Best Mechanical Breakdown Insurance

Our 4 picks for the best mechanical breakdown insurance companies

Besides GEICO, not many car insurance companies currently offer MBI nationwide. olive specializes in extended warranties (vehicle service contracts), but MBI policies are available to residents of California.

Endurance and CarShield are extended car warranty companies with comparable coverage through vehicle service contracts (an MBI alternative). These plans pay for mechanical breakdown repairs but aren’t considered insurance products.

• Our pick for same-day coverage: olive

• Our pick for traditional MBI: GEICO

• Our pick for extended warranties: CarShield

• Our pick for older vehicles: Endurance

Mechanical breakdown insurance buyers guide

In this guide, we’ll explore what MBI is, what it covers, what it doesn’t, how it works and who qualifies. We’ll also compare MBI with extended warranties, break down the costs and help you determine if it’s worth the investment. Whether you’re purchasing a new car or driving a high-mileage vehicle, understanding your options can help you save money and avoid unexpected financial setbacks.

How does mechanical breakdown insurance work?

MBI works like other types of insurance claims. A covered part fails for a covered reason, you follow the claim steps, your claim is typically approved within 24 to 48 hours, then the insurer pays for approved repairs minus your deductible.

Here are the steps you’ll take when using mechanical breakdown insurance:

1. Contact your insurance company when your car has a problem.

2. File a claim.

3. Take your car to a repair shop.

4. Pay a standard deductible if the repair is covered.

When comparing plans, the biggest differences usually show up in the claim rules: pre-authorization, inspections, where you can get repairs and whether the plan pays the shop directly or reimburses you.

Most MBI plans exclude preexisting problems, and some providers may ask for maintenance records to confirm that a breakdown wasn’t caused by neglect or improper maintenance. Before buying coverage, check how the provider defines preexisting conditions, whether an inspection is required and if there’s a waiting period before you can file a claim.

For example, if you have MBI or an extended car warranty, you’ll pay a monthly or annual premium for coverage. If a covered repair is needed, you’ll pay your deductible — such as $100 — before the insurance covers the rest.

Now, imagine your transmission unexpectedly goes out. At the repair shop, they say it costs around $3,000 to replace. You submit a claim (usually over the phone), and the company either pays the repair shop directly or reimburses you after you pay upfront. Once the process is over, you’re only out the deductible, which is $100 in this example.

Look for a policy that's flexible about where you can take your vehicle; some require that you take your car to specific repair facilities.

Mechanical breakdown insurance cost

The average cost of MBI is around $100 per year of coverage. Mechanical breakdown insurance costs vary greatly, but it’s generally less expensive and more flexible than extended auto warranties (which cost around $1,000 per year of coverage).

Some factors that will affect the cost of mechanical breakdown insurance include:

• Your insurer

• Your vehicle

• The deductible you choose

• The coverage you choose

Your deductible can have a significant impact on both your premium and what you pay when your car needs repairs. Choosing a higher deductible generally lowers the cost of coverage, but it also means paying more out of pocket when you file a claim.

The cost of MBI is often a key factor for consumers comparing coverage options. Like many important purchases, it makes sense to shop around and find the best value on coverage. For more, check out our tips to get cheap car insurance or how to avoid car warranty scams.

Coverage levels in MBI

MBI and MBI-like plans often come in tiers. The big difference is how far coverage goes beyond the engine and transmission. Common coverage tiers include:

• Powertrain coverage: Usually covers major drivetrain parts like the engine, transmission and drive axles. It often skips many electrical and comfort systems.
• Midlevel (named component) coverage: Covers more than powertrain, but only parts listed in the contract.
• Comprehensive (often exclusionary) coverage: Covers most mechanical and electrical parts unless they are listed as exclusions. It can cover more electronics, but limits still apply.

How to choose a mechanical breakdown insurance company

When choosing mechanical breakdown insurance, it's important to consider several factors to ensure you get the right coverage for your needs:

• Cost: Compare premiums, deductibles and coverage limits from multiple providers.

• Coverage limits: Understand what parts and systems are covered and whether there are exclusions.

• Provider reputation: Look through reviews and ratings of the mechanical breakdown insurance company to assess their reliability and customer service.

• Benefits: Compare the benefits offered, like rental car reimbursement, trip interruption coverage, hotel and meal reimbursement, tire protection and 24/7 roadside assistance. Look at the reimbursement limits for each benefit, such as how much the plan pays per day for a rental car or how much it reimburses for lodging and meals after a covered breakdown. Some companies include these benefits with your plan, while others require you to buy these as separate endorsements.

• Claim process: Find out how easy it is to make a claim and whether the provider offers flexibility in choosing repair shops. Check whether repairs require preauthorization, whether larger claims may require an inspection and whether the provider pays the repair facility directly or requires you to pay upfront and request reimbursement. Also find out whether you can use any licensed repair facility or must choose from a preferred repair network. It can be helpful to search reviews for mentions of the claim process to see how easy the company is to work with.

