Does Car Insurance Cover Transmission Damage?
Understand how car insurance applies to transmission damage, including coverage options, policy exclusions, and steps for filing a claim or resolving disputes.
Published Feb 22, 2025
Car repairs can be expensive, and transmission damage is among the costliest issues a vehicle owner might face. Since insurance helps cover unexpected expenses, many drivers wonder if their policy will pay for transmission repairs or replacement. The answer depends on the type of coverage they have and what caused the damage.
Understanding how car insurance applies to transmission failure requires examining different types of coverage, policy exclusions, and potential claim options.
Collision and Comprehensive Coverage
Whether car insurance covers transmission damage depends on the type of coverage in place and the cause of the issue. Standard auto policies include two primary types of physical damage coverage: collision and comprehensive.
Collision coverage applies when a vehicle is damaged in an accident involving another car, an object, or a rollover. If a crash directly affects the transmission—such as from a high-impact collision damaging the drivetrain—this coverage typically pays for repairs, minus the deductible, which usually ranges from $500 to $2,000. However, if the transmission fails due to wear and tear or a mechanical defect unrelated to an accident, collision coverage does not apply.
Comprehensive coverage protects against non-collision events like theft, vandalism, fire, flooding, and falling objects. If a covered peril, such as a flood, causes water damage to the transmission, comprehensive insurance may cover repairs. Deductibles are similar to collision coverage, and payouts are based on the vehicle’s actual cash value (ACV). If repair costs exceed the car’s ACV, the insurer may declare it a total loss rather than approving repairs.
Mechanical Breakdown Endorsements
Mechanical breakdown endorsements function as an add-on to a standard auto insurance policy, covering repairs that traditional policies exclude. Unlike collision or comprehensive insurance, which apply to accidents or external events, these endorsements cover failures due to internal mechanical or electrical malfunctions. Transmission issues often result from component wear, fluid leaks, or internal part failures rather than external damage, making them eligible under this coverage.
These endorsements operate similarly to an extended warranty but are issued through an insurance company rather than a manufacturer or third-party provider. Policies typically cover major powertrain components, including the engine, transmission, and drivetrain, though terms vary by insurer. Some plans limit coverage based on the vehicle’s age or mileage and exclude routine maintenance issues such as fluid changes or neglect-related failures. Premiums range from $100 to $500 per year, with deductibles averaging between $250 and $500 per claim.
Claim procedures differ from standard insurance claims. Instead of filing through an adjuster, policyholders may need to take their vehicle to an approved repair facility for diagnosis. Insurers often require pre-authorization before repairs begin, and reimbursement may go directly to the repair shop. Some policies impose limits on labor rates or require the use of aftermarket or remanufactured parts, affecting out-of-pocket costs.
Policy Language and Exclusion Clauses
Auto insurance policies contain detailed language outlining coverage terms. Exclusion clauses are particularly relevant for transmission failures. Most standard policies explicitly exclude mechanical breakdowns, gradual deterioration, and failures due to owner negligence. If a transmission fails due to old or contaminated fluid, a worn-out torque converter, or prolonged overheating, the insurer will deny the claim.
Even when policyholders believe their transmission damage should qualify for coverage, insurers may scrutinize claims based on maintenance history. Many policies require vehicles to be serviced according to manufacturer recommendations. If an insurer suspects failure resulted from skipped fluid changes, ignored warning signs, or aftermarket modifications, they may reject the claim.
Filing a Claim for Transmission Damage
Filing a claim for transmission damage requires understanding the insurer’s claims process and documentation requirements. The first step is notifying the insurance company as soon as the issue occurs. Most insurers require prompt reporting, and delays could lead to additional scrutiny or denial. Policyholders should provide a detailed account of what happened, including the date, location, and circumstances of the damage. If the failure followed an accident or covered peril, insurers typically request supporting evidence, such as photos, repair invoices, or a mechanic’s assessment.
Once the claim is initiated, the insurer assigns an adjuster to review the details. The adjuster may request a mechanic’s report to verify that the transmission damage aligns with a covered event. Some policies require inspection at an insurer-approved repair facility, which can affect the timeline for getting an estimate. If the adjuster determines the damage is covered, the insurer calculates the payout based on the policy’s deductible and limits. If repair costs approach the vehicle’s actual cash value, the insurer may declare it a total loss.
Dispute Resolution and Legal Remedies
If an insurance company denies a claim for transmission damage, policyholders can challenge the decision. The first step is reviewing the denial letter, which outlines the reasons for rejection. Common justifications include exclusions for mechanical breakdowns, insufficient evidence of a covered loss, or failure to maintain the vehicle properly. If the denial appears incorrect, claimants can request a review by providing additional documentation, such as repair shop assessments or expert opinions. Many insurers offer an internal appeals process for submitting supplementary evidence.
If appeals do not lead to a favorable outcome, policyholders can escalate the dispute through regulatory or legal channels. State insurance departments oversee claim-handling practices and offer consumer complaint services. These agencies may intervene if an insurer is found to be acting in bad faith, such as by failing to investigate a claim thoroughly or misrepresenting policy terms. If regulatory action does not resolve the dispute, legal options include arbitration, small claims court, or a lawsuit for breach of contract. Arbitration can be a less costly alternative to litigation, but availability depends on the policy. If a lawsuit is necessary, policyholders must demonstrate that the insurer wrongfully denied coverage despite policy terms supporting their claim. Legal representation may be required in complex disputes involving high repair costs or total loss determinations.
Does auto insurance cover transmission failure?
Does insurance cover transmission failure? Probably not if it’s a mechanical failure. There are some instances where you may be covered, though.
UPDATED: Jun 29, 2022 Fact Checked
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Rachael Brennan
Licensed Insurance Agent
Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in.
