How Much Is Car Repair Insurance?

Quick answer

• Car repair insurance, often called mechanical breakdown insurance (MBI), is not a standard auto insurance coverage.
• Its cost varies significantly based on vehicle age, mileage, make, model, and the coverage level you choose.
• Expect to pay anywhere from $500 to $3,000 or more annually, depending on the policy.
• It’s typically purchased separately from your collision or comprehensive coverage, often from third-party providers or sometimes through dealerships.
• MBI can be a good option for newer cars or those you plan to keep long-term, but its value depends on your risk tolerance and repair history.
• Always compare quotes and thoroughly read policy details before purchasing.

What to check first (before you buy or change coverage)

Coverage needs

Before looking into mechanical breakdown insurance (MBI), assess your current vehicle’s reliability and your financial situation. How old is your car? What’s its mileage? Do you have a history of frequent repairs, or is it generally reliable? Consider your emergency fund. If you have a substantial savings buffer, you might be comfortable self-insuring for potential repairs. If not, MBI could offer peace of mind.

Deductibles and premiums

Like traditional insurance, MBI policies come with deductibles and premiums. The premium is the amount you pay regularly (usually monthly or annually) for the coverage. The deductible is the amount you pay out-of-pocket before the insurance kicks in for a covered repair. Policies with higher deductibles often have lower premiums, and vice versa. Understanding this trade-off is crucial for finding a balance that fits your budget and risk tolerance.

Exclusions and limits (general)

No MBI policy covers everything. It’s vital to understand what is not covered. Common exclusions include routine maintenance items (like oil changes, tire rotations), wear-and-tear components (brakes, clutches, exhaust systems), and cosmetic damage. Policies also have limits on the total amount they will pay for repairs and may have specific requirements for where repairs must be performed. Always ask for a detailed list of exclusions and limits.

Claim process

Familiarize yourself with how to file a claim. What documentation will you need? Will you have to pay for the repair upfront and then get reimbursed, or will the repair shop bill the insurance company directly? Are there preferred repair facilities, or can you choose any mechanic? Knowing the claim process beforehand can save you significant stress and potential headaches if a covered breakdown occurs.

Bundling and discounts (general)

While MBI is often sold by third parties, some insurers or dealerships might offer it. If you’re considering purchasing MBI from your current auto insurer or a related entity, inquire about potential bundling discounts. Sometimes, purchasing MBI alongside your standard auto insurance can lead to savings. Always ask about any available discounts, such as those for low mileage or specific vehicle types, though these are less common with MBI than with traditional auto insurance.

Step-by-step (simple workflow)

1. Assess your current vehicle’s warranty status

• What to do: Check if your car is still covered by the manufacturer’s new vehicle limited warranty or an extended warranty you may have purchased.
• What “good” looks like: You have a clear understanding of when your existing warranty expires, including mileage and time limits for different components.
• A common mistake and how to avoid it: Assuming your warranty is still active without checking the exact expiration dates. Always verify with your owner’s manual or dealership.

2. Evaluate your vehicle’s repair history and reliability

• What to do: Review past repair bills and research common issues for your car’s make and model.
• What “good” looks like: You have a realistic picture of how often your car typically needs repairs and the average cost of those repairs.
• A common mistake and how to avoid it: Relying solely on memory. Keep a log of all repairs and their costs to make an informed decision.

3. Determine your personal risk tolerance and budget

• What to do: Decide how much you can comfortably afford to spend on unexpected car repairs without MBI, and how much you’re willing to pay for a policy.
• What “good” looks like: You have a clear number in mind for an emergency repair fund and a maximum annual premium you’re willing to pay.
• A common mistake and how to avoid it: Underestimating potential repair costs or overestimating your ability to handle them financially. Be conservative in your estimates.

4. Research third-party MBI providers and dealerships

• What to do: Look for companies that specialize in MBI or check if your dealership offers an MBI plan.
• What “good” looks like: You have a list of potential providers and understand their general reputation.
• A common mistake and how to avoid it: Only considering one provider without comparing options. This can lead to paying more than necessary or getting less coverage.

