Coverage Details, Costs, and Best Providers

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• Car repair insurance covers repairs and replacements stemming from mechanical issues.
• Some insurers will allow you to add repair coverage to your standard auto policy.
• You can also purchase repair insurance separately, similar to an extended car warranty.

Anyone who drives a car knows that breakdowns are inevitable, and paying for repairs can be hard on your wallet.

A car warranty is a common add-on when you buy a new car, but what should you do when that coverage expires? If you’re worried about covering the cost of mechanical and electrical issues as your car ages, you might consider getting car repair insurance in addition to your regular car insurance policy.

Car repair insurance overview

What is auto repair insurance?

If your car breaks down, auto repair insurance helps you cover the cost of major repairs and parts replacement. However, it won’t cover fixes related to normal wear and tear, lack of maintenance, or accidents.

Car repair insurance is typically an optional coverage that you can add to your standard auto policy. Some insurance providers offer it as a standalone coverage but require you to have comprehensive auto coverage to cover damages caused by theft or bad weather.

How it differs from standard car insurance

A full coverage auto policy pays for repairs or vehicle replacement if your car is damaged by weather, fire, a falling object (like a tree), or an accident you caused, or if it’s stolen or vandalized. It also gives you liability coverage, which is legally required in most states, and covers medical payments to others involved in an accident.

“Car repair insurance doesn’t cover the same things as collision or comprehensive insurance. It works as an addition to a standard policy rather than a replacement,” says Cassie Sheets, a data journalist at Insurify.

How it differs from extended service contracts or warranties

New cars and most used cars come with a warranty, obligating the manufacturer to fix any mechanical or electrical defects. Car warranties expire, but you may be able to purchase an extended warranty.

“Car repair coverage works similarly to an extended warranty that you’d purchase through a dealership or third party, except you can cancel it, unlike a warranty, and you can pay month-to-month rather than up front. Extended warranties can cost thousands of dollars, and for certain vehicles, mechanical breakdown insurance is as low as $10 per month,” Sheets says.

Ultimately, both types of coverage help you pay for electrical or mechanical repairs that are needed due to design or installation defects — not normal wear and tear or issues caused by neglect.

“Extended warranties cover a lot of the same things car repair insurance covers, so it might be an unnecessary expense if you already have a warranty. Drivers can talk through specific differences with an insurance agent to figure out if adding car repair insurance makes sense,” Sheets says.

Coverage explained

What auto repair insurance covers

Auto repair insurance is also known as mechanical breakdown insurance (MBI). Mechanical issues include defects in the air conditioning system, transmission, fuel system, exhaust, engine, and electrical system that are not caused by poor maintenance or a collision. Many of these repairs can be costly.

Common exclusions to be aware of

While the list of exclusions varies by insurance provider, you can expect that the following will not be covered by car repair insurance:

• Wear and tear
• Damages caused by a collision with a car or object
• Theft
• Pre-existing issues 
• Oil changes
• Tune-ups, such as air filter or spark plug replacement
• Non-original parts
• Alignment
• Rotating or replacing tires
• Cosmetic damages
• Certain luxury or collectible cars

Choosing the right car repair insurance

Factors to consider when choosing a plan

The first thing to evaluate when you’re shopping for car repair insurance is eligibility. This basically comes down to your car’s age and odometer reading, and the requirements can vary widely among providers. 

At Geico, for example, you can purchase mechanical breakdown insurance if you’re the first owner of a new or leased car that’s less than 15 months old with under 15,000 miles. You can renew your policy for up to seven years or 100,000 miles, whichever comes first.

Good Sam’s standalone mechanical breakdown insurance, offered by Progressive, is available to owners of a vehicle or RV up to 15 years old with less than 100,000 miles (or 120,000 miles for rear-engine diesel RVs). For owners of newer cars with full auto coverage in select states, Progressive Vehicle Protection is available as an add-on coverage. 

If you pass the eligibility test, weigh these factors when comparing policies: 

• Covered parts and systems
• Claims payout process (reimbursement vs. direct pay to service provider)
• Deductible options
• Rental car or ride-share reimbursement while your car is in the shop
• Additional perks, like free roadside assistance

Note: Commercial vehicles may not be eligible for car repair insurance, regardless of the mileage or age of the car.

Comparing top car repair insurance providers

Search for information about the insurance company’s financial stability using a database like AM Best. A good credit rating indicates the company has a history of paying out customer claims quickly and efficiently.

Top providers for car repair insurance include Geico, Progressive, and Mercury. The company you use for standard auto coverage may offer repair coverage as an add-on — that’s how Geico does it, for example — so check there first. 

Many car repair plans that are sold by insurance companies are more similar to service contracts in that they eventually expire after you drive a certain number of miles. 

