Car repair insurance costs an average of $100 per year. While car repair insurance is generally inexpensive, the exact cost for an individual driver depends on several factors, including their car’s make, model, and mileage.
Car repair insurance, also known as mechanical breakdown insurance, is a type of coverage that pays to fix a vehicle’s major mechanical components after the car’s original warranty expires. It is similar to an extended warranty, but costs far less.
Standard auto insurance policies generally do not cover mechanical repairs, so paying extra for car repair insurance could save you thousands of dollars if your vehicle suffers a major mechanical failure. To learn more, check out WalletHub’s guide to car repair insurance.
Extended car warranties are worth it if a driver doesn’t carry sufficient savings to pay for vehicle system repairs or is worried about their car’s reliability. But for most drivers, extended car warranties go unused, so the potential benefits are not enough to justify the upfront cost.
A good time to consider the value of an extended warranty is when the manufacturer’s warranty on your vehicle has expired or will expire soon. This typically happens after three years or 36,000 miles, depending on which comes first. If you plan on keeping your car beyond the manufacturer warranty’s expiration, then purchasing an extended warranty might give you peace of mind moving forward.
An extended warranty might also be worth it if you’re concerned about your ability to pay for major mechanical repairs in the future. Car repairs cost about $400 on average, which is less than the $1,500 average for an extended warranty. On the other hand, the least common and most catastrophic mechanical failures can often cost several thousands of dollars to repair.
If your car isn’t very reliable and you’re not in the financial position to risk either paying for repairs or replacing the car yourself, it might be worth it to pay a higher upfront cost for protection through an extended warranty.
When An Extended Car Warranty Isn’t Worth It
Your car is not reliable
Your car is not worth very much
Your car is still covered by the manufacturer’s warranty
You have a large enough emergency fund to pay for major vehicle repairs
Bear in mind that you don’t have to purchase an extended warranty when you buy your car. It’s likely a smart move for you to wait until the manufacturer’s warranty is about to expire to evaluate your situation and determine whether you want to pay for an extended warranty. To learn more, check out WalletHub’s guide to the best extended car warranties.
CarShield costs at least $99 per month and up, though prices vary by state, driver, and specific vehicle. CarShield sells vehicle service plans, which are similar to extended warranties, and a plan from CarShield covers the cost of repairs to the car's systems and mechanical parts. Six different plans are available from CarShield, so drivers can choose between several levels of coverage.… read full answer
To qualify for a CarShield plan, cars must fulfill certain eligibility requirements, though the company does not disclose the exact requirements.
CarShield Plans Cover:
Plans may cover slightly different things, but this list provides a good example of CarShield coverage.
CarShield vs. Extended Warranties From Major Insurers
Although exact coverage may differ for the providers above, all of them cover the main parts or systems. These include the engine, transmission, brakes, suspension, and steering.
It’s also worth noting that mechanical breakdown insurance from a car insurance company is often a cheaper alternative to a third-party vehicle service plan or extended warranty. For more information, check out WalletHub’s guides to mechanical breakdown insurance and extended warranties.
Car insurance does not cover intentional damage, general maintenance, or damage caused by normal wear and tear. Minimum car insurance coverage does not cover the policyholder’s injuries or vehicle damage, either, only providing liability insurance to pay for injuries and property damage caused to others.
However, exact coverage exclusions vary between policies. In addition, insurance companies offer extra policy add-ons that can protect you in situations that don’t fall under minimum car insurance coverage.… read full answer
What Car Insurance Never Covers
Damage caused by normal wear and tear
Intentional damage (sometimes including DUI)
Damage that exceeds the limits of your liability policy
Personal belongings stolen from your car
What Car Insurance Does Not Cover Normally
Custom parts and equipment
Liability, comprehensive and collision car insurance do not cover customized parts and equipment, such as undercarriage lighting or third-party sound systems. However, some insurance companies offer add-on coverage to protect those types of things.
Your Car Loan or Lease If Your Vehicle is Totaled
Even if you owe your lender more than your car is worth when it’s totaled or stolen, your insurance company will only cover the replacement cost of the vehicle. Gap insurance is a policy option that covers the dollar-amount “gap” between what a car is worth and what is owed on the loan.
Driving Your Car for Rideshare or Delivery
If you’re driving your car as a way to make money, then your personal insurance policy might not cover you if you’re involved in a wreck on the job. While ridesharing and food delivery companies often offer insurance for their drivers, you can also purchase rideshare insurance for extra protection.
If you experience an engine or transmission failure on the road, your insurance policy won’t usually cover the cost of fixing it. But as a precaution, you can purchase mechanical breakdown insurance, which is similar to an extended warranty from a car manufacturer.
Before purchasing car insurance, it’s important to do your research and get a good idea of what types of coverage you might need beyond what’s required by the state. And before you sign on the dotted line, be sure to read the fine print of the policy so that you fully understand what is and is not covered.
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