5. Request quotes from multiple providers

• What to do: Contact at least 3-5 different MBI providers and request detailed quotes for your vehicle.
• What “good” looks like: You receive comprehensive quotes that clearly outline premiums, deductibles, coverage levels, and exclusions.
• A common mistake and how to avoid it: Getting quotes without providing exact vehicle information (year, make, model, mileage), leading to inaccurate pricing.

6. Carefully review policy documents

• What to do: Read the full contract, paying close attention to what’s covered, what’s excluded, the claim process, and any limits.
• What “good” looks like: You understand the policy inside and out, including specific components covered and any maintenance requirements.
• A common mistake and how to avoid it: Skimming the policy or only reading the summary. This is where crucial details about coverage gaps are often hidden.

7. Compare deductibles and premiums across policies

• What to do: Analyze how different deductible amounts affect the annual premium for each policy.
• What “good” looks like: You can see the direct relationship between your out-of-pocket cost per repair and your ongoing policy cost.
• A common mistake and how to avoid it: Focusing only on the lowest premium without considering the deductible. A low premium with a very high deductible might not be beneficial.

8. Understand the repair authorization and payment process

• What to do: Clarify if repairs need pre-authorization and how payment is handled between you, the mechanic, and the insurer.
• What “good” looks like: You know whether you’ll be reimbursed or if the provider pays the shop directly, and if pre-approval is always required.
• A common mistake and how to avoid it: Assuming direct payment to the shop will always happen. Some policies require you to pay first and then submit for reimbursement.

9. Check for roadside assistance and rental car coverage

• What to do: See if the MBI policy includes benefits like towing, lockout services, or reimbursement for a rental car while your vehicle is being repaired.
• What “good” looks like: You have a clear understanding of any additional benefits that add value to the policy beyond just repair coverage.
• A common mistake and how to avoid it: Overlooking these ancillary benefits, which can significantly add to the overall value of the MBI plan.

10. Make a decision and purchase the policy

• What to do: Choose the MBI policy that best meets your needs and budget, and complete the purchase process.
• What “good” looks like: You have secured coverage that provides you with financial protection against unexpected major repairs.
• A common mistake and how to avoid it: Delaying the purchase until a problem arises. MBI typically cannot be purchased after a breakdown has occurred or is imminent.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Not checking existing warranty coverage	Paying for MBI when your car is already covered by a manufacturer’s or extended warranty.	Always verify your current warranty status before considering MBI.
Ignoring policy exclusions	Discovering that a major repair you thought was covered is actually excluded, leaving you with a large bill.	Thoroughly read the “Exclusions” section of any MBI policy.
Choosing a policy with a high deductible	Paying a significant amount out-of-pocket for every repair, negating the financial benefit of the insurance.	Balance the premium cost with a deductible you can realistically afford.
Not comparing quotes from multiple providers	Paying a higher premium than necessary or accepting less favorable terms due to a lack of comparison.	Get quotes from at least 3-5 different MBI providers.
Failing to understand the claim process	Experiencing delays or denial of claims due to not following the correct procedure or providing required documentation.	Clarify the claim filing and payment process with the provider before purchasing.
Overlooking wear-and-tear components	Assuming parts that wear out naturally (like brakes or tires) will be covered, when they typically are not.	Understand that MBI is for mechanical <em>breakdowns</em>, not routine maintenance or wear items.
Purchasing MBI for an older, high-mileage car	Paying premiums for a vehicle that is already prone to numerous issues not covered by MBI, or where repair costs might exceed the policy’s value.	MBI is often more cost-effective for newer vehicles with lower mileage.
Not checking repair facility requirements	Being forced to use a specific, inconvenient, or lower-quality repair shop to ensure coverage.	Verify if you can choose your preferred mechanic or if there are network restrictions.
Assuming MBI is the same as extended warranty	Confusing the terms and coverage, potentially missing crucial differences in what is covered and how it’s administered.	Understand that while similar, MBI and extended warranties can have different contract structures and providers.
Not factoring in maintenance requirements	Voiding coverage because you failed to adhere to the manufacturer’s recommended maintenance schedule.	Keep meticulous records of all maintenance performed on your vehicle.