For example, Allstate’s Extended Vehicle Care covers essentially the same repairs as an MBI contract, but only for seven years or 100,000 miles (whichever comes first). It offers other benefits, though, including rental car and ride-share reimbursement, 24/7 roadside assistance, and trip interruption.

Some companies offer repair coverage only to residents of certain states. If you’re a California driver who’s comfortable with an exclusively-online experience, Olive.com is a newer platform that can help you get a standalone car repair insurance policy if your car is less than 10 years old with under 140,000 miles.

Tips for selecting the right coverage level

To choose the right level of coverage, research the make and model of your car to find out what the most common breakdowns are and the typical cost of repairs where you live using a database like Kelley Blue Book. 

Car repair insurance is generally inexpensive for cars in good condition, so choosing the most comprehensive coverage plan is unlikely to increase your monthly cost noticeably. However, to keep costs down, you could select coverage for only one system, such as the powertrain. Repairs that fall into this category are typically the most expensive, so having coverage could prove cost effective.

Costs and benefits

Understanding premiums and deductibles

Premiums for car repair insurance range from $100 to $500 per year, on average, for newer cars, according to research from ConsumerAffairs.

Car repair insurance premiums can either be rolled into your standard auto policy payment or paid separately. Keep in mind that insurance companies have the right to adjust your premium at your renewal date. 

Your deductible is the amount you need to pay before insurance kicks in. Typically, choosing a higher deductible reduces your premium. While deductibles on a standard auto policy can range from $200 to $2,000, deductibles on a car repair policy are usually no more than $500.

How costs vary with vehicle type and age

Older vehicles and certain trucks and RVs may be more expensive to insure.

“Vehicle age and mileage are essential rating factors, as repair frequency tends to rise as mileage accrues, while newer cars may have operating systems that are incredibly complex and expensive to repair,” says Ezra Peterson, senior director of insurance at the auto app Way.com. 

If you’re looking to protect a collectible or rare car, you may need classic car auto insurance instead.

Calculating the potential savings on repair costs

Say you purchase car repair insurance at an annual cost of $150 with a $200 deductible. When your air conditioning stops working six months into your policy, a mechanic tells you it needs to be replaced. 

Kelley Blue Book estimates that an A/C system replacement can run from $1,546 to $1,705, on average. With car repair insurance, you pay your $200 deductible and the insurance provider pays the rest. Thanks to your coverage, you’ve paid just $275 (your premium over six months plus your deductible) instead of six times that.

How to file a car repair insurance claim

Step-by-step process for filing an auto repair insurance claim

The process for filing an insurance claim will vary by provider, but generally follows these steps:

1. Take your car to a mechanic for an inspection
2. Receive an inspection report with recommendations and cost estimates for labor and parts
3. Call your insurance company (some claims departments will want to speak directly to the mechanic)
4. Insurance company authorizes the repair work and covers the bill

Necessary documentation and information 

You’ll need to bring your insurance card or policy information to the mechanic. Typically the insurance provider will ask to speak directly to the mechanic about the needed repairs and ask them to send a copy of a written report before authorizing the work.

Pros and cons of car repair insurance

Advantages of auto repair insurance

If you drive an unreliable vehicle and can’t afford to buy a new car, repair insurance can offer peace of mind and a safety net when things go wrong that aren’t covered by your standard auto policy.

Potential downsides and limitations

Insurers can deny your claims if you fall behind on regular maintenance and a mechanic determines the problem was caused by neglect rather than a system failure. Car repair insurance may not be worth it for some drivers with specific cars or car models that have a history of breaking down.

“Depending on your premium, car repair insurance also might not make sense financially. If you can put that money into savings and come up with enough to pay for most repairs, your personal mechanical breakdown insurance premium is probably too high to justify the policy,” Sheets says.

Customer reviews and feedback

Customer satisfaction with insurance companies tends to vary throughout different regions of the U.S. 

For instance, Progressive and Allstate were ranked fifth and sixth, respectively, in California on J.D. Power’s 2024 annual ranking of overall customer satisfaction with auto insurers. In the mid-Atlantic region, Allstate ranked 10th and Progressive ranked 11th. In the southeast, neither company cracked the top 10.

Conclusion 

Car repair insurance isn’t necessary for all drivers, but can be a smart investment for certain drivers.

“A mechanical breakdown policy can be a very effective way to manage risk. It can save a consumer from hefty repair bills in exchange for a much smaller monthly premium, and it should be considered when assessing the household insurance needs and budget,” Sheets says.

If you have comprehensive and collision auto insurance and enough cash savings to cover an unexpected repair, you likely won’t gain much benefit from a car repair policy. Likewise, if you’re still covered under a warranty or an extended warranty, you don’t need to double up on coverage with car repair insurance.

Car repair insurance FAQs