You might have been asked to purchase auto repair insurance or an extended warranty when you purchase your car or truck. These two things are very different. Which should you choose?

Auto Repair Insurance

Geico and Mercury Insurance are two companies that offer auto repair insurance. This is insurance that you can add to your auto liability insurance that will pay for repairs to your vehicle. It covers the big repairs like a blown engine or a failing transmission, things that cost thousands of dollars typically.

With Geico you’ll need to sign up for it while your car is less than 18 months old. This means you’ll be paying for it for years through the warranty period. Mercury will let you wait to sign up within 30 days of your warranty’s expiration. To use it, you call for a pre-authorization and then go to an authorized mechanic to have the repair done.

Extended Warranty

You’ll purchase this from the new car dealer when you purchase the car or at some point before your warranty expires. Offers from companies you’ve never heard of are famous for being scams. So, only purchase this from your dealer. There are usually a range of plans that cover different things.

Which to Choose

If you’ve had trouble with the car during the warranty period then it might be a good idea to buy Mercury’s auto repair insurance or an extended warranty, depending on the price. You’ll have to weigh the coverage cost against your best guess on costs of repair. Geico’s coverage must start so early in the car’s life that it probably isn’t worth it by the time something breaks.

Generally speaking, if your car is a bit of a lemon then get rid of it. Don’t throw good money after bad. And paying for extended warranties are usually making the company rich, not saving you any money. It is better to always have money in a savings account for a repair emergency.

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