Paying for car repair can be a scary experience since costs can compound quickly, and in most cases catch you by surprise. Car issues that aren't the result of an automotive accident are not expected, so the pain of having to pay someone to make your car run the way it did several days before feels unnecessary. There are some companies out there who claim to offer a solution to the car owner's repair woes; car repair insurance companies. But is purchasing car repair insurance actually worth it? Let's take a closer look.
The way this type of insurance is supposed to work is simple. Purchase the coverage for your vehicle while it's still in proper running condition. Pay a premium either as a lump sum, monthly, annually, or some combination thereof. Once you're covered, if you experience mechanical issues that require repair, the insurance is supposed to cover the cost, allowing you to avoid a hefty mechanic bill. This type of insurance is marketed as a great option for people whose car is out warranty, offering peace of mind in the face of potentially costly repairs.
Before going out and purchasing car repair insurance, it's important to take a look at whether it's actually worth the cost. There is nothing more frustrating than paying for insurance only to find out that your particular repair isn't covered. Frequently, you can only purchase this type of insurance while the vehicle is still relatively new, sometimes no older than 18 months old. New cars are still covered by a warranty, so you may be paying in advance for coverage that isn't entirely necessary. This benefits the insurance company because they're receiving money for a vehicle that is very unlikely to require immediate repairs, especially if its still covered by the warranty.
Another potential problem has to do with exclusions in the coverage. This could mean that the insurance company will deny your claim if they decide that whatever vehicle repair you need is the result of your negligence, which, as an insurance company, would be in their best interests to prove. As with most other insurances, you'll also have to pay a deductible in the event of a breakdown. The insurance may also only allow you to work with certain repair facilities, which may prove problematic if you want to work with a mechanic of your choice.
There are some upsides to car repair insurance, at least when compared to extended warranties offered by car dealerships and vehicle manufacturers. Insurance is easier to cancel, as it's usually paid on a monthly or annual basis, whereas extended warranties are paid upfront as a lump sum. Since in some states they fall under the jurisdiction of the insurance regulator, they may also offer stronger coverage and pricing than an extended warranty would.
So is car repair insurance worth it? The answer will depend on the quality of your policy, but if you are following your vehicle's maintenance schedule properly and addressing any potential issues quickly, there is no reason why you couldn't just set aside a certain amount of money each month in the event of a major mechanical breakdown. If you do elect to purchase a policy, make sure that you personally understand everything before paying up. Find out what kind of repairs the policy exempts from coverage, as well as how and when the deductible is applied, and whether or not you can choose your own mechanic. And if you need help finding the right mechanic, we're always here to help.
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