If you are worried about car repair after a breakdown or accident, you might be interested in “car repair insurance.” Unfortunately, this terminology is not quite accurate, and sometimes it’s used to describe completely different products. Let’s find out more.

Cover expensive car repair costs with an extended auto warranty. Get a free quote from CARCHEX today.

Car Insurance

Car insurance, or auto insurance as most people call it, is actual insurance. The key factor here is that this product covers you in the event of an accident, vandalism or theft, but not due to a random mechanical breakdown. Car insurance can include mechanical repairs due to a crash, and this type of coverage is required by law in most states. Auto insurance can also cover things like medical expenses if someone is injured in a crash.

So if your transmission or AC fails during regular driving, car or auto insurance will not cover the repair costs.

Factory Warranty

These plans are included with any new car purchase. Until your vehicle reaches a certain age and mileage, any breakdown not caused by misuse or negligence is paid for under the factory warranty. So normal wear and tear – such as worn tires and wiper blades – is not covered. But, if your water pump fails for no reason at all during the warranty period, the dealership will pay for the repairs. One major difference between factory warranties and car insurance is that the warranty does not pay for repairs in the event of an accident, vandalism, or theft.

Extended Vehicle Protection Plans

For some car owners, it’s important to have factory warranty-like coverage even after the warranty expires. This type of coverage is referred to as an extended protection plan. Other commonly used names for this type of product are:

  • Extended auto warranty
  • Aftermarket warranty
  • Vehicle service contract
  • Mechanical breakdown insurance
  • Car repair insurance

Regardless of the name given to a type of extended protection plan, it’s important to understand that these plans are not car insurance and are not sold by insurance companies.

Then What Is Extended Vehicle Protection?

For a monthly fee, extended vehicle protection plans take over where the original factory warranty left off. So any unexpected repairs get paid for as if the car was still under the dealership warranty. Many drivers choose this type of coverage because it offers them peace of mind that no matter what, their repairs will be covered.

Also, with the rising cost of car parts, extended auto warranties offer protection against inflation as the payment terms are established when the plan is purchased. Finally, extended vehicle protection allows you to avoid haggling over car repair costs. The plan provider pays the mechanic directly for the entire cost of repair, minus any deductible.

Extended vehicle protection plans, like factory warranties, do not pay for damages caused by accidents or vandalism.


Here is a summary of the terms discussed in the article and their definitions:

  • Car Insurance – covers you in the event of accident, vandalism, or theft – depending on plan specifics.
  • Factory Warranty – pays for unexpected breakdown during the lifetime of the warranty.
  • Extended Vehicle Protection Plan – covers unexpected breakdown costs after the factory warranty expires.

Interested in covering your car repair costs? Get a free extended vehicle protection plan quote from CARCHEX today.

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