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Do you need car breakdown insurance?

Award-winning broadcast journalist and author Jeanette Pavini writes the Buyer Beware column for MarketWatch and wants to hear your stories, questions, problems and complaints. Write to her at .

SAN FRANCISCO (MarketWatch)--Is mechanical-breakdown insurance--which pays you in the event your car breaks down--one of those policies you need, or should you skip it?

It may depend on the age of your car, how long you plan to keep it and, in the case of a new car, how extensive the bumper-to-bumper factory warranty is.

In general, mechanical-breakdown coverage is designed to guard against expensive repairs after the factory warranty expires. But often you have to buy it while the vehicle is still fairly new--many insurers won't sell a breakdown policy on a car older than 18 months.

Policies can start at around $75 annually, but the cost varies, depending on the car's age, mileage, history and other factors. Deductibles also vary, but average between $200 and $400. After the initial purchase, you usually can renew coverage for a certain period--six or seven years in some cases--or until the car reaches a certain mileage--say, 100,000 miles.

In addition to paying for car repairs, some policies may include benefits such as towing and car rental. But like any insurance policy, there can be exceptions and loopholes.

Any exclusions related to normal wear and tear and routine maintenance, for example, should be explained clearly in the agreement. Otherwise you may find yourself having to prove that a major breakdown wasn't caused by, say, your failure to get the car's oil changed regularly.

In terms of what they aim to do, mechanical-breakdown policies are similar to the service contracts, or extended warranties, offered by auto dealers and manufacturers. But they differ in some ways.

For starters, a breakdown policy may provide better coverage and pricing than a manufacturer's or dealer's service contract. That's because in some states these policies fall under the jurisdiction of the state's insurance department, which has some regulatory control over how much insurers charge and how claims are handled.

A breakdown policy also may be easier to cancel. You usually pay for an extended warranty up front or it may be rolled into your car loan, whereas breakdown coverage is more like auto insurance in that you make periodic payments and can cancel at any time.

As with any contract or policy, auto-repair coverage is only as valuable as the obligor's ability to pay. When you buy a breakdown policy, the obligor is the insurance company, and in some states breakdown policies are backed by state insurance guarantee funds. When you buy a service contract, the obligor is usually the car dealer or a Vehicle Service Contract Provider.

Still, some experts say consumers may be better off skipping such policies altogether and setting aside money for auto repairs on their own.

Ron Montoya, consumer-advice editor for the auto-information website , says that Edmunds, in general, doesn't recommend drivers purchase mechanical-breakdown insurance.

"We would rather see consumers set that money aside in their own account and use it toward repairs when needed," he says. "This way, if nothing goes wrong, they have that money available for gas or anything else they want to spend it on."

Edmunds.com recommends minimizing any potential issues with a vehicle by purchasing a vehicle history report.

Additionally, have the car inspected by a mechanic and request the service records from the previous owner. Taking these steps will help limit your repair risk, Edmunds says.

If you still believe that having an extra auto-repair insurance is a good choice for you, here are some questions you should ask before signing on the dotted line:

What classifies as a mechanical breakdown, and what is regular wear and tear?

What is the deductible and is it applied "per visit" or "per repair?"

Can you use the mechanic of your choice? If not, check out the repair shops that are covered before you buy the policy.

Is there a limit to the amount of claims you can make?

Is coverage transferrable if you sell your car? That might be a useful selling point when you're ready to sell.

As with any insurance policy, get everything in writing. If something is confusing, ask for a clarifying sentence, in writing, added to the contract.

Compare breakdown policies across insurers, before you buy. If you decide to buy a policy on the Internet, make sure the insurance company or agent is licensed by your state's insurance department.

Jeanette Pavini is a regular contributor to various publications and Better.TV. She also is the national spokeswoman for Coupons.com. She encourages readers with questions, ideas or consumer complaints to write to her at .