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
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.
MBI is like an extended warranty, but it offers more coverage and has a low monthly fee, rather than a large upfront cost. As the name suggests, MBI only covers breakdowns of the mechanical and electric components of your car and will not pay for preventative or routine maintenance like tire rotations or oil changes.
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