Written by Rachael Brennan
Licensed Insurance Agent
Brad Larson
Licensed Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual.
Reviewed by Brad Larson
Licensed Insurance Agent
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UPDATED: Jun 29, 2022
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UPDATED: Jun 29, 2022
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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UPDATED: Jun 29, 2022 Fact Checked
In a nutshell
- If your transmission fails because of a mechanical defect, it may be covered under your car’s warranty
- Transmissions that fail because they haven’t been properly maintained will not have any coverage under a warranty
- If you’re involved in an accident and the transmission needs repairs or replacement, you may be able to have insurance cover transmission
- If there’s a fire under your hood or your car floods, your transmission may be covered by comprehensive coverage
- You will be obligated to pay your collision or comprehensive deductible if your transmission is covered
Car manufacturing techniques have improved dramatically over the years. Not only does it cost manufacturers less to engineer a model and then build it on the line, it also takes less time.
Even better is the fact that vehicle components have been engineered to stand the test of time if they are maintained as recommended by the manufacturer.
One vital component in any vehicle is the transmission. The engine is what produces torque so that your car can go and your transmission is what tells your engine what gear it needs to be in.
Since the transmission is always working, it’s easy to understand that it’s one of the first major components to start failing.
Does insurance cover transmission issues? If you’ve experienced transmission failure in the past, here’s what you need to know about how insurance covers transmission repair.
See how much money you could save by comparing car insurance quotes. Just enter your zip code above to check it out.
How long does the average transmission last?
How long a transmission will last depends on several factors:
- The type of engine
- The type of transmission
- Your driving habits
How much you drive, the type of driving you to do, and how dedicated you are to maintaining the car are other things to consider.
Today’s modern transmissions last an average of 250,000 miles according to Forbes, but some well-maintained models last much longer.
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Signs that Your Transmission is About to Fail
Transmissions typically don’t fail suddenly without warning. If your transmission is failing due to mileage and wear and tear, you’re going to notice the signs as long as you know what to look for.
You don’t have to be an expert mechanic to spot the signs. Here are some important signs to look for:
- The smell of burning transmission fluid could be a sign of overheating
- You hear odd clunking noises while the car is in neutral
- Noises, while the car is shifting, could be a problem with gears or worse
- If car spontaneously jumps out of gear while you’re driving your transmission could be slipping
- If your transmission fluid is dark or it’s low it could signal a problem
- The check engine light signals something is wrong with the transmission or its components
Does car insurance cover transmission wear and tear or mechanical issues?
If you’re experiencing a transmission breakdown, you’re not alone. It’s one of those things you don’t want to accept when you start to see the signs, but if you ignore the issue for too long your transmission will be damaged beyond repair.
Fortunately, if you catch an issue early enough, it’s possible to keep the repair costs to a minimum.
Will insurance cover transmission repair? Not if it’s a mechanical issue. No matter what the cost of the repairs, if you need to take your car to the shop to repair mechanical issues the work won’t be covered. Not only do you have to pay for the labor on your own, you’ll also have to pay for the parts.
Car insurance policies have a specific provision built into the contract that says mechanical failure is considered wear and tear and wear and tear is excluded. All losses have to be unexpected and sudden.
Your Manufacturer’s Warranty May Cover Transmission Failure
All of the leading manufacturers will offer some sort of warranty on new or newer cars.
Some of these warranties cover the vehicle from bumper-to-bumper for as many as 100,000 miles and others will only cover certain types of mechanical issues for three years or 30,000 miles.
If you want as much protection as possible when you’re buying your vehicle, put a lot of focus on the quality of the manufacturer warranty.
Find out about what’s covered, what’s excluded, and the time and mileage restrictions. It’s especially important to find out how the transmission is protected if you’re buying a model that’s known to suffer transmission failure.
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Extended Warranties and Mechanical Breakdown Insurance
If you’re not happy with the manufacturer’s warranty, there’s also the option to buy an extended warranty through the dealer.
This extends your coverage in length. It might also expand on the coverage that you’re afforded. Only newer cars are eligible for extended warranties.
Does insurance cover transmission failure? It might be covered if you purchase Mechanical Breakdown Insurance through the insurer you’re with.
Not all insurers offer this supplemental form of coverage that pays for repairs after a mechanical breakdown as long as it’s not because of a failure to maintain the car.
It differs from a warranty because all parts are covered and you can get your car repaired wherever you’d like to.
How to Extend the Life of Your Transmission
There are a few practices that you should make a habit to keep your transmission running for as long as you possibly can. If you weren’t aware of what you should do in the past, there’s no better time to learn than now.
Here’s what you need to remember:
- Check the fluid levels frequently
- Service your car every 30,000 miles and two years
- Add an external filter to trap more contaminants
- Drive your car easily when it hasn’t yet warmed up
- Use your emergency brake on an incline
- Don’t push on gear lever while you’re driving
When will your auto insurance cover transmission repairs?
Just because auto insurance doesn’t cover transmission problems that arise out of time doesn’t mean that the policy will absolutely never cover anything transmission related.
If you experience a covered loss and that loss damages your transmission or results in transmission failure, your insurer could be stuck footing the bill. If you’re in a collision, you need collision insurance to file a claim under your policy to collect.
Does full coverage cover transmission repairs? Here are some examples of situations when you can file a comprehensive car insurance claim:
- When your car is vandalized
- When your car is stolen
- When your car has flood damage
You will still have to pay your car insurance deductible, but that’s far worse than paying for the entire repair bill.
There’s a difference between a mechanical failure claim and an insurance claim. Make sure you understand the difference between the two before calling your insurer.
If you believe that you need physical damage coverage, start seeing how much it will cost by soliciting quotes online. Use our rate comparison tool for the easiest shopping experience.
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