Mechanical Breakdown Insurance: Everything You Need to Know

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It should be no secret that vehicles can be expensive to maintain and repair when the need arises. Repair costs alone can quickly skyrocket if the damage is severe enough or if you aren’t covered by the right coverage like an extended warranty or mechanical breakdown insurance (MBI). 

In a worst-case scenario, the costs may be so expensive that you can’t even get the repairs done in the first place, potentially leaving you with an expensive garage ornament instead of a working car. 

This is why many people opt for a mechanical breakdown insurance policy over a traditional warranty, thinking the policy will cover anything that needs to be repaired. While many policies do cover a lot, nothing is ever totally comprehensive. 

That is why it’s important to know what you can expect from mechanical breakdown insurance and how it differs from more traditional factory and extended warranty options. Here’s everything you need to know about mechanical breakdown insurance.

Like other types of insurance, mechanical breakdown car insurance generally covers repair costs for repairs and parts that happen from normal wear and tear of an active vehicle. In other words, if something breaks unexpectedly while you are driving, an MBI policy will most likely cover the repair cost (either upfront or through a reimbursement). 

In theory, this type of insurance can reduce or eliminate the repair costs that may otherwise be too cost-prohibitive if you were to pay out of pocket. 

The look of a mechanical breakdown insurance policy should be somewhat familiar if you have experience with other automotive insurance plans. This type of policy generally covers any fault that is due to normal wear and tear. 

It’s important to keep in mind, however, that issues related to an accident or just general automotive maintenance needs aren’t generally covered. In other words, if you want something to reduce the price of periodic maintenance or unexpected events, an MBI policy isn’t the way to go.

An MBI policy comes from a third-party provider, so you can generally get one regardless of the make and model of your vehicle. MBI policies, however, do tend to have certain limitations related to the condition of the vehicle. For example, a policy may limit eligible cars to:

These limitations differ between various insurance companies, but the idea remains the same: Your car must be eligible to get the insurance. 

Like other insurance policies, once you have mechanical breakdown insurance, you will pay a monthly premium and have a deductible to meet before the insurance plan will cover the repair costs. Once again, this varies between different insurance providers and the individual plans each one offers.

It’s easy to confuse mechanical breakdown insurance with mechanical warranties, but the differences are important if you really want to get the right coverage for your vehicle. Major differences come down to the cost, when you pay the costs, and what is and isn’t covered under the policy. 

First, it’s important to know your options:

On the surface, there are many similarities between mechanical insurance and warranties. Choosing the right option, however, requires knowing some of the minute differences:

Neither option is inherently better than the other. Instead, you just need to compare the advantages and disadvantages of each to see which meets your needs the most.

The real value and need of mechanical breakdown insurance come if you can actually save money over the duration of the policy. In other words, the policy needs to reduce or eliminate repair costs. If you end up spending more on the monthly premiums without taking advantage of the policy, it won’t be worth it.

For an MBI to be worth its cost, the yearly price needs to be less than your vehicle’s maintenance requirements (which must also be covered). On average, repair costs for a small sedan can be around $6,000 a year, which includes routine work in addition to repairs for wear and tear. A mechanical breakdown insurance policy, on the other hand, can be as little as $75 a year. 

If the policy actually covers some portion of the yearly repair costs, the low price of the insurance will likely save you money in the long run.

The worth of an MBI policy may also depend on the age of your vehicle. Repairs for new vehicles tend to be either routine or secluded to factory defects, which most factory warranties will cover. Older vehicles, however, require more unexpected maintenance and repairs as more parts wear out and break. 

Therefore, an MBI policy makes more sense for a used or older vehicle since this type of repair is covered more often.

A. Most policies cover the most important systems and parts of a vehicle, namely powertrain parts like the transmission and engine components. You may also find plans that offer additional coverage for the suspension, AC/heating, brakes, and electrical or electronic systems. 

The process of shopping for the best mechanical breakdown insurance is very similar to shopping for any other kind of insurance: research to see what each mechanical breakdown insurance covers, get free quotes, talk to others, and make a choice. 

It helps to check out different options so you can compare costs, coverage, exclusions, and other details that may help you choose between one policy over another.