Leif Olson, Car Insurance Writer
@leif_olson_1
The main difference between mechanical breakdown insurance and an extended warranty is where you buy them. Mechanical breakdown insurance (MBI) is typically purchased through a car insurance company, whereas an extended warranty is usually purchased through a dealership, manufacturer, or third-party company.
Both MBI and extended warranties cover expensive repairs to ageing vehicles. While their coverage areas are similar, extended warranties are usually much more expensive than MBI. Typically, MBI is added to an existing insurance policy for a relatively low monthly cost, whereas an extended warranty must be paid for up front and costs between $1,000 and $3,000.
Mechanical Breakdown Insurance vs. Extended Warranty
| Coverage Type | Mechanical Breakdown Insurance | Extended Warranty |
| Eligible vehicles | New or used cars with fewer than 15K miles | New cars and some used cars from dealerships |
| Coverage limit | 7 years or 100,000 miles | 2-7 years |
| Payment schedule | Pay as you go | Pay for all coverage up front |
| Up-front cost | About $100/year | $1,000-$3,000 |
| Deductible | Typically $250 | $0-$250 |
To learn more, check out WalletHub’s guides to mechanical breakdown insurance and extended car warranties.
People also ask
What does mechanical breakdown insurance cover?
Mechanical breakdown insurance covers the major systems in your car, like the engine, transmission, and brakes, which aren’t covered by standard car insurance. For example, mechanical breakdown insurance (MBI) would cover a blown transmission or head gasket—repairs that even full coverage car insurance leaves out.
What Mechanical Breakdown Insurance Does & Does Not Cover
| Covered | Not Covered |
| Engine | ... |
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