Updated March 12, 2020

Mechanical Breakdown Insurance

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Mechanical breakdown insurance is an alternative to the extended warranty sold at car dealerships. The coverage may be cheaper, but how does it compare? Read this to find out.

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Car dealers love to sell buyers on the benefits of an extended warranty. But mechanical breakdown insurance (MBI) may be a better—and less expensive—option.

Read on to learn more about MBI coverage and whether it's right for you.

What Is Mechanical Breakdown Insurance?

Mechanical breakdown insurance (MBI) pays for repairs when your car breaks down, but not for accidents. It's an extra coverage option you can add to your car insurance policy. You use it in place of the extended warranty offered by your car dealer.

Like an extended warranty, mechanical breakdown insurance covers your car after the factory warranty expires.

It can cover most major failures that can happen in your car. There are several levels of coverage, but the basic coverage usually protects:

  • Engine parts (oil pump, water pump, etc.)
  • Drivetrain (all parts that deliver power to the wheels, other than the engine and motor)
  • Transmission
  • Exhaust system
  • Brakes
  • Electrical components

Does traditional car insurance cover mechanical breakdown?
No. Car insurance pays for repairs in situations like collisions, theft, or fire damage. Mechanical breakdown insurance pays for car malfunctions like a busted engine or brake failure.

What Does Mechanical Breakdown Insurance Not Cover?

Mechanical breakdown insurance doesn't cover routine maintenance or wear and tear on a vehicle, such as:

  • Tune-ups
  • Tire issues/rotations/replacement
  • Filter replacement
  • Coolant and fluid replacement
  • Spark plugs
  • Brake pads and linings
  • Damages caused by poor maintenance
  • Damages caused by an accident (collision or comprehensive coverage will cover it)

How much does Mechanical Breakdown Insurance cost?

The price of mechanical breakdown insurance depends on the year, make, and model of your car. If you have an older vehicle, it could cost $30–$75 annually with a $250 deductible.

An expensive new car is more expensive to repair. You may see rates as high as $200–$300 or more per year. And some auto insurers won't offer mechanical breakdown insurance for high-value cars.

Unlike traditional auto insurance, the cost of mechanical breakdown insurance isn't impacted by personal information like your age, credit score, driving record, etc.

Mechanical Breakdown Insurance vs. Extended Warranty

Mechanical breakdown insurance and extended warranties cover the same need in different ways. MBI is offered by your provider as an add-on to your insurance policy. Extended warranties are typically purchased through car dealers.

Mechanical breakdown insurance is generally the more affordable option. Extended warranties are financed through your car loan, which increases interest and payments.

Here are some other key differences:

  • MBI good for up to 7 years or 100,000 miles vs Extended warranty expires after 3 to 5 years

  • Cancel MBI at any time to stop coverage vs Pay entire cost of extended warranty upfront or as part of loan amount

  • Use the licensed repair shop of your choice with MBI vs Only use the car dealership with extended warranty

  • MBI offers broader coverage vs Extended warranty often has more exclusions

  • Both are transferable if you sell your car.

Auto dealers typically get commission on extended warranties they sell. In other words, they're motivated to convince you the coverage is worthwhile.

A recent Consumer Reports survey estimated that nearly one out of three customers purchase an extended warranty. But 55% didn't use the warranty.

Is Mechanical Breakdown Insurance Worth It?

If you just bought a new car, you probably want to protect it. Mechanical breakdown insurance is less expensive and more comprehensive than an extended warranty. It has fewer exceptions and can be canceled at any time.

But is it worth it for you? Here's what you should consider before you decide:

Vehicle Performance
Research your car's make and model to know what you can expect from it over time. You can use review sites like Consumer Reports to learn about common issues and complaints that other people have.

Budget
If a big-ticket part fails in your car, will you have the funds to fix it? You may be better off purchasing mechanical breakdown insurance if you won't be able to afford the cost when something breaks.

Other Considerations
Before committing to MBI, ask your insurance provider these questions:

  • What are the exclusions of the coverage? ("Wear and tear" can mean different things to different insurers)
  • What will the deductible be?
  • How can I make a claim?
  • Are there amounts that I have to pay upfront?
  • What costs does MBI cover? Does this include labor costs?
  • Can I use the repair shop of my choice?
  • For how long can I renew coverage?

Mechanical breakdown coverage varies by insurer, and some companies don't offer it at all. Generally, you'll have better luck with larger insurers like Geico and Progressive.

Contact your insurance agent or company for more details and to learn what's included in the coverage.

Companies That Offer Mechanical Breakdown Insurance

Mechanical breakdown insurance is different at every insurer. Popular plans include:

GEICO Mechanical Breakdown Insurance

  • For new or leased cars less than 15 months old
  • Car must have less than 15,000 miles
  • Plan good for up to seven years or 100,00 miles, whichever comes first

Mercury Mechanical Protection Plan

  • Four coverage levels: Platinum, Gold, Silver, Copper
  • For new or used cars still under warranty (Platinum plan)
  • Plan good for up to seven years or 100,000 miles

USAA Extended Vehicle Protection

  • For new or used cars still under warranty
  • Car must be less than 10 years old
  • Car must have less than 250,000 miles

AAA Vehicle Protection Plan

  • Three coverage levels
  • For any car mileage and year
  • Not available in all states

How to File an MBI Claim

Like other claims, you'd file a mechanical breakdown insurance claim online or by calling your insurer. Here's what you need to do:

  1. Report the breakdown to your insurance company
    You have to get authorization from your auto insurance company before you get your car fixed.

  2. Give detailed information about the breakdown
    Your insurance provider needs a chance to investigate your claim before repairs are made. If you don't let them investigate first, your claim could be denied.

  3. Take your car to the licensed repair shop of your choice
    Be sure to inform the shop that you have mechanical breakdown insurance. Give them your policy number and your insurer's claims department phone number.

Make sure to let the auto repair shop know that your insurer needs to be contacted with a diagnosis and repair estimate before they begin work on your car.

Once your auto insurance provider hears from them, a claims examiner will decide whether a physical inspection of your car is necessary.

When your car is fixed, you pay your deductible amount to the repair shop. The insurance company pays the remainder of the bill directly to the shop.

Bottom Line

Mechanical breakdown insurance covers most major failures that happen in your car, like transmission issues and electrical system malfunctions.

If you're considering mechanical breakdown insurance, talk to your insurance company to learn about what's covered, how much it would cost, and if there are any fine-print details you need to know.

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