An auto repair insurance policy can help save money by paying for needed parts and car repairs if your vehicle breaks down. Auto repair insurance comes in two forms—extended car warranties and mechanical breakdown insurance policies. Both types of coverage provide varying degrees of protection and may include only a few systems on a vehicle or provide coverage for almost every part or system on a vehicle.
Auto repair insurance differs from regular car insurance in that your car need not be involved in an accident in order for the coverage to pay claims to help repair your vehicle. Sometimes the vehicle simply breaks down or parts wear out. If the part or repair is covered under the terms of your policy contract, the insurance company will pay for the cost of repairing your vehicle and you will only be required to pay a relatively small deductible.
An extended warranty is a type of car repair insurance that is usually offered by most dealerships at the time of a new or used vehicle sale. Some extended warranties pay for repair of major parts and car systems only, while some extended warranties provide more of a bumper-to-bumper type warranty coverage that is similar to the car manufacturer’s new car warranty. Extended warranties are available for new and used cars and provide varying degrees of warranty protection. The cost of extended warranty will generally range from only a couple of hundred of dollars to several thousand dollars. However, all extended warranties are only valid after the manufacturer’s new car warranty has expired.
Mechanical breakdown insurance policies are another common form of car repair insurance. These types of policies are offered by more traditional car insurance companies and allow drivers to pay monthly premium payments that provide coverage for parts and repairs of included parts and systems. Like extended warranties, mechanical breakdown insurance policies vary in the amount of coverage they provide and are generally only valid as long as you keep your insurance premium payments current and your policy has not been canceled.
Auto repair insurance policies are also very convenient for people that don’t know very much about vehicles, and simply want to have the ability to drop their vehicle off for repair and have the repair shop deal with the insurance company directly. Some policy providers of auto repair insurance will pay the repair shop directly, and the customer need only pay the deductible to the mechanic or repair shop.
One of the biggest potential drawbacks with many auto repair insurance policies is the fact that there are usually some major exceptions in these policies. While many auto repair insurance policies will cover major systems such as the engine, fuel system, transmission and drive train, there are many other parts of the car that the policy may not cover and for which the car owner will be responsible to pay for.
Also, some auto repair insurance policies may require the payment of multiple deductibles for a single car repair. Some extended warranty companies and mechanical breakdown insurance policy providers require that the customer make a small deductible payment for each part required to repair vehicle. The combined cost of the multiple deductibles can often amount to significant out-of-pocket costs for the car owner.
Another common complaint with many types of auto repair insurance policies is the fact that the customer must pay for the repair first, and then submit a claim to the insurance company for reimbursement. Many people purchase extended warranties or mechanical breakdown insurance policies assuming that the insurance company will pay the repair shop or mechanic directly.
While some insurance companies do actually pay directly, many companies still require that the policy holder pay first and then request reimbursement. This often results in the customer having to make large out-of-pocket payments, and then wait for several months before he/she is reimbursed.
Auto repair insurance policies can help you save a lot of money on needed car repairs and the parts needed for those repairs. However, you should carefully research different auto repair insurance offerings and try to find a policy that maximizes coverage and is affordable. Also, you should make sure that the policy covers repairs you feel are important and provides quick and fair handling claims.