What Is Mechanical Breakdown Insurance?

How Mechanical Breakdown Insurance Works

Mechanical breakdown insurance is a policy that covers the cost of repairs, replacements, and other services to your vehicle as a result of failure or defect. This type of coverage can reduce your out-of-pocket spending on car repairs and provide a type of coverage you generally don’t get with a standard auto insurance policy.

• Alternate name: Car repair insurance
• Acronym: MBI

Mechanical breakdown insurance isn’t designed to pay for damages from accidents. Instead, it covers defects or failures to your vehicle’s parts and systems. Depending on your policy, it might cover more than what’s specifically listed in your dealer’s car warranty.

This type of coverage usually is only available for newer cars and those under a certain mileage. For example, Geico, which is one provider of mechanical breakdown insurance, only offers new policies for cars younger than 15 months with fewer than 15,000 miles (although you can renew your policy until your car is seven years old or has up to 100,000 miles).

Mechanical Breakdown Insurance Example

Suppose you’re driving home from the library and notice smoke billowing out from under the hood of your car. You purchased the new car relatively recently, so you know it shouldn’t be having mechanical problems yet. You take the car to your mechanic and learn it has a part that needs to be replaced.

Under normal circumstances, there would be two possibilities. First, if your car were still under warranty, the dealer would replace the part for you (assuming it’s covered under the warranty). But if that wasn’t the case, you’d have to pay for the repair out of pocket.

But if you have mechanical breakdown insurance, your policy should cover the cost of the repair, as well as labor costs, up to your insurance limit. The only out-of-pocket expense you’ll be stuck with is your deductible.

Most car insurance coverages are designed to pay for damage to your vehicle (or someone else’s) as a result of an external factor. Liability insurance pays for damage to someone else’s vehicle when you’re at fault for an accident, while collision and comprehensive coverage pay for damage to your own vehicle caused by an accident or something else.

What Does Mechanical Breakdown Insurance Cover?

Mechanical breakdown insurance covers failures and defects of your car’s parts and systems. Generally speaking, your policy may come in one of two forms. Some policies will explicitly list the parts and systems within your vehicle that are covered. Other policies may cover all parts and systems except those specifically excluded.

Examples of parts and systems that might be covered by your mechanical breakdown insurance policy include:

• Engine
• Transmission
• Drive axle assembly
• Heating and cooling
• Electrical
• Steering
• Brakes
• Fuel delivery
• Suspension

Just as it’s important to know what mechanical breakdown insurance covers, you should also know what it doesn’t cover.

Mechanical breakdown insurance usually doesn’t cover general wear and tear to your vehicle. It will cover the cost of repairing the brakes on your new car if they’re defective, but if you’re replacing your brakes after several years of use, they probably won’t be covered.

Mechanical breakdown insurance also won’t cover damages caused by accidents. If you’re involved in an accident or inclement weather damages your vehicle, the collision and comprehensive coverage in your policy should pay for it. But in that situation, mechanical breakdown insurance won’t apply since it’s only designed to cover defects and failures to your vehicle.

What Is the Average Cost of Mechanical Breakdown Insurance?

The cost of mechanical breakdown insurance depends on the insurance company you sign your policy with. These policies tend to be very affordable and have price tags between $50 and $100 per year.

Of course, your insurance premium isn’t the only expense you’ll be on the hook for. If you have to file a claim, you also have to pay your deductible before your insurance company will pay for the remainder of the damages, up to your insurance limits. Deductibles for mechanical breakdown insurance tend to range from $100 to $500, with an average deductible of about $250.

MBI vs. Extended Warranty: What's the Difference?

An extended warranty is designed to protect your vehicle for a certain number of years. Unlike your basic vehicle warranty, the extended warranty doesn’t come from the vehicle manufacturer—it’s offered by a third party.

Mechanical breakdown insurance and extended warranties have some things in common. First, both generally only provide coverage for a set amount of time. Mechanical breakdown insurance may cover vehicles up to a certain age or mileage. Extended warranty coverage, on the other hand, covers a certain amount of years after you purchase the policy. As a result, it could cover older vehicles.

However, these policies have some important differences. While mechanical breakdown insurance requires a small premium when you pay your auto insurance premium, an extended warranty often requires a large upfront payment.

Mechanical breakdown insurance usually allows you to get your car repaired at a mechanic of your choice. But in the case of extended warranties, you may have to get your repairs done at the dealer or with an approved mechanic.

Do I Need Mechanical Breakdown Insurance?

Mechanical breakdown insurance can save you money on car repairs. The cost of mechanical breakdown insurance can be as low as $50 to $100 per year. Meanwhile, the cost of a new transmission or engine can cost thousands. It’s a small price to pay for the chance of saving yourself a lot of money.

However, mechanical breakdown insurance isn’t right for everyone. First, many insurance carriers only provide this type of coverage for newer vehicles or those with low mileage. As a result, if you have an older vehicle or one with high mileage, you may not even be able to sign up for mechanical breakdown insurance.

Mechanical breakdown insurance also may not be necessary for someone with a comprehensive vehicle warranty.

If you have a vehicle warranty that covers all parts and systems, you probably don’t need mechanical breakdown insurance.

Frequently Asked Questions (FAQs)