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Auto Repair Insurance

HMOs for clunkers
  [vote for,

This is not to be confused with manufacturers' warranties or the supplemental warranties that used car dealers sell.

I've paid my car off and continue to drive it because I do not want another car payment. However, the manufacturer's warranty has expired. The car is old enough for things to break, but new enough to make the repairs expensive. If a major item breaks on it, I'm likely to pay the equivalent of two or more payments to get it fixed.

I propose a voluntary supplemental insurance that covers non-warranty car repairs. This insurance could be priced in such a way as to be profitable to insurance companies and attractive to consumers. Rates would be based on the age of the car and repair statistics by make and model. The policies can be further refined to only cover failures that prevent the car from running. If the motor swallows a valve or the starter quits, you're covered at this percentage. If the air conditioner fails, you're covered at that percentage. It all depends on how much peace of mind you're willing to pay for. As with other types of insurance, the rates could be bought down with higher deductibles.

Insurance companies would have networks of authorized service providers. These service providers have to meet certain criteria (in the US, members of the Better Business Bureau, ASE certified mechanics on staff, etc). Reimbursement for hourly repair rates would be negotiated by the insurance companies at or near fair market value. The major benefit to repair shops is that participation brings in business. Customers can choose to take the work to out-of-network repair shops, but at a higher deductible. In short, it's managed health care for cars.

We already have roadside assistance, towing insurance and extended warranties. I'd be more than willing to pay a reasonable monthly premium for the peace of mind of knowing that if I turn my motor to slag tomorrow, I don't have to fork out $3K or more to get it running again.

Fester, Jun 22 2003

Like this? http://www.theaa.co...y/warranty_home.jsp
[angel, Oct 17 2004]


       Is a 'reasonable monthly premium' less than the amount you might squirrel away in a savings account for car repairs?   

       I'm sure some people would buy it, but it doesn't make economic sense to have this type of insurance. Unlike health insurance, a mechanical breakdown is unlikely to cost more than you might have saved up.
Cedar Park, Jun 22 2003

       In the days of $250 alternators, $600 AC compressors and $1200 electronic control modules, yep, I think it makes sense to pay $50-$75/month for something like this. I bought an extended warranty for my car and it paid for 4 times its cost in repairs. Other people buy these warranties and never use them, which is how insurance companies maintain 1000% profit margins.   

       Repair cost is a big part of what causes people to trade in their cars after the warranties expire. In many cases, they haven't finished paying the car off yet, so they may be "upside down" in the next loan. This type of insurance would allow people to break a bad cycle without having to spend the money that they're saving on car payments to do so.
Fester, Jun 22 2003

       Dear [Fester]:   

       We regret to inform you that you application for car repair insurance has been denied. We are presently unable to insure Fords. If you are looking for a new car, please note that anything Italian or Russian, Jaguars with Lucas wiring, and any model sold with 'Corinthian Leather' is ineligible, as well.
Cedar Park, Jun 23 2003

       PS Jags without Lucas wiring are Fords so they're out, too.   

       {1000% profit margins?! And the moon is made of green cheese)
bristolz, Jun 23 2003

       Damn. So much for all the research I've been doing on a Ferrari.
thumbwax, Jun 23 2003

       Buy a Jaguar? Well, you don't know me. I had the misfortune to buy something that was made during some sort of hiatus in manufacturer's drug testing, thus the issues.   

       [angel] Yep, almost exactly like that. So, baked. Thanks. Perhaps AAA will offer it in the US soon.   

       Back to my custard-based edible etch-a-sketch do-it-yourself birthday cake idea...
Fester, Jun 24 2003

       Some have mentioned its not economical, all insurance is set so that on average you pay more than you will claim (ie chances are you're better off with no insurance of any type) but this is just looking at it from an 'averages' sort of view. you ensure no chance of a big cost by accepting a small continual cost. I would have done well out of such a thing - but i might have baulked at the cost and not puchased it
jim1013, Jun 24 2003


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