Car repair insurance is a specific type of insurance that's also often referred to as mechanical breakdown insurance (MBI). It covers pre-determined systems in your car, along with coverage for the repair bill should any of these systems breakdown for a covered cause.
Today, we're going to take a look at this specialty insurance and discuss whether it's worth buying.
What Does MBI Cover?
Specific coverage and exclusions will vary based on the car repair insurance provider. We can, however, make some generalities on systems that are typically covered:
At the same time, there are some areas that are not usually covered by this insurance, such as:
- Repairs that are part of regular maintenance
- New filters
- New brake pads
- New spark plugs
- New tires
- Any fluids
These exclusions tell us that an MBI is not going to cover maintaining your vehicle, but it will cover major breakdowns.
When Can I Buy Car Repair Insurance?
Mechanical repair insurance is often sold by automakers and car dealers. You can also buy it after you've already purchased your car, though. Some third-party companies sell these policies directly to consumers, just like vehicle service contracts.
Most MBI providers have specific limitations to purchasing one of their policies.
Buy It Early
The exact numbers will vary by provider, but every MBI provider will require that you purchase the insurance early on in your vehicle's life. The requirement level will be based on years or mileage, whichever comes first.
You Have an End Date
When we think about anything with the word "insurance" in the name, we typically think that coverage will last forever. With an MBI, coverage will end once your car reaches a set number of miles or years.
Speaking in generalities, car repair insurance will have a deductible ranging from $50-$250, depending on your provider. Make sure to clarify this deductible before you make your purchase.
Is Car Repair Insurance Worth It?
For some people, car repairs are terrifying, and they'll do everything they can to have the peace of mind that comes with having them covered. For most people, however, car insurance repair is simply not worth it. Here's why:
Your Coverage Will Overlap
Since you need to buy the insurance early on in your car's life, you'll already have the manufacturer's warranty protecting you from most major repairs. This means that you won't even use your insurance until after your warranty expires, with the exception of a part covered by your insurance, but not your warranty.
You Won't Have It When You Need It
Modern cars are designed to be highly reliable and sturdy for their first seven years or 100,000 miles. Unfortunately, this is the average cut-off for the time period during which MBI will cover your car. You'll likely be stuck without an MBI policy when you actually start to need it.
You Probably Don't Need It
Mechanical breakdown insurance is only worth the added peace of mind. You may discover that you don't even end up using it, which means that it's probably not worth your hard-earned cash.