Auto Repair Insurance: Is It Worth It?

In most states, you're required to have auto liability insurance. Sadly, liability insurance doesn't cover your auto repair bill when your car breaks down. Instead, you can purchase auto repair insurance, also known as mechanical breakdown insurance, to cover your car repair bills for those times when your car inevitably breaks down. Here's what you need to know.

Benefits of Auto Repair Insurance

Purchasing insurance to repair your car can give you peace of mind that you will be able to get your car repaired even if you don't have the cash to pay for a large repair bill. Think of car repair insurance as a way to budget for auto repairs over a long period. Rather than trying to set money aside each month for the eventual car repair bill you know will come, auto repair insurance takes on the risk as long as you make your monthly payments. For people that have a hard time setting money aside or leaving their savings alone, car repair insurance makes sure you're covered when you need a large repair to get your car running again.

Disadvantages of Mechanical Breakdown Insurance

Mechanical breakdown insurance has downsides, as well. The claims process can be complicated. For instance, not all repairs are covered under your insurance policy and, even if an item is covered, it may not be covered at full cost. Getting a claim approved can eat up valuable time that you could use to get your car fixed. Once your claim is approved, you may only have a small list of providers to choose from, which may not include your favorite repair shop. Different policies have different limitations as far as what qualifies for a claim, so make sure to read the paperwork carefully before signing up for vehicle repair insurance.

Another common issue is the fact that coverage often expires at a certain vehicle age or mileage. Usually, the policy will expire right before cars historically start to have major issues. Even if you have a great policy, you may end up with an amazing car that never breaks down. If you do, the insurance companies won't refund your money and you'll be out the total amount of premiums you paid over the policy period. However, a more likely case involves paying more in premiums than the repair bills your insurance actually pays. In this case you still lose money, just not as much.

How Much Auto Repair Insurance Costs

Auto repair insurance quotes vary for many reasons. Different companies offer different rates for the same exact coverage. Sometimes, companies offer different levels of coverage that result in a higher or lower price than a competitor.

Some of the largest factors that determine the cost of car repair insurance involve your specific vehicle. Major factors include the make, model, age and mileage of your vehicle. Vehicle repair insurance companies have a large amount of data that allows them to calculate the cost of offering you insurance based on those, and potentially other, factors. They look at the history of other cars similar to yours and come up with a price to offer you coverage that should provide the insurance company a profit.

Prices also vary based on what level of coverage you choose, what deductible you choose as well as any fees or other costs associated with your policy and making a claim. For these reasons, the best way to determine the costs for your particular situation is to get a car repair insurance quote.

How to Get the Best Auto Repair Insurance Rates

If you have decided to purchase vehicle repair insurance, the way to get the best deal is to compare multiple quotes. After you receive quotes from insurance providers, compare the policies to see how they differ from each other. Then, pick the policy that fits your needs the best while still having a competitive premium.

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