Best Mechanical Breakdown Insurance

Our top picks for mechanical breakdown insurance (and alternatives)

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

Mechanical breakdown insurance (MBI) is a valuable consideration for drivers looking to protect themselves from costly repairs that aren’t typically covered by standard auto insurance. 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.

What is mechanical breakdown 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 vehicle, 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.

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.
• Mid-level (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.

What does mechanical breakdown insurance cover?

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

• Major engine parts, such as pumps
• Drivetrain
• Electrical components

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

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, 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.

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.

» READ MORE: How to choose an extended car warranty

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.

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.

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.

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

• Your insurer
• Your vehicle
• The deductible you choose
• The coverage you choose

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.

Factors to consider when choosing mechanical breakdown insurance

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.
• Claim process: Find out how easy it is to make a claim and whether the provider offers flexibility in choosing repair shops. 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.

Mechanical breakdown insurance vs. extended warranty

An extended car warranty is technically a vehicle service contract. It’s not the same as car insurance but provides comparable financial protection. 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.

“An insurance policy is a contract between you and an insurance company. The insurance company is the obligor. If you have a claim, you deal directly with the insurance company (or a claim adjuster hired by the insurance company),” according to the California Department of Insurance (CDI).

Some laws apply to MBI that don’t apply to vehicle service contracts. For example, the CDI regulates insurance policy prices in California but not the prices for VSCs.

» LEARN: What does a car warranty cover?

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.”

» NEXT: How to find reputable extended car warranty companies