Decision rules (simple if/then)

• If your car is less than 3 years old and has under 36,000 miles, then you likely don’t need MBI because it’s probably still under the manufacturer’s bumper-to-bumper warranty.
• If you have a substantial emergency fund covering at least $5,000-$10,000 in potential repair costs, then you might consider skipping MBI and self-insuring because your savings can absorb minor to moderate breakdowns.
• If your car is a make/model known for frequent and expensive mechanical issues, then MBI could be a wise investment because it can protect you from significant out-of-pocket expenses.
• If you plan to keep your car for many more years beyond its warranty period, then MBI can provide valuable long-term protection against unforeseen repair bills.
• If the cost of MBI premiums and deductibles combined over a year is significantly higher than your average annual repair costs for the past 3-5 years, then MBI may not be financially beneficial for you.
• If a policy excludes coverage for major components like the engine, transmission, or electrical systems, then it’s likely not a good MBI policy because these are the most common and costly breakdowns.
• If the MBI provider requires you to use a very limited network of repair shops, then consider this a potential drawback because it might limit your choices for service and repair quality.
• If you are looking for coverage for routine maintenance or wear-and-tear items, then MBI is not the right product because it’s designed for unexpected mechanical failures.
• If the MBI policy has a very low annual premium but an extremely high deductible, then carefully calculate if the potential payout would actually be worth the high out-of-pocket cost per incident.
• If you can’t easily find reviews or information about the MBI provider’s reputation for handling claims, then proceed with caution because a good claims process is essential for any insurance.
• If your car is older than 7 years or has over 100,000 miles, then MBI might be less cost-effective or even unavailable, and it’s often better to budget directly for potential repairs.

FAQ

What is car repair insurance?

Car repair insurance, more commonly known as mechanical breakdown insurance (MBI), is a type of coverage that helps pay for repairs to your vehicle’s mechanical and electrical components after the manufacturer’s warranty expires. It is not a substitute for standard auto insurance like liability, collision, or comprehensive coverage.

How much does mechanical breakdown insurance typically cost?

The cost of MBI varies widely, but you might expect to pay anywhere from $500 to $3,000 or more per year. Factors influencing the price include the age and mileage of your car, its make and model, the level of coverage selected, and the deductible amount.

Is mechanical breakdown insurance worth it?

Whether MBI is worth it depends on your individual circumstances. It can be beneficial for newer cars you plan to keep long-term, or if you have a vehicle known for expensive repairs and want financial protection. If you have a large emergency fund and a reliable car, you might opt out.

What’s the difference between MBI and an extended warranty?

While both cover repairs beyond the factory warranty, MBI is typically a type of insurance policy sold by third-party providers or sometimes insurers, while extended warranties are often sold by the vehicle manufacturer or dealership. Coverage details, exclusions, and claim processes can differ significantly.

Does MBI cover routine maintenance?

No, MBI generally does not cover routine maintenance services such as oil changes, tire rotations, or brake pad replacements. It is designed to cover unexpected mechanical failures of specific components, not standard upkeep or wear-and-tear items.

Can I buy MBI for any car?

Availability of MBI often depends on the age and mileage of your vehicle. Many providers have limits, such as requiring the car to be less than a certain number of years old or have under a specific mileage at the time of purchase.

What kind of repairs does MBI usually cover?

MBI typically covers major mechanical and electrical components like the engine, transmission, drive axle, steering, brakes, and air conditioning systems. However, it’s crucial to check the policy’s specific list of covered parts and exclusions.

What happens if my car breaks down out of state?

Most MBI policies are valid nationwide. If your car breaks down, you’ll generally follow the same claim process. It’s advisable to confirm with your provider about their procedures for repairs performed away from your home state.

What this page does NOT cover (and where to go next)

• Specific MBI policy providers and their current offerings. (Next: Research reputable MBI providers and read customer reviews.)
• Exact pricing for MBI policies, as this varies greatly by individual circumstances. (Next: Obtain personalized quotes from multiple providers.)
• Legal requirements for auto insurance in your specific state, which are separate from MBI. (Next: Consult your state’s Department of Motor Vehicles or insurance regulator.)
• Detailed comparisons between MBI and various types of extended warranties. (Next: Research the differences between insurance-based MBI and manufacturer-backed extended warranties.)
• How to file a claim for a specific MBI provider. (Next: Review the claims process outlined in the MBI policy documents or contact the provider directly.)