People buy car insurance because they want to protect themselves financially if their car is damaged, but what happens when your insurance doesn’t cover a necessary repair?
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Engine failure is just one type of mechanical problem that isn’t covered by a standard car insurance policy. Even people who purchase full coverage aren’t covered for mechanical breakdowns, but there are optional coverages available that might help if you are stuck with a broken engine.
Traditional car insurance does not cover engine failure or other mechanical breakdowns
The only time a standard insurance policy will pay for engine failure is if the damage is caused by an accident or covered peril
Mechanical breakdown insurance is similar to a service contract and can be used to pay for engine failure
An extended warranty is a third-party service and maintenance agreement that covers unexpected damage and breakage not caused by an accident
Generally speaking, car insurance doesn’t pay for engine failure or the breakdown of mechanical parts in your vehicle. Car insurance is designed to cover damage that is sudden, unexpected, and accidental or beyond your control, like repairing your car after a collision.
Deterioration, basic maintenance, and wear and tear are all things that aren’t covered by your auto insurance policy. The only time a standard insurance policy will pay for engine failure is if the damage is caused by an accident or covered peril.
There are several different types of car insurance coverage that could potentially cover damage to your engine, including:
Liability: Liability coverage pays for damage you cause in an at-fault accident. This includes both bodily injuries and property damage. If you cause an accident that damages someone else’s engine, property damage liability coverage would pay to repair it. If the other driver is at fault for the accident, their liability coverage would pay to repair your engine
Collision: Collision coverage pays for damage to your vehicle due to an accident, no matter who is at fault. If you hit a cement pillar or rear end someone on the highway, collision coverage will pay for repairs after you’ve met your deductible. If your engine failure is caused by an accident, your collision coverage would pay to repair it
Comprehensive: Comprehensive coverage pays for damage to your vehicle that isn’t caused by an accident. Fire, theft, and flood are just a few examples of things covered by comprehensive insurance. If your engine failure was caused by a covered peril, comprehensive coverage would pay to fix it
Engine failure or other damage to the mechanical parts of your vehicle is not covered under a standard insurance plan. If you are concerned about paying for engine failure or other mechanical issues, you may be able to purchase mechanical breakdown insurance.
Also known as car repair insurance, mechanical breakdown insurance (MBI) is similar to a service contract or warranty sold by a car manufacturer. Mechanical breakdown insurance is usually only available when you buy a car, and not every car is eligible for the coverage. Depending on your vehicle’s age and mileage, MBI coverage may or may not be available to you.
You can purchase mechanical breakdown insurance as an endorsement on your auto insurance policy, but the coverage can also be purchased as stand alone coverage through a third party, similar to roadside assistance coverage. The coverage is designed to pay for mechanical issues that aren’t caused by a car accident, like if your air conditioner suddenly stops blowing cold air.
Mechanical breakdown insurance typically covers:
Electrical components, including computerized systems
Engine parts and systems
Engine failure is almost always included in MBI coverage. Every policy is different, however, so you will want to review the coverage carefully before purchasing car repair insurance.
An extended warranty, purchased to add coverage after your manufacturer’s warranty has expired, is a service and maintenance agreement that covers unexpected damage and breakage not caused by an accident. For example, if your transmission suddenly stops shifting gears and the damage wasn’t caused by an accident, your extended warranty would pay to repair or replace it.
Like mechanical breakdown insurance, extended warranties usually offer bumper-to-bumper coverage (with some exclusions) and must be purchased when your car is relatively new, though a brand new car does come with a manufacturer’s warranty. An extended warranty would most likely cover engine failure, depending on the specifics of your particular warranty.
You can purchase an extended warranty before or after your manufacturer’s warranty has expired, but extended warranties in general have less-than-stellar reputations, so read the fine print carefully if you choose to buy an extended warranty.
Mechanical breakdown insurance and extended warranties both cover the same issues, so how do you know which one is right for you?
|Mechanical Breakdown Insurance||Extended Warranty|
|Paid for annually||Paid for at the time of purchase|
|Cannot be transferred to another car||Can be transferred to another car|
|Can be cancelled at any point and payments will stop||Can be cancelled at any point and you will receive a prorated refund|
|Tends to last longer, up to 75,000 to 100,000 miles in most cases||Tends to expire before MBI, usually providing coverage for up to 36,000 miles|
It can be helpful to sit down with your insurance representative and review all of your options to decide if either MBI or an extended warranty is a good fit for your needs.
Gap insurance is a type of coverage that pays off the balance left on your car loan if your car gets totaled. It does not provide any coverage for engine failure or other mechanical issues.
If you have a loan on your vehicle and you are concerned about being able to afford an engine failure or other mechanical issues with your car, it is a good idea to purchase MBI or an extended warranty. That way, you aren’t stuck making payments on a car that doesn’t run because you can’t afford to repair it.
A standard car insurance policy does not cover mechanic negligence. If you believe your mechanic damaged your car, you can file a claim against their business liability coverage.
Car insurance only covers the cost of a rental if your car was damaged in a covered accident or by a covered peril, but even that coverage is only guaranteed if you chose to purchase rental car coverage as an add-on to your insurance policy. It isn’t a guaranteed benefit, so check your policy carefully to see how much, if any, rental car coverage you have available.
A standard car insurance policy does not cover non-accident repairs. However, there are some types of insurance that cover non-accident repairs that can be purchased as an add-on benefit. For example, roadside assistance coverage will make some small repairs (battery replacement, changing a tire) and MBI will pay to repair mechanical issues that were not caused by an accident.
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