Is auto repair insurance worth it?

Key points

• Auto repair insurance covers mechanical breakdowns on most systems of the vehicle.

• You can get auto repair insurance from Geico and Progressive.

• Extended warranties cover similar repairs and offer more flexibility.

Dealing with a breakdown can be aggravating. And stressful. That’s why doing your homework can alleviate the headache of repairs.

Car insurance is typically useful in a scenario where your driving is the cause of an accident or if you unexpectedly run over a piece of junk on the road. But standard insurance coverage won’t help out when your car simply breaks down from a mechanical failure. On the other hand, some providers offer auto repair insurance that does cover mechanical breakdowns.

Auto repair insurance works similarly to extended car warranties, but the difference is it’s purchased through a car insurance company. Here, we define auto repair insurance and then explain how extended warranties work.

What is auto repair insurance?

Auto repair insurance is a type of insurance policy that covers mechanical breakdowns on a vehicle. It’s also called mechanical breakdown insurance or MBI. Strictly speaking, an auto repair insurance plan is backed by an insurance company. When you submit a claim, the insurance provider pays for covered repairs.

The confusing part is that many warranty companies refer to their coverage as mechanical breakdown insurance too. In this case, mechanical breakdown insurance is a marketing term.

If the plan is backed by a warranty administrator and not an insurance company, it’s a vehicle service contract or an extended warranty. 

What does auto repair insurance cover?

Auto repair insurance is different from standard car insurance because it covers mechanical breakdowns — not damages from accidents. This includes things like your engine not turning on, faulty wiring in the electrical system, the air conditioning blowing warm air, a blown head gasket or a water pump failing.

Getting a flat tire or running out of fuel isn’t a mechanical breakdown because no internal component failed. You would call for roadside assistance in these situations.

Auto repair insurance usually provides comprehensive coverage. This means it covers any mechanical breakdown except for a list of exclusions. All major systems of the vehicle are covered, including:

• Air conditioning 
• Brake system
• Drive axle
• Electrical system
• Engine
• Engine cooling system
• Fuel system
• Steering
• Transmission

Some plans also come with extra perks. For example, Progressive Vehicle Protection covers minor dings and dents along with lost, stolen or damaged key fobs.

Where can you get auto repair insurance?

Not all insurance companies offer auto repair coverage. And some of the ones that do offer it require you to have an auto insurance policy with the company. Below are details on car repair insurance plans you can get from some major providers.

Geico Mechanical Breakdown Insurance

Geico Mechanical Breakdown Insurance is available for new and leased cars that are 15 months old or less and have under 15,000 miles. You can renew it for up to 7 years or 100,000 miles. The comprehensive plan is similar to a bumper-to-bumper warranty as it covers all parts and systems. It pays for all covered repairs after a $250 deductible.

Geico MBI doesn’t cover routine maintenance or normal wear and tear.

Progressive Vehicle Protection

If you’re a Progressive customer, you can get Progressive Vehicle Protection to cover mechanical repairs. Be aware that Progressive requires you to have liability, comprehensive, collision, rental car and roadside assistance with trip interruption to add this coverage.

Progressive Vehicle Protection is available for cars up to 2 years old. You can then renew coverage until your car is 8 years old. It covers all mechanical systems plus dents and dings along with key fob replacement and repair.

The plan comes with trip interruption, rental car coverage and roadside assistance plus a deductible of $100. According to Progressive, it can cost as little as $12 per month.

Progressive Mechanical Breakdown Insurance through Good Sam

Good Sam is an RV club that also sells insurance and protection products. If your car doesn’t qualify for Progressive Vehicle Protection, then you can get MBI backed by Progressive through Good Sam. This is a standalone plan, so you don’t have to be a Progressive customer.

Mechanical breakdown insurance through Good Sam provides comprehensive coverage and is available for vehicles up to 15 model years old and with less than 100,000 miles. Coverage can last until 18 model years or 150,000 miles.

Allstate Extended Vehicle Care

Allstate offers a variety of vehicle protection products including its Extended Vehicle Care. This comprehensive plan covers a variety of systems including the powertrain, steering, suspension and electrical systems.

