Mechanical breakdown insurance (MBI) helps protect against expensive repair bills when a vehicle experiences mechanical failure. MBI is similar to an extended auto warranty, but it’s generally more affordable and better for cars with lower mileage. Unlike extended auto warranties, MBI can only be sold by a licensed insurance company. In this article, we break down everything you need to know about MBI policies — what they are, how they work, what they cover and, most importantly, are they worth it?
What is mechanical breakdown insurance and how does it work?
Mechanical breakdown insurance (MBI) helps cover costly repairs for many of the major systems and mechanical components of your vehicle. Basically, it's car repair insurance. 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.
MBI doesn’t cover damage caused by a driver or repair damage caused by an accident or normal wear and tear. Make sure that you understand what "wear and tear" means with prospective providers to avoid any misunderstandings about what your MBI will cover.
Here are some things you should know about MBIs:
- Coverage varies: The insurer may have multiple plans available with different coverage levels and prices.
- Most have deductibles: MBI deductibles vary depending on the policy but usually range from $0 to $500.
- Not all vehicles are covered: Not every company offers MBI, and not every car owner qualifies for MBI. New and used cars are eligible, but MBI usually must be purchased before a car is 15 months old or before it hits 15,000 miles.
- High mileage policies: Some companies offer high-mileage MBIs for vehicles with more than 15,000 miles, though these are not as common.
You can buy MBI from third-party providers and even some extended warranty providers. You can also buy a policy from some car insurance companies or add it to your current auto insurance policy.
Who has the best mechanical breakdown insurance?
You can buy mechanical breakdown insurance from many of the major car insurance companies. The best MBI policies provide a wide range of coverage for the mechanical and electrical components of your vehicle. You’ll also want to look for a policy that provides roadside assistance for emergencies and extra perks like rental car and lodging reimbursement.
- You can add MBI to your Geico policy to fill out your vehicle’s coverage. Geico’s MBI covers all parts and systems and charges on an installment basis, so you won’t have to come up with a lump-sum payment. With Geico’s MBI, you can take your car to the repair shop of your choosing, and you won’t ever pay more than your deductible (currently advertised at $250) for covered repairs.
- Mercury offers MBI policies that cover your engine, transmission and the electrical components of your vehicle. These policies include 24/7 roadside assistance, rental vehicles, hazard tire protection and trip interruption coverage and let you take your vehicle to the licensed repair facility of your choice. This MBI coverage is also transferable.
- USAA offers an MBI plan, referred to as an “extended vehicle protection” plan, through a third-party partner, Assurant Solutions. While often it’s a plus to work with a direct provider when possible, if you have insurance through USAA, this third-party service may be a convenient and fitting choice. The policy provides substitute transportation and 24/7 roadside assistance and can either pay on your behalf or reimburse you when you pay for repairs out of pocket. It’s worth noting that for cars with between 12,000 and 50,000 miles, the USAA sample contract states there’s no coverage for transmission, drive axles or diesel engine components.
Mechanical breakdown insurance vs. extended warranty
MBI is generally less expensive and more flexible than extended auto warranties. Extended auto warranties may require you to take your car to a mechanic within your provider's network, where you'll pay upfront and be reimbursed later. Depending on your plan, both may offer extras such as roadside assistance and rental cars.
Extended warranties have a smaller deductible and are often best for high-value, high-mileage cars. Extended warranties don't cover preexisting conditions and come with a waiting period (typically 1,000 miles or 30 days) to ensure you aren't buying the service only after an issue appears.
Mechanical breakdown insurance coverage is easier to secure for new and gently used vehicles than older cars that have seen better days. However, many extended auto warranties provide coverage for cars with over 100,000 miles. MBI will generally be cheaper than an extended auto warranty, but both are designed to help combat expensive and unexpected repair bills.
Consider the following when deciding between an extended warranty and an MBI policy:
- Payments: Often, you’ll pay for extended warranties when you purchase your vehicle so the cost can is added to your financing, but you can buy an extended auto warranty at any time from a third-party provider. You can often negotiate the price on a warranty plan. MBI payments are made monthly, usually for up to a year, with the option of renewal at the end of the policy period.
- Warranty or policy supplier: MBI is considered an insurance product and is only provided by licensed entities. The automaker, the dealership or third-party companies may offer extended warranties.
- Repairs: Extended warranties often require that repair services be done at dealerships or approved repair shops, though there are some exceptions. MBI policies usually let you take your car to any licensed repair shop.
Common features of MBI policies and extended auto warranties include:
- Reduced costs on large repairs
- Multiple tiers of coverage
- Age and mileage restrictions
- Coverage for the vehicle after the original warranty expires
- Deductible requirement (typically)
Some of the differences:
|Mechanical Breakdown Insurance||Extended Auto Warranty|
|Offered by businesses with Property and Casualty licenses|
|Provided by auto manufacturer, dealer or third party|
|Upfront payment required|
|Monthly payment options|
Our top extended warranty picks
The best extended auto warranty providers offer comprehensive coverage for the major components of your vehicle. Try to look for a warranty that offers some flexibility in where you can take your vehicle; for example, some warranties sold by dealerships might require that you take your car to their repair facility. It’s also worth looking for a warranty that will provide extra coverage for things like roadside assistance and rental car reimbursement.
All endurance plans cover roadside assistance, substitute transportation and trip interruption reimbursement, which helps pay for food and lodging if you break down more than 100 miles from home.
In total, Endurance offers five vehicle service contracts: Secure, Select Premier, Superior, Supreme and Secure Plus, each with its own pros and cons. The Secure plan is the most affordable of the options, while the Supreme plan offers exclusionary coverage and is considered the most comprehensive plan.
Protect My Car
Protect My Car offers an extended auto warranty product and acts as a licensed agent for several auto insurance policies, including popular providers like Progressive, Liberty Mutual and National General. Speak with Protect My Car about which option is right for your vehicle. Like Endurance, Protect My Car also provides 24/7 roadside assistance and rental car reimbursement on vehicle service contracts.
Mechanical breakdown insurance coverage
MBI coverage varies based on the policy provider and the plan you select. As with most insurance policies, there are comprehensive plans and more minimal coverage options available.
Depending on the plan you select, MBI coverage might include:
- Air conditioning
- Fuel system
- Power system
MBI policies don’t cover any item related to wear and tear or anything considered routine maintenance like oil changes, new tires, filters, spark plugs or brake pads.
Is mechanical breakdown insurance worth it?
MBIs can be worth it if you want to spread out payments over time or if you prefer to work with an insurance provider. As with any insurance, you might not ever have to use your MBI policy — but if you do, it could save you thousands of dollars. If you know you can't afford to pay for an expensive mechanical breakdown repair, MBI might be the way to go.
Remember, a salesperson at a car dealership is likely to pressure you into buying an extended warranty the day you buy your car. Don't let them push you into this decision — you don’t have to purchase either an extended auto warranty or MBI coverage the same day you get your car. Weigh the pros and cons of each option before deciding which coverage to buy.
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