Unless you are one of those fortunate people who can trade in your vehicle each year for a new one, a trip to your auto repair shop can be a costly adventure. When your auto mechanic approaches you and says something like, “I have some good news and some bad news,” you can expect your pocket book to suffer. The good news is usually that your vehicle can be fixed. The bad news is that it is going to cost a lot.
Expensive Auto Repairs
You can count on any repair that involves the motor or transmission to run into the thousands of dollars. In some cases, you are almost better off to simply buy a new vehicle. Sadly, your personal budget might not be prepared for the impact of a monthly car payment. This can leave you with some challenging decisions to make. You could purchase a used car, you could make a deal with your auto mechanic to make payments on the repair, providing that he is willing. Or you could become a stay-at-home recluse and order all your food and furnishings online. At this point, it is too late to purchase breakdown insurance coverage, but it is not too late to plan for your next vehicle.
When to Buy Breakdown Insurance
The time to buy bike breakdown insurance is while your vehicle is still under warranty. It is most useful for vehicles that are less than 15 months old and have been driven less than 15,000 miles. Breakdown insurance is almost like an extended warranty, but less expensive and with fewer restrictions. A warranty might include a specific list of parts that can be replaced and require you to use a particular repair shop. With breakdown insurance you have more freedom of choice. With that said, there are some restrictions on what a breakdown policy will cover.
Breakdown Insurance Coverage
Breakdown insurance will cover major repairs. Routine maintenance will usually cost less than the deductible, but it does have the advantage of bumper to bumper coverage without having to consult a list to see what is covered, as might be the case with an extended warranty. Therefore it doesn’t matter whether it is the motor, transmission, drivetrain or even the air conditioner, high dollar repairs can be covered by your insurance. It is very similar to an extended warranty but has the advantage of being paid out over time rather than requiring one upfront purchase.
Disadvantages of Breakdown Insurance
The disadvantages of breakdown insurance include lack of refundability and finite duration. Insurers are fully aware that after a vehicle is seven years old repairs are required more frequently. After your vehicle is seven years old or has been driven for 100,000 miles, it no longer qualifies for breakdown insurance. Often, it will no longer be eligible for an extended warranty, either.
Vehicle Owner Options
Since breakdown insurance and extended warranties tend to end in the same time frame, your options as a vehicle owner might be limited. But that doesn’t mean that you can’t take advantage of the security of breakdown insurance in the short term while planning for the long term. Some ideas might include enrolling in a service plan with your auto mechanic. While your breakdown insurance is in effect, make small deposits that match the amount of your premiums in a savings account, or even add a little extra. That way, when the policy runs out, you will still have a cushion to manage those big repair bills. You could also consider trading or selling your vehicle when it becomes uninsurable or if it is already past the age for breakdown insurance and make sure that your new vehicle is covered.