Your car is eligible for extended vehicle care if it’s 7 years old or newer. Allstate customers can purchase plans online. Other customers can get Allstate’s plans through participating dealerships. You’ll need to contact Allstate to find out which dealerships sell these plans.

Mercury Mechanical Protection

Mercury Insurance offers multiple levels of mechanical coverage, including a comprehensive plan similar to a factory warranty. The plan comes with roadside assistance, rental car coverage, trip interruption and road hazard tire repair. You can use any licensed repair shop and transfer the coverage to a secondary buyer. You’ll need to call a Mercury agent to find out details about its mechanical breakdown insurance plans.

Is auto repair insurance worth it?

Car repair coverage can give you peace of mind that repairs are covered after the manufacturer’s warranty expires. But it may or may not be worth it depending on your situation. In general, auto repair insurance is worth it if you have a vehicle model with above-average repair costs. You can use resources like RepairPal and Edmunds to see the average annual repair costs for your model and year.

Many auto repair insurance policies are only available while your car is young — under 15 months for Geico and 2 years for Progressive, for example. That means you don’t have a whole lot of time to decide if you want to add this coverage.

You might not want to start paying for car repair coverage until your car is a bit older and more likely to break down, anyway. In that case, an extended car warranty can be worth it instead.

How does auto repair insurance compare to an extended warranty?

Auto repair insurance and extended car warranties both cover the same breakdowns due to mechanical failure. The difference is that auto repair insurance is an add-on backed by an insurance company while an extended warranty is a standalone contract backed by a warranty administrator.

States may regulate auto repair insurance differently than a vehicle service contract or extended warranty. For example, the California Department of Insurance has requirements depending on the contract obligor — the party that pays for claims.

If the obligor is a car insurance company, the coverage is mechanical breakdown insurance. California regulates how much an insurance company can charge for MBI policies. If the obligor is a different type of company or a car dealership then the plan is considered a vehicle service contract. California doesn’t regulate vehicle service contract prices.

How do payment terms differ between auto repair insurance and extended warranties?

If you purchase auto repair insurance, your insurance premium will increase for that period. You have the option to renew the repair insurance until your car is no longer eligible. In other words, you’ll make a monthly payment for as long as you have the auto repair insurance.

In contrast, extended warranty companies usually offer fixed prices for the entire contract term. When comparing quotes, you might find an option for 8 years/100,000 miles, for example. This plan will have a fixed cost that you can pay in a lump sum or break up into payments. Say you pay for the plan in 36 months. After making payments for three years, you have coverage for another five years as long as you haven’t hit the mileage cap.

We said “usually” because some companies like CarShield also offer unlimited month-to-month options. In this case, you’d make a monthly payment for as long as you have the warranty. These options tend to be affordable for shorter periods — under three years — but they become more expensive than traditional fixed-price plans over long periods.

How does vehicle eligibility differ?

Auto repair insurance is typically available for newer vehicles only. For example, you can only get Geico’s MBI plan if your car is 15 months old or newer, and you can renew it up to 7 years after that or until the car has 100,000 miles. You’d add this coverage while your new car warranty is still in effect.

Similarly, you can get Progressive Vehicle Protection as long as your car is under two years old. You can renew it until the vehicle is 8 years old. Progressive’s other option, MBI through Good Sam, is available on cars up to 15 model years old with 100,000 miles and it can last up to 18 model years/150,000 miles. That option is more in line with what extended warranties offer.

If your car is on the older side, chances are you won’t be able to get auto repair insurance. Your car can still be eligible for extended warranty coverage, though. For example, Endurance can cover up to 200,000 miles, Carchex can cover up to 250,000 miles and CarShield can cover up to 300,000 miles.

What’s next?

Auto repair insurance can help cover mechanical breakdowns after your factory warranty expires. That said, many programs are only available for newer vehicles and existing auto insurance customers. If you want longer coverage terms and more plan options, consider an extended warranty from leading providers.