• Eligibility requirements: Make sure your vehicle qualifies for the coverage based on age and mileage.

• Contract details: Carefully review the contract to get an understanding of maintenance documentation requirements, preexisting condition exclusions, preauthorization requirements and wear-and-tear language.

What does mechanical breakdown insurance cover?

What each policy covers depends on your plan and provider. According to CARCHEX, typical mechanical breakdown coverage includes:

• Major engine parts, such as pumps

• Drivetrain

• Electrical components

• Parts and labor

Some policies also cover air conditioning, steering and fuel systems.

What does mechanical breakdown insurance not cover?

Typical exclusions include routine maintenance, such as:

• Tune-ups

• Oil changes

• Tire rotations and alignments

• Lubrication

• Coolant changes

• Replacing spark plugs, brake pads, brake shoes and tires

MBI also won’t cover damage caused by:

• Corrosion

• Improper maintenance

• Accidents or natural disasters

• Overheating

• Vehicle modifications or alterations

• Towing excessive weight

• Preexisting conditions

Mechanical breakdown insurance vs. traditional car insurance

Mechanical breakdown insurance (MBI) is an insurance policy that covers your car’s major parts and systems. It helps cover expensive repairs for your powertrain, electrical system and other major components.

Traditional car insurance helps cover accidents and damage to the body of your car, but MBI deals with the components that keep your car working and on the road. Basically, it's car repair insurance.

It can be hard to find MBI for higher-mileage used cars because insurers view these vehicles as higher risk due to the increased likelihood of mechanical issues and more wear and tear on major components. If you’re buying a used car, find out if it’s still covered by the original equipment manufacturer’s (OEM) warranty to avoid duplicate coverage.

If the OEM warranty has expired and you want to keep similar coverage, also consider an MBI alternative, like an extended warranty or vehicle service contract (VSC) — even cars with more than 100,000 miles can qualify for these plans.

Mechanical breakdown insurance vs. extended warranty

An extended car warranty is technically a vehicle service contract. Mechanical breakdown insurance can only be sold by licensed insurance companies, whereas extended warranties are offered by dealerships and third-party providers.

Both pay for needed services and repairs after a mechanical breakdown. Unlike auto insurance, you can get a warranty from dealerships and third-party providers, and unlike comprehensive or collision insurance, MBI helps cover repairs for mechanical failures that occur during normal vehicle use.

Not every company offers MBI, and not all car owners qualify for MBI. New and used cars are eligible, but MBI typically must be purchased before a car is too old or has too many miles, depending on the insurer’s limits.

MBI generally works as a lower-cost, renewable insurance add-on with stricter eligibility requirements, while vehicle service contracts tend to accommodate older and higher-mileage vehicles but can cost considerably more.

If you’re debating between purchasing mechanical breakdown insurance or an extended warranty, here are a few scenarios that may help you decide.

• If your car is new and under 15,000 miles → consider GEICO MBI

• If your car is older with high mileage → consider an extended warranty with Endurance or CarShield

• If you live in California → MBI through olive is your primary option

Who qualifies for mechanical breakdown insurance?

Mechanical breakdown insurance is available for both new and used cars, but certain eligibility criteria must be met to qualify for coverage. Typically, MBI must be purchased when the vehicle is relatively new, often before it reaches a certain age or mileage threshold. Many insurance companies will not offer MBI for older cars or those with significant mileage due to the increased risk of mechanical failures.

If the OEM warranty on your used car has expired, you may be eligible for MBI, but it's important to act quickly before the car accumulates too many miles. Additionally, vehicles with a history of significant modifications or improper maintenance may not qualify for MBI.

Another thing to keep in mind is that mechanical breakdown insurance availability varies from state to state. MBI policies are available in all 50 states, but many companies don’t offer them in all states due to legal or financial restrictions.

MBI is often a good option for car owners who want to extend the protection provided by the original warranty, especially if they are still financing the vehicle. However, it is important to compare the eligibility requirements and coverage limits of different providers to find a plan that meets your specific needs.

FAQ

Is mechanical breakdown insurance worth it?

MBI can be worth it if you’re still paying off a new car after the OEM warranty expires or if you buy a used car that’s out of warranty. It might not be worth it if you get a certified pre-owned vehicle that comes with similar protections.

Ultimately, it depends on how old your car is, what kind of coverage you want and where you live.

In California, where you can’t get an extended car warranty, MBI is a popular alternative. On the other hand, if you live in another state, you might be better off going with an extended warranty plan.

Typically, a good vehicle protection plan pays for itself after a couple of major repairs. The biggest potential downside is that you might buy a plan and then never have to use it. Still, some people don’t mind spending money for peace of mind.

One olive customer gives an example: “on the 2019 one-ton Ram, I paid $1,400 for a three-year extended warranty, up to 185,000 miles. … But just to have that peace of mind, 1,400 bucks, why not? That's a no brainer to me.”