Consumer Alert: We’re keeping our cars longer. Is car repair insurance worth it?
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ROCHESTER, N.Y. (WHEC) — Today’s consumer alert concerns your cash and your car. Data from IHS Markit caught my eye.
It indicates the average age of cars on the road has risen to 12.1 years. That’s two months longer than before the pandemic. During the lockdowns, the production of semiconductors slowed. Now there’s a huge demand for new cars and a shortage of semiconductor chips.
That has driven up the prices of new cars which in turn has increased the price of used cars. So the cost-conscious are keeping those cars a bit longer. I get it. My car is eleven years old and still running well, so I’m certainly not replacing it now while prices are high. But with an old car comes a higher risk of big bills for repairs. Is car repair insurance worth it?
So I decided to evaluate car repair insurance for you. If your car is out of warranty, is car repair insurance worth it?
Car repair insurance usually covers your major systems: Air conditioning, cooling, electrical, engine, exhaust, fuel systems, steering components and transmission.
It doesn’t cover routine maintenance like engine tune-ups or oil changes. It doesn’t cover damage caused by poor maintenance like failing to change your oil or using the wrong fuel. And it won’t cover normal wear and tear, like brake pads and tires.
Here are some of the drawbacks.
- You have to buy it when your car is fairly new. For example, GEICO requires you to sign up when your car is 15 months old and has less than 15,000 miles.
- Most car repair plans will only cover your car for 7 years and 100,000 miles.
And let’s face it. Cars today are manufactured so much better than in the past. You may not need a major repair in your car’s first 100,000 miles. There’s a lot to consider. Also car repair insurance is not the same as an extended warranty. Click here for WalletHub’s chart to compare the pros and cons of both.