Is Insurance for Car Repairs Worth It?

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Purchasing insurance for car repairs, or mechanical breakdown insurance, can be a great way to budget for the unforeseen costs of car ownership. But is insurance for car repairs better than an extended warranty? And how do they compare with standard auto insurance?

In this review, we’ll dive into the advantages and disadvantages of mechanical breakdown insurance versus vehicle service contracts and explain when you’ll need to use your standard car insurance coverage instead. We will also recommend a few of the best extended warranty companies that could help make the cost of car repairs more affordable.

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Insurance for car repairs could save you hundreds or even thousands of dollars in the event of a mechanical breakdown. If a certain part of your vehicle fails, there’s a good chance repairs will be covered under a comprehensive mechanical breakdown insurance (MBI) policy.

MBI policies are backed by insurance providers and are therefore regulated by state governments. But unlike standard collision or bodily injury policies, no state laws mandate that drivers must have insurance for car repairs.

Here’s a guide to help you understand when you should use standard car insurance or mechanical breakdown insurance when you need vehicle repairs:

Geico mechanical breakdown insurance is one of the best choices on the market. It’s an exclusionary plan that covers the majority of vehicle parts, and it can extend up to 7 years or 100,000 miles, whichever comes first. If you’re a Geico policyholder, it may be a good idea to add insurance for car repairs—but you’ll only be eligible if your vehicle is less than 15 months old and has fewer than 15,000 miles.

The American Automobile Association, or AAA, also offers insurance for car repairs. There are a number of tiered plans to choose from, and terms can range from 1 month/1,000 miles to 7 years/230,000 miles, depending on your needs and location. AAA eligibility limits are much higher than Geico’s: Vehicles may be covered if they’re less than 15 model years old and have fewer than 150,000 miles on them.

Although they offer similar vehicle protection, there are many differences between extended warranties and insurance for car repairs.

One major difference is that extended warranties tend to offer more flexible and more comprehensive coverage than mechanical breakdown insurance policies. However, this comes at a higher price. Our research shows that extended car warranties tend to cost between $600 to $1,000 per year of coverage, but the Wall Street Journal reports that MBI policyholders only pay about $75 per year.

Additionally, extended warranties can be bought at any time in your vehicle’s life, whereas mechanical breakdown insurance must be purchased when your vehicle is relatively new. Warranties can also be canceled at any time for a prorated refund. MBI, on the other hand, is neither transferable nor refundable.

Both extended car warranties and insurance for car repairs can be financed over a number of months or years, and with either coverage, repairs can be completed at any licensed repair facility, including dealerships. Further, neither MBI nor extended warranties cover routine maintenance or normal wear and tear.

Whether you choose to buy an extended warranty or mechanical breakdown insurance, both guarantee peace of mind on the road to know your finances are protected against the cost of expensive unforeseen repairs.

Learn more about the provider in our complete Endurance warranty review, and get a free quote to see how much you would pay for coverage.

Benefits that come with all CarShield extended warranties include courtesy towing, emergency roadside assistance, and rental car reimbursement.

You can read more about this provider in our full CarShield review. To find out what an extended warranty from CarShield would cost for your vehicle, get a personalized quote below.

Our rating: 4.2 out of 5.0

Our research found this provider to be the most affordable. Plus, it offers monthly plans.