Car Repair Insurance

Car repair insurance can help manage surprise repair bills when your vehicle breaks down, offering optional protection beyond a factory warranty and predictable costs for drivers concerned about long-term ownership.

What Is Car Repair Insurance?

Car repair insurance, more formally known as Mechanical Breakdown Insurance (MBI), is an insurance product that helps pay for covered mechanical and electrical repairs when your vehicle breaks down. Unlike a manufacturer’s warranty, which is included with a new car purchase, MBI is a true insurance policy issued by an insurance company and regulated by state insurance departments.

It is also different from standard auto insurance, which only covers damage from accidents, theft, weather, or liability claims, and does not pay for mechanical failures. MBI typically covers major components such as the engine, transmission, and drivetrain, and is often added as an optional endorsement to an existing auto insurance policy rather than purchased as a standalone warranty.

How Does Car Repair Insurance Work?

Car repair insurance works much like other types of insurance, following a clear lifecycle from purchase to claim. To buy a policy, your vehicle must usually meet eligibility requirements related to age, mileage, and condition, and coverage is often added to an existing auto insurance policy. Once the policy is active, you pay a monthly or annual premium and agree to a deductible, commonly around $250, each time a covered repair is needed.

When a mechanical breakdown occurs, you take your vehicle to a licensed repair shop of your choice, have the shop diagnose the problem, and file a claim with the insurer before repairs begin. If the repair is approved, the insurance company typically pays the repair shop directly for the covered portion of the work, leaving you responsible only for your deductible and any non-covered costs.

How Much Does Car Repair Insurance Cost?

Car repair insurance is generally inexpensive compared to most major auto repairs. Most policies cost between $30 and $100 per year, depending on your vehicle’s age, mileage, make, and the level of coverage selected.

Some insurers charge a small monthly amount instead, but the annual cost typically stays well under $150 for eligible vehicles. In exchange, you agree to a deductible, often around $250, each time you file a claim, which means MBI is designed to protect against larger, unexpected repairs rather than minor fixes.

To put that cost in perspective, here’s how a typical MBI premium compares to common out-of-pocket repair expenses drivers often face:

For example, a single AC compressor failure can easily cost ten to fifteen times the price of an entire year of MBI coverage, making car repair insurance appealing to drivers who want protection from large, unpredictable repair bills rather than budgeting for every possible breakdown.

Car Repair Insurance vs. Extended Warranties

Car repair insurance and extended warranties are often lumped together, but they work very differently. Mechanical Breakdown Insurance (MBI) is usually the lower-cost option, with modest annual or monthly premiums instead of a large upfront payment.

Extended warranties, more accurately called “vehicle service contracts,” are typically paid in full at purchase or financed into a loan. This can make them feel less expensive initially, even though they often cost more over time.

MBI is regulated by state insurance departments, which means pricing, claims handling, and consumer protections are overseen like other insurance products. Extended warranties are service contracts governed by contract law rather than insurance law.

Here’s a side-by-side glance at both:

What Does Car Repair Insurance Cover?

Car repair insurance typically covers major vehicle systems that are expensive to fix when they fail. Coverage commonly includes the engine, transmission, drive axle, steering components, cooling system, and key electrical systems that keep the vehicle running properly.

These policies are designed to protect against sudden mechanical breakdowns, not routine upkeep or gradual deterioration. As a result, maintenance items, normal wear-and-tear, pre-existing conditions, and damage caused by neglect or lack of proper maintenance are generally excluded from coverage.

EV-Specific Repair Insurance

Electric vehicles have very different repair risks than gas-powered cars, and many articles gloss over that distinction. Instead of engines and transmissions, EV repair costs are driven by battery health, power electronics, onboard computers, and specialized cooling systems designed to manage battery temperature.

EV-specific repair insurance or EV-compatible MBI policies may cover components such as the high-voltage battery (often with limits), battery management systems, inverters, onboard chargers, electric motors, and advanced electronic control modules. These parts are highly specialized, require certified technicians, and can be extremely expensive to repair or replace compared to traditional mechanical components.

At the same time, EV policies often come with stricter exclusions and conditions. Battery degradation from normal use, loss of range over time, software updates, and problems tied to improper charging or lack of required maintenance are usually excluded.

Because EV repair insurance varies widely by insurer and vehicle model, coverage details matter more than the policy name, making it especially important to understand exactly which electronic and battery-related systems are included before assuming protection exists.

Is Car Repair Insurance Worth It?

Car repair insurance can make sense when you compare the relatively low cost of coverage to the price of major repairs. A typical Mechanical Breakdown Insurance (MBI) policy typically costs around $50–$100 per year, while common repairs, such as a transmission failure, can run anywhere from $3,000 to $5,000. Even a smaller repair, like an AC compressor, can easily exceed $1,000.

That said, it isn’t a universal fit. Car repair insurance tends to be most valuable for drivers who would struggle to absorb a sudden $2,000 or higher repair bill without financial stress, especially those planning to keep a vehicle for several years.

For drivers with newer cars, limited savings for emergencies, or a low tolerance for unpredictable expenses, the trade-off of paying a small annual premium for protection against large, unexpected repairs can be a reasonable one, even knowing that not every policyholder will ever file a claim.

How To File A Car Repair Insurance Claim

Filing a car repair insurance claim is usually straightforward, but timing and documentation matter. Following the correct steps helps prevent delays, denials, and out-of-pocket surprises.

Six-Step Claim Process:

1. Verify coverage and stop driving if necessary. Confirm your policy is active and understand your deductible. If driving could worsen the problem, stop to avoid a denial for secondary damage.
2. Choose a licensed repair shop and disclose your coverage. Use a reputable shop and tell them you have car repair insurance or MBI before diagnostics begin.
3. Get a diagnosis and written estimate. The shop should identify the failure and prepare a detailed estimate covering parts, labor, and related costs.
4. Open a claim with the insurer. Contact the insurer with your policy details, vehicle information, mileage, and the repair shop’s estimate.
5. Wait for authorization before repairs start. Do not approve repairs until the insurer gives approval; they may request records, photos, or a teardown.
6. Pay your deductible and collect documentation. Once repairs are complete, pay your deductible and any non-covered items, and keep all invoices and records for your files.

When used correctly, car repair insurance can turn a stressful breakdown into a manageable inconvenience rather than a major financial setback.