Is Car Repair Insurance Worth It?

By Kiah Treece

Usually costing about $150 per year, car repair insurance can be a worthwhile investment for newer, low-mileage vehicles.

Car repair insurance is designed to mitigate the financial impact of mechanical breakdowns that aren’t typically covered under standard auto insurance policies. These unforeseen incidents can range from engine failures to complex electrical system malfunctions, often resulting in significant repair costs. 

Unlike standard policies that primarily cover damages from accidents, theft and natural disasters, car repair insurance focuses on the internal well-being of your vehicle.

Learn how car repair insurance works and how this form of coverage compares to the best car warranty companies.

Only newer vehicles are usually eligible for car repair insurance. For example, some providers may require vehicles to be less than 15 months old and have fewer than 15,000 miles. 

For vehicles with more miles on the odometer, an extended warranty plan may be a useful alternative.

What Does Car Repair Insurance Cover?

Car repair insurance covers the cost of repairs not typically included in standard auto insurance policies. This specialized insurance can be a lifesaver for owners facing unexpected mechanical failures. Coverage often includes:

• Engine issues: One of the most costly repairs for any vehicle owner, engine problems can arise unexpectedly and require extensive work. Auto repair insurance policies typically cover the engine, including the major components that keep it running smoothly.
• Electrical systems: Today’s vehicles are equipped with advanced electrical systems that control everything from the dashboard lights to the navigation system. Auto repair insurance helps cover the costs associated with electrical failures, which can be complicated and expensive to fix.
• Transmission problems: Transmission repairs or replacements are among the most expensive auto repairs. Whether your vehicle has a manual or automatic transmission, encountering issues can significantly impact your car’s performance. Car repair warranty and auto repair warranty plans often cover transmission work, ensuring that shifts remain smooth and efficient.

What Is Not Covered by Car Repair Insurance?

Below is a list of what is typically not covered by car repair insurance:

• Routine maintenance, such as oil changes, tire rotations and brake pads
• Cosmetic damages, including scratches, dents and paint wear
• Damages caused by accidents or collisions
• Issues resulting from neglect, such as failure to perform necessary maintenance
• Wear and tear on parts due to normal usage over time
• Repairs for vehicle modifications or aftermarket parts not authorized by the manufacturer
• Components or items covered by your car warranty

What Is the Average Cost of Car Repair Insurance?

Based on the quotes we received, the average cost of car repair insurance was about $150 per year with a $500 deductible. Rates may vary based on the following factors: 

• Insurer versus third-party: Some auto insurance companies, such as GEICO, offer car repair coverage as an add-on to your standard auto policy. If available, this option is usually cheaper than buying stand-alone coverage through a third-party provider like Good Sam. 
• Deductible: Car repair insurance policies have a deductible you must pay before your policy covers the cost. Deductibles typically range between $100 and $1,000. The higher your deductible, the lower your premiums. 
• Vehicle details: Your vehicle’s year, make, model and odometer reading can impact your rates. 

Always compare quotes and assess your specific needs to ensure you’re getting the best value for your coverage.

How Does Car Repair Insurance Work?

Car repair insurance works as a supplemental policy to help cover the cost of mechanical breakdowns or repairs that are not typically covered under a standard auto insurance policy. 

Once enrolled, you pay a premium to the insurance provider much like traditional insurance. If you have a claim, follow these steps: 

1. Contact your insurer: You can usually file a claim online or by calling your insurance company’s claim support line. 
2. Visit a repair shop: You can take your vehicle to a repair shop of your choice as long as they’re licensed to complete repairs. The repair shop will evaluate the vehicle and make the necessary repairs. Some policies offer additional perks like roadside assistance and rental car reimbursement that you can use while your car is in the shop. 
3. Pay the deductible: Your insurer will pay the repair shop for the repairs minus the amount of your deductible and up to your policy’s coverage limit.

Car Repair Insurance Vs. Extended Warranties

At first glance, insurance for car repair and extended warranties might appear to serve the same purpose, but there are distinct differences between the two. 

