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Auto repair insurance can save you money on costly auto repairs, especially on repairs other than damages that collision or comprehensive auto insurance won’t cover. Even warranties are limited or eventually expire and will no longer pay for replacement parts. The coverage is separate from your regular auto insurance.
What It Is
Paying monthly premium amounts covers vehicle repair bills that otherwise might cost you more money than you can afford to pay out of pocket. Auto repair insurance is an option available to help you budget unexpected auto repairs on your vehicle that can’t wait.
When buying a policy, you can customize it to cover specific types of mechanical breakdowns and particular parts, such as the transmission or brake system. But since companies vary in the coverage they offer, it’s important to check your policy for exclusions and parts that aren’t covered.
How It Works
Some auto repair policies have deductibles. Depending on the company offering the coverage, the policy may require that you have repair work done by a preferred mechanic or at an auto dealership. Other policies will pay for repairs done by a certified mechanic or auto repair center of your choice.
The insurance company may pay the mechanic’s bills directly or reimburse you for the cost of repairs. If you sell your vehicle before the service contract runs out, some companies allow you to transfer the contract to the buyer or give you a pro-rated refund for the remaining term of coverage.
Restrictions May Apply
Although bumper-to-bumper repair insurance covers most parts involved in operating your vehicle, coverage may be restricted. For example, policies often include limits on how much the insurance company will pay the repair shop. If the mechanic charges more money per hour for labor than your policy allows, you will be responsible for paying the difference.
What It Covers
While auto repair insurance is similar to a manufacturer’s or dealer’s warranty, you can get parts and mechanical repairs covered after your vehicle’s warranty runs out. If you buy a late model or pre-owned vehicle that isn’t covered under warranty, auto repair insurance provides coverage for breakdowns, wear and tear, and routine auto maintenance. Some auto repair policies also cover the cost of:
Towing
24-hour roadside assistance
A rental car while your vehicle is being repaired
Cost of Coverage
Policies for older vehicles with higher mileage usually cost more. The cost of repair insurance also varies based on the model, make, and year of the vehicle you cover, length of the coverage period, and types of coverage you choose.
You can buy auto repair coverage through:
companies
Auto dealers
Financial institutions that provide auto financing
.
