Does Auto Insurance Cover Repairs?

As a driver, auto insurance is a must-have. But what does it cover? Will it pay for mechanical failures or breakdowns? What complementary services do you need to cover gaps between your maintenance needs and your insurance coverage? We have the answers. 

What is (and isn't) auto insurance?

Auto insurance, which is generally required by law to have in the US, is built around the concept known as liability. Liability usually involves more than one party and occurs in the event of an accident or external force damaging yours or another person's vehicle. This is when—depending on your type of coverage -  your insurance provider kicks in to pay or reimburse for covered damages after you've met any deductible.

Auto-related issues occurring from everyday use typically have nothing to do with liability and are therefore usually not covered by your auto insurance policy. That could potentially put drivers in a financial jam since mechanical breakdowns are pretty much inevitable and repair bills are prone to quickly spiraling out of control as car usage and age climb higher and higher.

Vehicle Service Contracts cover repairs

Fortunately, there is a solution: a Vehicle Service Contract (VSC) is designed to help pay for scheduled repairs on mechanical breakdowns.

Some VSCs can be purchased using a payment plan. Every month the contract holder pays a relatively small payment to buy the VSC, and in the event that a covered breakdown takes place, the provider pays or reimburses the contract holder up to a certain amount, after any applicable deductible has been met. 

H2: The difference between auto insurance and VSCs

Whereas auto insurance can pay out in the event of a covered accident (e.g. driver negligence) resulting in auto-related damages, VSCs are intended to respond to breakdowns arising from mechanical failures. 

For example, if a thunderstorm hits your area and causes a tree to topple onto your car, your auto insurance may cover the resulting damages. But if you're driving down the highway and suddenly your engine begins sputtering to failure, that could be covered under a VSC. 

Is a VSC the same as a car warranty?

No. Car warranties are typically supplied by the car manufacturer and expire at some point during the life of car ownership. VSCs, on the other hand, are separate and independent from the manufacturer’s warranty and subject to their own terms and conditions. VSCs can include payments for parts and repairs after the manufacturer’s warranty expires or that the manufacturer warranty would not address. 

A VSC can make for an excellent complement to auto insurance since it addresses and resolves a different need without any overlap between the two coverages.