What Is Mechanical Breakdown Insurance?
Mechanical breakdown insurance is an optional type of insurance that provides coverage for the major systems in your car, like the engine and transmission, which are not covered by standard car insurance policies. Mechanical breakdown insurance (MBI) is similar to an extended warranty but provides more coverage. It is sometimes referred to as car repair insurance.
With mechanical breakdown insurance, you can submit a claim to your insurance company if your car has a major system issue. Once your claim is approved, you can go to a mechanic of your choosing, and all you need to pay is your deductible. Your insurance company will cover the rest.
What Does Mechanical Breakdown Insurance Cover?
| Covered | Not Covered |
|---|---|
| Engine | Filters |
| Drivetrain | Spark plugs |
| Transmission | Brake pads |
| Brakes | Tires |
| Exhaust | Fluids (coolant, oil, wiper fluid, etc.) |
| Power system | Repairs categorized as normal maintenance |
Note: some policies also cover steering, air conditioning, and the car’s fuel system.
How Does Mechanical Breakdown Insurance Work?
Mechanical breakdown insurance works by covering the cost to repair or replace the major components of your vehicle if they break due to mechanical failure, in return for you making premium payments.
Here's how mechanical breakdown insurance generally works:
- When you purchase MBI, you will pay a premium, typically in monthly installments for the duration of the coverage period.
- You will file a claim with your MBI provider if your vehicle experiences a covered mechanical breakdown. Some MBI policies require you to take your car to a specific repair facility, but others allow you to choose your own repair shop.
- Your MBI provider will typically pay for the cost of the repair or replacement, minus any deductible that you are responsible for, once your claim is approved. You will choose a deductible amount when you purchase MBI so the deductible will vary based on your policy.
How Much Is Mechanical Breakdown Insurance?
Mechanical breakdown insurance costs around $100 per year, on average. Since MBI is only available for new or relatively new vehicles, the cost of a policy will depend heavily on how long the policy will last, the value of the car itself, the mileage, and if it is a type of vehicle that is particularly expensive to repair, like luxury cars or electric vehicles.
Learn more about how much mechanical breakdown insurance costs.
Is Mechanical Breakdown Insurance Worth It?
Mechanical breakdown insurance is worth it if you are buying a new car, planning to have your car for a while, or concerned about paying for repair costs out of pocket. If you plan to drive your new car for multiple years, getting mechanical breakdown insurance will help ensure that your car stays fully functioning. Just bear in mind that MBI typically has high deductibles, so you’ll still end up with out-of-pocket costs.
Learn more about whether mechanical breakdown insurance is worth it.
Best Mechanical Breakdown Insurance
Some of these companies offer vehicle service plans that are very similar to mechanical breakdown insurance and generally have the same type of coverage included.
Learn more about the best mechanical breakdown insurance companies.
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 |
Mechanical breakdown insurance, extended warranties, and vehicle service plans all work in similar ways, but the biggest differences are in their overall cost and where they can be purchased.
MBI and vehicle service plans are generally purchased through an auto insurance provider and can be added to an existing insurance policy for a low monthly cost.
Extended warranties, on the other hand, are typically sold by dealerships, manufacturers, and third-party companies. Extended warranties often cost significantly more than MBI and must be paid for up front in a large lump sum. However, MBI typically has higher deductibles than extended warranties do, so you’ll have more out-of-pocket costs with MBI if your new car breaks down frequently.
Learn more about the difference between mechanical breakdown insurance and extended warranty.
