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Auto Repair Insurance or Extended Warranty?

Nationally, the average cost of car breakdowns is $652 per year. Some car brands are more reliable than others, but inevitably, every car will need parts repaired or replaced, and these costs don’t include car maintenance, gas, or car insurance.

According to AAA, a new vehicle costs an average of $1,186 per year to maintain and repair, so you can only imagine how much an older vehicle costs. One of the best ways to get coverage beyond your manufacturer’s warranty is to purchase added protection, such as auto repair insurance or an extended warranty.

Below, we explain these two options, and why extended warranties from CARCHEX may be the better choice.

What Is Auto Repair Insurance?

Car insurance is different than car repair insurance. Car insurance protects you in the case of theft or an accident. It’s legally required for driving in almost every state, just as bodily injury liability (BIL) and property damage liability coverage may be required. However, there’s a lot that car insurance doesn’t cover, such as car maintenance costs.

Auto repair insurance protects you from unexpected mechanical breakdowns caused by normal vehicle use, such as breakdowns that occur outside of a collision. This coverage extends beyond your factory warranty that typically only covers repairs or replacements due to poor workmanship or manufacturer error. Coverage options vary, and so do deductibles, normally ranging from $100 to $300.

Here’s what you can expect from auto repair insurance:

  • When a breakdown occurs, quickly notify your car repair insurance provider and file a claim. They will walk you through the process and determine if the problem is covered by your plan.
  • Some companies require an inspection of the vehicle before moving forward. Either way, a diagnosis and estimate will be determined at the repair shop, and this will inform the next steps.
  • Depending on your plan and coverage, the provider will either reimburse you or pay the repair shop directly.

Who Provides Auto Repair Insurance?

Auto repair insurance is offered by companies like GEICO or Mercury Insurance. To qualify for GEICO, your car needs to be less than 15 months old, and have less than 15,000 miles on it. If you have an older vehicle or a high-mileage car, we recommend an extended warranty plan from a third-party provider like CARHEX. We offer vehicle service contracts, which cover mechanical breakdowns and everyday wear and tear.

Comparing Auto Repair Insurance and Extended Warranties

An extended auto warranty, also called a vehicle service contract, covers repairs and replacements due to mechanical breakdown. Typically, you get the option of bumper-to-bumper coverage, powertrain coverage, or something in between. Many providers also include roadside assistance and other benefits in their plans.

Should anything unexpected happen on the road, you want to make sure you have the best protection available. There are many perks to choosing extended warranties over car repair insurance. Here are a few things to consider when comparing these two options:

  • Car repair insurance plans don’t last as long as extended warranties from third-party providers. For example, auto repair insurance may stop your coverage at seven years, but CARCHEX extended warranties can last up to 10 years.
  • Auto repair insurance plans typically need to be purchased at the time of your car purchase, so you can’t exactly wait and see if you want it. An extended warranty can be purchased at almost any time.
  • You must get pre-authorization from your insurance provider before getting the repair or replacement. If the repair facility isn’t in the insurance provider’s network, then you won’t get covered. On the other hand, many warranty companies like CARCHEX don’t require pre-authorization.
  • Refunds are not typically offered by insurance companies. However, the best extended warranty companies offer a 30-day return option.

Why Get Extended Warranty Protection: Is It Worth It?

Trucks and SUVs account for almost 70% of the U.S. market and are considered some of the most long-lasting vehicles bound to outlast your car warranty. You’re not required to buy extended warranty protection when your car warranty ends, but there are many reasons why you should. If you plan to keep your vehicle for many years, then you can expect some breakdowns and repairs.

One of the biggest benefits of buying an extended warranty on a used car is peace of mind. You can’t predict if your carburetor will fail or if your engine will stop working, but if it does and you’re not covered, you’ll have to face the out-of-pocket expenses.

Here are some costs you can avoid with a vehicle service plan (labor not included):

  • Replacing front brake rotors and pads costs between $243 and $890.
  • Replacing an alternator costs between $271 and $649.
  • Replacing a door window regulator costs between $101 and $164.
  • Replacing a radiator costs between $295 and $601.

Extended warranties aren’t meant to replace car maintenance—they’re meant to protect you from unexpected repairs and replacements. If paying out-of-pocket for any of these repairs would put a strain on your budget, then an extended warranty can provide peace of mind.

CARCHEX Extended Vehicle Protection Plans

Now that you understand the differences between auto repair insurance plans and extended warranties, take a look at CARCHEX’s vehicle service coverage plans:

  • Titanium Coverage—Lasting up to 10 years, this bumper-to-bumper plan offers the highest level of coverage, providing maximum breakdown protection.
  • Platinum Coverage—This is a great option for stated-component coverage. All major systems are covered in this plan, including electrical, heating and cooling components, suspension, and more.
  • Gold Coverage—Ideal for older vehicles with over 60,000 miles, this plan covers all major systems and offers flexible terms.
  • Silver Coverage—This “powertrain plus” warranty offers a little more coverage than CARCHEX’s basic Bronze plan. Up to seven year plans are offered depending on your vehicle.
  • Bronze Coverage—The engine, transmission, and other major systems are covered until this powertrain warranty. If you have an older pre-owned vehicle, this is a good plan.
CARCHEX Vehicle Protection Plans

