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Home / Articles / Columnists / Happy Motoring /  Is Auto Repair Insurance Necessary?
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Thursday, July 6,2017

Is Auto Repair Insurance Necessary?

By Teresa Aquila  


You see commercials on TV and emails in your inbox trying to persuade you to pur- chase Auto Repair Insurance. Most can be very convincing. So is this a wise choice to make? The way this type of insurance is supposed to work is simple. Purchase the coverage for your vehicle while it’s still in proper running condition. Pay a premium either as a lump sum, monthly, annually, or some combination thereof. Once you’re covered, if you experience mechanical issues that require repair, the insurance is supposed to cover the cost, allowing you to avoid a hefty mechanic bill. This type of insurance is marketed as a great option for people whose car is out of warranty, offering peace of mind in the face of potentially costly repairs.

Before going out and purchasing car repair insurance, it’s important to take a look at whether it’s actually worth the cost.

There is nothing more frustrating than paying for insurance only to find out that your particular repair isn’t covered. Frequently, you can only purchase this type of insurance while the vehicle is still relatively new, sometimes no older than 18 months old. New cars are still covered by a warranty, so you may be paying in advance for coverage that isn’t entirely necessary. This benefits the insurance company because they’re receiving money for a vehicle that is very unlikely to require immediate repairs, especially if it’s still covered by the warranty.

“A number of these third-parties (auto warranty companies) are flyby-night operations that go belly up within a few years, costing consumers hundreds of dollars in out-of- pocket repairs and leaving them without coverage. A third-party warranty is so named because it has no direct business relationship with the product it covers, in this case, your car.”

When your car breaks down, that is not the time to find out that the insurance policy isn’t worth the spoke about this very topic on paper it was written on. I recently Teresa’s Garage Radio Show, in hopes of educating those contemplating owning such a policy. People know that car ownership can be expensive on the upkeep, especially when the car breaks down.

If you are considering purchasing such a policy, here is some advice.

First, do your research, and do not go with those who “claim” to have the best coverage, like a bumper-tobumper warranty. If you do not read the fine print, it may only cover the bumpers. All kidding aside, these policies can be specific, or cover just the transmission and drive train components, but not the engine. Wording in the policy can be misleading.

Again, researching to find a reputable company is the key to keep from being scammed, and being in good hands.

Mechanic shops are not obligated to accept your third-party Repair Insurance, and in most cases will not negotiate pricing with the Insurance Company. You may need to pay upfront and then deal with your claims adjuster to obtain payment. Some policies are limited to an hourly rate, which may not always be what the shop charges, leaving you to pay the difference. This can also go for the parts that are to be installed. If you do elect to purchase a policy, make sure that you person- ally understand everything before paying up. Find out what kind of repairs the policy exempts from coverage, as well as how and when the deductible is applied, and whether or not you can choose your own mechanic.

"Buyer Beware" is a saying used often to alert consumers, and holds true for this type of coverage. So before you sign on the dotted line, insure you have made a wise decision, and know that you’re getting what you are paying for.

Happy Motoring


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