Car breakdown insurance is coverage that takes care of major repairs on your vehicle. With that said, there are some things you should know about it before taking out this coverage. There are limitations on the type of vehicle that can be insured in this way, and limitations on the kinds of repairs that will be covered. Furthermore, the owner is expected to be proactive in keeping up with maintenance events such as oil changes and tune-ups. Not attending to these small repair and maintenance requirements can cause your vehicle not to qualify for coverage.
What is Covered
Car breakdown insurance doesn’t cover small repairs such as brake linings, hoses, or similar items. What it does cover, keeping in mind that different companies might write different conditions into their policies, are those big-ticket expenses that leave you wondering whether it might be easier to take a cab or ride the local bus and also help when broken down at the roadside. It covers repairs such as rebuilding or replacing a motor or transmission, replacing a head gasket or doing some sort of major repair on your vehicle’s drivetrain. In other words, the kinds of repairs that usually amount to more than $1,000, and sometimes come to $2,000 or even $3,000.
Not all Vehicles are Insurable
Don’t expect to insure your vintage collector car or your battered, but well-loved jalopy. Insurance underwriters understand the probability of whether a vehicle is likely to break down. Aged vehicles that have a lot of miles on them are unlikely to qualify. In fact, most policies require that you purchase them while your vehicle is still under warranty. In fact, breakdown insurance has a strong resemblance to an extended warranty.
But before you decide this isn’t for you, let’s take a look at some important differences.
Extended Warranty vs. Breakdown Insurance
An extended warranty often covers smaller repairs and might have a lower threshold for deductibles than breakdown insurance. Depending upon the warranty, some might cover those routine maintenance items such as oil changes on the principle that they will help prevent those high-dollar repairs down the road. That’s the upside of the extended warranty. The downside is that extended warranties sometimes only cover major repairs, such as motors and transmissions, and only cover the parts involved – especially if they are factory warranties. An extended warranty is expensive and often requires a big payment up front that might not be included in your car payment. Where the two kinds of coverage are very similar is that both are likely to run out when your vehicle reaches a certain number of miles on the odometer. That magic number is often 100,000 miles but might be less. If you spend a lot of time behind the wheel, think about just when that magic number might roll around if you continue to drive the same number of average miles per day/month/year that you drive now.
Advantages of Having Both a Warranty and Breakdown Insurance
If you have a car or truck that’s less than 15 months old and has been driven less than 15,000 miles, it’s a good candidate for breakdown insurance. Many vehicle warranties only cover the first two years of ownership, but in order to qualify for breakdown insurance, many companies require that you begin it while the vehicle is still under warranty. Your warranty will continue to cover those complementary oil changes and tune-ups offered by the company, but if your still pretty-new vehicle’s transmission decides to blow up the day after the warranty expires, the breakdown insurance will get you back to the nearest town or the closest qualified mechanic.