A Car Repair Insurance Research Guide

If you are considering car repair insurance, there are a number of different things you should look at and research before you buy. Car repair insurance is not the answer for every situation, and you’ll want to understand the costs and benefits before you purchase coverage.

What Is Car Repair Insurance?

Car repair insurance is coverage that protects in from losses in the eventuality that your car breaks down. Broken timing belts, thrown rods, crumbling transmissions and faulty drive trains are never covered by traditional insurance. These are, however, the types of repairs that may be covered by car repair insurance, depending on the policy.

The more common name for car repair insurance is extended warranty. If you are familiar with the term, then you will have a good idea of what car repair insurance covers. Just as standard insurance covers accidents, natural disasters and hit-and-runs but doesn’t cover common repairs, so car repair insurance will not take the place of standard insurance. It will not cover medical costs or body repair costs in the event of an accident or natural disaster.  

Car repair insurance will not fulfill the requirements of the state that you carry insurance on your vehicle. You will still need to have standard liability and medical coverage have your legal obligations met. The purpose of car repair insurance is to avoid being hit with large, unexpected expenses from a car breakdown such as a bad engine seal or broken fuel pump.

Watch the Details

Regular car insurance has many standard provisions and coverage is similar between insurance companies. However, extended warranties and car repair insurance policies differ significantly between companies. Each is different in what they cover and how much they charge.

Read carefully to see how much you pay and exactly what you get in return. Are standard parts that wear out normally (brake pads, windshield wipers, etc.) covered by the warranty?  Are physical parts such as knobs, buttons and electrical systems covered? Or, are only the drive train items covered? These differences make it difficult to compare policies, since it is often unclear as to what you are paying for.

Manufacturer Plans

One type of car repair insurance is sold through the vehicle manufacturer. They will offer this plan to you either when your standard manufacturer warranty runs out or when you purchase your vehicle. If they offer the car repair insurance when you purchase your new vehicle, they often offer additional coverage on their extended warranties beyond what they offer on the standard manufacturer warranty. However, the plans can be more expensive than other plans and the manufacturer often requires that you keep your mileage very low—below the average. Additionally, you have to use the dealer for any repairs.

Third Party Coverage

Companies not affiliated with any dealer or automobile manufacturer sell third-party plans. These plans vary the most in coverage and safety. There is a high incidence of bankruptcy among car repair insurance and extended warranty providers, especially among those with no affiliation with a dealer. Look at each company carefully before you purchase coverage, and be sure the business has a good reputation. Find out how claims are handled and research customer satisfaction.

If you are careful and thoughtful, you can find out if auto repair insurance is the right purchase for you. If it is what you decide to do, using care will ensure that you get the best possible deal on your coverage.