The Value of Auto Repair Insurance

Owning a car is an expensive undertaking. Besides the cost of buying the car, finance charges, auto insurance, and rising fuel prices, the maintenance of a car can be a major expense. Auto repair coverage is meant to cover all your expenses for an extended period of time, if your automobile happens to break down.

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According to Fox Business, auto repair insurance, also called mechanical breakdown insurance is a service contract that gives additional protection, beyond extended warranties or after your warranty runs out. However, auto repair insurance does not automatically cover regular wear and tear as well as maintenance costs such as oil change etc.

Buying Auto Repair Insurance

Auto repair insurance can be bought from various vendors. You can buy it from the vehicle manufacturer, car repair insurance and extended warranty providers, and in some cases, from your car insurance company, or your bank if it provides automobile financing.

Auto manufacturer or dealer plans that are offered as additional coverage on extended warranties, when you are buying a new car can be expensive and limit your mileage. Such plans also require you to use the dealer for any repairs or parts needed.

Besides dealer plans, you can also opt for third party plans that are offered by insurance companies or your bank. If you are opting to get your insurance from a company that is a stand-alone extended warranty company, make sure you do your research. Focus on how they handle claims and look at their customer reviews. Additionally, examine the financial wherewithal of the company. A.M. Best Company provides the industry standard for financial ratings of insurance companies.

Questions to Ask Before Buying Auto Repair Insurance

Like any other purchase, you need to ask yourself some questions and make sure your answers are informed by research.

For instance, it is important to know how long you plan to keep your car and how much you plan to drive it. Certain insurance policies are limited by the number of years and miles you can cover.

Understand the terms and conditions of your manufacturer’s warranty. Then it will be easier to see how if the auto repair insurance policy fits and enhances your coverage.

Make queries about the auto repair insurance policy. Ask about what it covers and what it excludes. It is important to know whether the company has a fee schedule that dictates an upper limit per repair or per part.

Also, ask if the policy will allow you to take your car to any mechanic or repair shop. Some insurance policies will not pay if you use an out-of-network mechanic. This is important since AOL Auto found that independent repair shops were likely to be 34% cheaper, at an average, compared to car dealerships. That difference in price can sometimes be more than your premium!

You should also find out if the insurance company would pay your mechanic directly or reimburse you for the expenses. Direct payment to the mechanic is always preferable!

What Does Auto Repair Insurance Cover?

Auto repair insurance covers a variety of breakdowns for different lengths of time and distance traveled. For instance, a common bracket for most car repair insurance companies is six years or 100,000 miles.

Car dealerships or insurance companies offer drivers a menu of options. You can buy protection for specific parts of the car such as the engine including the oil pump, pistons, gears and valves, or for the entire system such as the electrical or brake components.

Since auto repair insurance is not mandatory, it is up to the driver to decide how much coverage they require. So besides the basic engine and transmission coverage, you can get insurance for the electrical, cooling, air conditioning, as well as wear and tear.

You should also ask if your auto repair insurance policy offers towing and rental car reimbursement, besides roadside assistance and help in case you lock yourself out of the car!

What Does Auto Repair Insurance Cost?

Much as car insurance, the insurance to cover mechanical breakdowns has no set price. From its length of coverage, type of coverage and number of miles to be covered, all factors influence the final cost.

In fact, even the type of car you drive makes a difference. According to U.S. News and World Report, certain cars cost dramatically less to repair as opposed to others. So if you are driving a super-luxury foreign car, you are likely to pay a premium!

Unlike auto insurance, auto repair insurance becomes more expensive as your car ages. Indeed if your car is more than five years old, you are likely to pay double as opposed to insuring a car that is less than five years old.

The mileage and condition of your car are also determinants. If your car has been regularly maintained and driven with care for less than average miles, you will pay less than a roughly handled car.

If you plan to get bumper-to-bumper auto repair insurance, it will cover major components such as engine, transmission, exhaust, drive train, brake system, and exhaust. However, body repair, broken lights, windshield wipers, and interior damage are not covered.

Depending on the type of coverage, your deductible can be as high as $300. Additionally, make sure you understand all hidden charges such as surcharges, taxes, and processing fees. These can add up quickly so account for them in your calculations.

Most auto repair insurance plan covers parts and labor. But make sure you find out the actual amounts they pay. For instance, if your policy pays $75 per hour for labor, and your mechanic charges $100 per hour, then you are on the hook for the extra $25 per hour. Depending on how long it takes to fix your car, this can be a substantial amount of money.

Lowering Your Auto Repair Insurance Cost

Also known as extended warranty coverage, this form of insurance is not regularly offered by your traditional car insurance company. So it is important that you closely examine the records of the auto repair insurance companies you consider. As a norm, it is better to opt for older established companies since extended warranty companies are known for going out of business, rather regularly.

Auto repair insurance can be a lifesaver if you receive a huge repair bill because of a mechanical breakdown. But given the unpredictable job market and the uncertainties of the economy, it is important to get the best deal possible for your auto repair insurance policy. Some of the steps are:

Shop around. Like your regular auto insurance, you must shop around to get different quotes from different companies. Whether you go online, talk to an agent, or get a recommendation from a friend or relative, please do your due diligence and check out the innards of the company thoroughly.

Make sure you read the fine print of the insurance policy. This can save you a lot of headache later. Understand clearly what is covered and what is not, what your deductible and premium are, who can fix your vehicle, and how long it takes to clear a claim.

If the price of the auto repair insurance policy is too low, it might be too good to be true. So buyer, beware!

Never pay the entire amount upfront. If you do, you are likely to wait a long time for reimbursement. Most legitimate companies do not require you to pay the entire amount. So ask how the company’s claim system works before you sign up.

Do not buy pre-paid insurance contracts. Such contracts usually have hidden fees, surcharges, repair exclusions and might not be acceptable at every repair shop. Additionally, such third-party sales are likely to have less friendly customer service.

Another way to lower your auto repair insurance is to take care of your car. If you keep up with the maintenance schedule, get regular oil changes, and drive your car carefully, you will lower your auto repair insurance bill.

It is important to remember that making a claim on your auto repair insurance policy will not impact your regular auto insurance. Any damage you have repaired under your auto repair policy must be caused by mechanical failure and not an accident. If the mechanical failure occurs because of an accident, then your collision coverage will take care of it.

Buying Auto Repair Insurance

If you have decided to get auto repair insurance to supplement your traditional car insurance policy, you have multiple options. You can talk to your car insurance company and find out if they provide mechanical breakdown insurance. If they don’t, they might be able to suggest a reputable company or more.

The Internet is another great resource. You can get a plethora of quotes from various insurance company websites or auto repair insurance consolidator services. But be careful and make sure you find out about the financial condition and customer service record of each company you consider.

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