These are some of the main differences between car repair insurance versus extended warranties:

• Coverage: Extended car warranties are often used when purchasing a used car or to extend the coverage period beyond a manufacturer’s warranty. Car repair insurance or mechanical repair plans from insurance companies may pick up the slack if a vehicle warranty excludes mechanical failures.
• Availability: Extended warranties are typically sold by car dealerships or manufacturers, while car repair insurance is available through insurance companies.
• Payments: Instead of making monthly payments like with car repair insurance, you’ll likely pay for a car warranty plan as a lump sum or as part of your monthly car payment.  

Is My Vehicle Eligible for Car Repair Insurance?

Car repair insurance policies have specific eligibility criteria that largely depend on the vehicle’s age, mileage and overall condition. Typically, insurers offer vehicle repair insurance for newer models or vehicles that fall within a certain mileage limit. 

The reason behind these restrictions is straightforward: Newer, less driven cars are less likely to have significant issues, making them a safer risk for insurers. These requirements vary by provider, so check the applicable criteria before choosing a plan. Popular car repair insurance companies include Progressive, Allstate and Geico. 

Is Car Repair Insurance Worth It?

Consider these factors to determine whether auto repair insurance is worth it for you:

• Your driving habits. If you frequently drive in conditions that put extra wear and tear on your vehicle, such as rough terrain or extreme weather conditions, car repair insurance might be worth considering. Such conditions can accelerate the need for repairs, making a policy that covers the costs of auto repair and maintenance a wise choice.
• Vehicle reliability. Newer cars with a history of few mechanical issues might not immediately benefit from car repair insurance. However, as a vehicle ages, its likelihood of needing significant repairs increases. At this point, having auto repair insurance could save you from bearing the full brunt of costly repairs. Additionally, if your car is no longer under a manufacturer’s warranty — such as a car repair warranty or auto repair warranty — vehicle repair insurance can offer a safety net against unexpected expenses.
• Financial readiness. Evaluate your ability to pay out of pocket for sudden, expensive repairs. If such unforeseen expenses would strain your finances, investing in insurance for car repair might provide peace of mind and financial stability. On the other hand, if you have a robust emergency fund, you might decide that you’re better off without an additional insurance premium.

Car repair insurance is worth the cost if: 

• Your manufacturer warranty expired
• Your car has complex electrical systems
• You don’t have a substantial emergency fund

Car repair insurance may not be worth the expense if: 

• Your manufacturer warranty is still active
• You have a large emergency fund
• Your vehicle make and model is very reliable

Car Repair Insurance FAQ

What does car repair insurance cover? 

Car repair insurance covers components of your vehicle after your car’s manufacturer warranty expires. Covered components include the engine, transmission, drive train, and heating and cooling system. 

What’s excluded by car repair insurance? 

Car repair insurance doesn’t cover damages related to wear and tear, maintenance or collision-related repairs. 

What is covered under a car warranty?

A car warranty typically covers defects in materials or workmanship for a set period. Knowing what is covered under a car warranty can help you identify which repairs are your financial responsibility versus those covered by the warranty.

How much is car repair insurance per month? 

Based on the quotes we received, car repair insurance is typically about $150 per year, or $12.50 per month. That price assumes a $500 deductible. 

Are car extended warranties worth it?

Whether car extended warranties are worth it often depends on factors like the reliability of your vehicle and your ability to cover unexpected repairs out of pocket.

Car warranty vs. insurance: How do they differ?

A warranty — often offered by the manufacturer — covers defects and repairs for a certain period. When comparing car insurance versus a car warranty, insurance covers unforeseen events like accidents, theft and, in the case of car repair insurance, mechanical breakdowns not caused by accidents.

Can car repair insurance be used for any repair shop?

Whether car repair insurance can be used for any repair shop varies by policy. Some auto service insurance plans require drivers to use authorized dealerships or approved mechanics to ensure the quality of repairs. It’s essential to read the fine print of your insurance for car repair policy to understand where you can take your vehicle for service.