Benefits of Extended Warranty with CARCHEX

Mechanical breakdowns happen when you least expect them, so be prepared and get the peace of mind you deserve with CARCHEX. Here are some of the benefits of buying a protection plan from CARCHEX:

  • Up to 250,000 miles covered
  • 24/7 roadside assistance for members of any CARCHEX plan
  • Towing, rental car, and trip interruption service so you don’t get stranded
  • Gas delivery
  • Flexible plan options so you get the plan you need
  • Consultation from our expert customer service representatives
  • Excellent customer service
  • 30-day back guarantee on all plans
  • No-Haggle, Low-Price, Everyday Guarantee™

CARCHEX has received an A+ rating from the Better Business Bureau and for good reason: we prioritize customer satisfaction and ensure you get the coverage you need at a price you can afford.

Our plans are good choices for any car owner, but especially those with older or pre-owned vehicles. Get a free quote today by calling 866-261-3457 or filling out our online form.

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Questions to Ask When You’re Looking for Car Coverage

When shopping for coverage on your vehicle, whether auto repair insurance or an extended warranty, you want to consider all of the following:

  • What parts are covered in my plan? Don’t assume all parts are covered by your plan. Make sure you read the fine print, as many repair insurance plans have hidden fees or don’t cover as much as you expect.
  • Is roadside assistance included? Roadside assistance usually includes flat tire service, gas delivery, trip interruption services, and other benefits.
  • Am I covered if I need a rental car or a hotel room for the night? Trip reimbursement is important if you have a breakdown far from home and have nowhere to go. You don’t want to have to pay for those extra costs yourself.
  • Do I have to visit a specific repair facility? With manufacturer warranties, you have to visit their approved service centers for a necessary repair, but the best protection plans include more flexible repair options.
  • How long is the claims process? When your vehicle breaks down, you need to get it to a repair shop as soon as possible. You don’t want a slow claims process to prevent you from using or repairing your car.
  • When can the plan be purchased? The provider may have restrictions on when you buy the plan based on the age or mileage of your car.
  • How long does the insurance last? Regular car insurance doesn’t usually last as long as vehicle service contracts. Insurance typically lasts between six months and one year. Vehicle service contracts last much longer and cover high-mileage vehicles.

No matter what policy you choose, make sure you always read the terms and conditions of the provider’s plan before purchasing. The best providers put their agreements online, so you can review while you shop.

Q&A: Car Repair Insurance

How high are auto repair insurance deductibles?

This depends on the insurance company, but deductibles are typically $100 or more. For example, GEICO charges $250. With CARCHEX, you can choose a $0 deductible or something higher that will lower your monthly payment.

Does car repair insurance include engine protection?

A blown engine is an expensive problem. If you own an older vehicle, it could cost more than the vehicle itself. An engine rebuild costs between $2,500 and $4,000 for parts and labor. In general, both auto repair insurance and extended warranties cover the engine. Check your contract to know for sure.

Sources:

Repair: https://repairpal.com/reliability

AAA: https://newsroom.aaa.com/tag/cost-to-own-a-vehicle/

NerdWallet: https://www.nerdwallet.com/blog/insurance/car-insurance-basics/what-does-car-insurance-cover/

Automoblog: https://www.automoblog.net/2019/09/16/auto-repair-insurance/

WalletHub: https://wallethub.com/edu/oi/car-repair-insurance/10869/

Bloomberg: https://www.bloomberg.com/opinion/articles/2019-07-12/small-cars-are-being-driven-out-of-existence-like-the-vw-beetle 

Chicago Tribune: https://www.chicagotribune.com/autos/chi-top-20-longest-lasting-vehicles-20140318-story.html 

Consumer Reports: https://www.consumerreports.org/car-maintenance/car-repair-red-flags-older-vehicles/ 

Better Business Bureau: https://www.bbb.org/us/md/hunt-valley/profile/extended-warranty-contract-service-companies/carchex-0011-23015869

Car Insurance Companies: https://www.carinsurancecompanies.com/how-long-can-car-insurance-last/

GEICO: https://www.geico.com/claims/claimsprocess/understanding-mechanical-breakdown-claims/ 

CarBrain: https://carbrain.com/Blog/my-engine-failed-how-much-does-an-engine-rebuild-cost 

CARCHEX 118 Shawan Road, Suite 210 Baltimore, MD 21030 (FL License # E155490)

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We proudly offer the CARCHEX No-Haggle, Lowest Price Everyday Guarantee™ for all of our auto warranty and car inspection programs.
Consistent with consumers’ understandings and expectations of the market in which CARCHEX operates, CARCHEX uses the terms “warranty”; “extended warranty”, “extended auto warranty”, “extended service protection plan” and similar terms to describe the more technical term “vehicle service contracts”. For more information, see this FTC link or learn more here or by reviewing CARCHEX’s website.
CARCHEX markets and sells extended warranties on behalf of third party extended warranty providers, and your extended warranty will be between you and the provider. This website site is intended solely for the purpose of providing general information regarding the purchase of extended warranties. Specific contract terms, rates, taxes, fees and other charges are determined upon validation of vehicle information and acceptance by the extended warranty provider, for which CARCHEX is not responsible. Extended warranties may not be sold where prohibited by law.
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