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LAST UPDATED:  May 24, 2019

Mechanical Breakdown Insurance: Everything You Need to Know

Wondering what mechanical breakdown insurance actually is? Here are all of the ins and outs to see if you really need it

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PUBLISHED ON May 24, 2019

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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.

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CarShield

CarShield — USA’s #1 Auto Protection Provider

CarShield pays claims directly to a US or Canadian ASE-Certified® repair facility of your choice. Our contracts have low or no deductibles to prevent stress to your wallet at a critical time. Never worry about being stranded somewhere after a breakdown. All of our vehicle repair contracts include towing services to transport you and your vehicle to a safe repair facility.

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Carchex

Nationwide coverage for cars new and old

CARCHEX has something for everyone. Have an old car? No problem. Live in California? Not an issue. CARCHEX 's plethora of warranty plans includes options for cars up to twenty years old with up to 250,000 miles, regardless of any existing or expired warranties. Click below or call 1-877-207-3304 for a free quote.

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Basics

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. 

Common Auto Insurance Policies

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:

  • Three years of age or 15,000 miles to purchase the policy.
  • Seven years of use or 100,000 miles to keep the policy.

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.

Yellow car smoking on the side of the road.
GETTYIMAGES

MBI can cover many roadside issues that general factory car warranties won't touch.

MBI vs. Car Warranties

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:

  • Mechanical Breakdown Insurance: This is a specific type of insurance policy that covers issues related to normal wear and tear. Some policies may offer extra coverage or additional perks for things like tune-ups at a repair facility of your choice.
  • Manufacturer Warranties: Traditional new car warranties come from the manufacturer itself, either as a factory (dealership-provided) or an extended warranty. These often come with new vehicles or can be purchased for used vehicles below a certain age and mileage limit. In general, these warranties are limited in their coverage to problems caused by design or construction defects. Anything related to normal wear and tear or an accident isn’t covered. 
  • Third-Party Warranties: A warranty provided by a third-party provider is similar to a warranty from the factory but generally offers more coverage and extra perks (for an extra cost). For example, routine maintenance may be covered with roadside and emergency assistance included. Some even come with other types of coverages like vacation and rental reimbursement.

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

  • Cost: Pricing varies between warranty and insurance options, but the payment structure remains the same (and different) between the two. Warranties, especially from the manufacturer, have an upfront cost that is included in the price of the vehicle. This means you can potentially roll up the cost into a car loan, but you’ll be paying extra in the form of interest. MBI, on the other hand, has a monthly premium so you don’t have to pay everything upfront. 
  • Coverage: The average warranty includes issues related to defects. MBI policies give you a little more coverage for normal wear and tear, but none of the options tend to cover the most common and routine repair costs.
  • Eligibility and Duration: All warranties and insurance policies have their limits. Most manufacturers and third-party providers won’t offer coverage for old vehicles (more than 10 years on average), but MBI policies can be even more restrictive in terms of the eligibility requirements and how long the policy lasts. For the best coverage, the right third-party warranty will most likely be your best bet.
  • Claim Process: In order to get paid for a covered repair, warranties and insurance policies have different processes to go through. Insurance policies usually work through claims, meaning you have to fill out the paperwork after a repair has been made to get reimbursed. Factory and third-party warranties can kick in before the repair, but you may be restricted in choosing the mechanic who does the work. 

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.

Do You Need an MBI?

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 man in the desert with a  vehicle.
GETTYIMAGES

MBI can come in handy during emergency road situations.

FAQs

Q. What do MBI policies cover?

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. 

Finding the Best MBI Policy

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. 

EXTENDED WARRANTY COVERAGE MORE … FOR LESS

Endurance

Save $350 on an Endurance warranty plan with coupon code: DRIVE350

Going with a factory extended warranty is a good option for basic protection, but you can get more and save more with Endurance, ranked the top extended warranty provider by Consumer Advocates, Consumer Affairs, and Retirement Living.

Get a Free Quote

Save $350 with coupon code: DRIVE350

EXTENDED WARRANTY COVERAGE MORE … FOR LESS

CarShield

CarShield — USA’s #1 Auto Protection Provider

CarShield pays claims directly to a US or Canadian ASE-Certified® repair facility of your choice. Our contracts have low or no deductibles to prevent stress to your wallet at a critical time. Never worry about being stranded somewhere after a breakdown. All of our vehicle repair contracts include towing services to transport you and your vehicle to a safe repair facility.

Get a Free Quote

EXTENDED WARRANTY COVERAGE MORE … FOR LESS

Carchex

Nationwide coverage for cars new and old

CARCHEX has something for everyone. Have an old car? No problem. Live in California? Not an issue. CARCHEX 's plethora of warranty plans includes options for cars up to twenty years old with up to 250,000 miles, regardless of any existing or expired warranties. Click below or call 1-877-207-3304 for a free quote.

Get a Free Quote