Mechanical Breakdown Insurance (MBI) vs. Extended Warranty

Mechanical breakdown insurance for used cars offers extra protection against damage to your vehicle that’s unrelated to wear and tear and/or accidents.
Written by Jason Tushinski
Reviewed by Kathleen Flear
Mechanical breakdown insurance is an add-on option on top of regular
car insurance
that covers breakdowns of your car’s mechanical operation.
You can purchase it through your insurer to cover issues such as your engine, brakes, or transmission. Mechanical breakdown only covers damage unrelated to wear and tear and accidents.
A mechanical warranty is similar, the main difference being that a mechanical warranty is offered through your dealership.
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What is mechanical breakdown insurance?

Mechanical breakdown insurance pays for damage to your vehicle that is unrelated to normal wear or an accident.
This type of insurance covers anything beyond the scope of your original warranty and is an add-on policy that you must pay for in addition to your car insurance policy.
Mechanical breakdown insurance is regulated by the insurance industry for standards and claims.

What is a mechanical warranty?

A mechanical warranty, or
extended warranty
, is similar to mechanical breakdown insurance but is offered through your car dealer. Unlike mechanical breakdown insurance, a mechanical warranty is not regulated by an external body.
Like mechanical breakdown, an extended warranty covers damage to your car’s mechanical components—as long as the damage is not the result of wear and tear or an accident.
Most dealers offer various extended warranty plans, and you can choose one depending on the term length and budget that suit you.

Why choose mechanical breakdown insurance over an extended warranty?

For most drivers, mechanical breakdown insurance is a better choice than an extended warranty. This is because mechanical breakdown plans tend to be more flexible and cost less money to buy.
Mechanical breakdown policies tend to offer a greater selection of repair shops and garages to take your car to, along with the ability to cancel your policy at any time without losing any money.
You also won't have to put down a lump sum upfront when purchasing mechanical breakdown insurance—you’ll just be responsible for paying your premiums.
Mechanical breakdown insurance is not offered for every model of car, and if you’re driving an expensive car, an extended warranty may be your only option for supplemental coverage. Talk to your insurer to see if your car qualifies.

What mechanical breakdown insurance covers

Most basic mechanical breakdown insurance policies cover the following parts if damaged:
  • Engine parts, such as the oil pump, water pump, etc.
  • Drivetrain
  • Transmission
  • Exhaust
  • Brakes
  • Electrical components, such as your car’s alternator
Some plans—though not all—cover the following parts for repairs:
  • Steering wheel
  • Air conditioning
  • Fuel system
As mentioned, each insurer may differ in what cars they’ll cover with mechanical breakdown insurance. Many won’t cover pricier cars, such as
, or Mercedes. Be sure to ask your insurer if your car qualifies.

What’s not covered by mechanical breakdown insurance

Trying to get normal wear and tear or damage from an accident covered under your MBI is a fool’s errand because you’ll be denied.
That said, it’s a good idea to ask your insurer what they specifically categorize as wear and tear versus what is considered breakdown. This should give you more clarity in terms of what will and won’t be covered.
Key Takeaway Mechanical breakdown insurance does not cover wear and tear, but it will cover many of the mechanical failures often excluded from typical car insurance policies.

Typical exclusions from mechanical breakdown insurance policies

While insurers differ in terms of what they’ll cover under your policy, the following auto components and related procedures are usually excluded from mechanical breakdown insurance:
  • Regular repairs or tune-ups
  • Suspension alignment
  • Wheel balancing
  • Filters
  • Fluids and coolants
  • Spark plugs
  • Brake pads, linings, and shoes
  • Tire issues
Key Takeaway MBI definitely won’t cover wear and tear or accident damage, but you’ll want to check with your insurer for a complete list of what is excluded from their coverage.

Does car insurance cover mechanical breakdown?

Your regular car insurance does not cover mechanical breakdown—this kind of policy is an add-on that you will have to buy separately from your insurer or add as an endorsement on your overall insurance policy.

The cost of mechanical breakdown insurance

Prices for mechanical breakdown insurance can range from as little as $30 dollars to as much as $100. There is usually a deductible to go along with the policy, ranging from $250 to $500 dollars.
What you’ll pay for mechanical breakdown insurance depends on your insurer, as well as your car’s mileage. Mechanical breakdown insurance is almost always cheaper than an extended warranty.
Note that unlike your normal insurance policy, your personal information is not taken into account when your insurer calculates your mechanical breakdown rate.
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Advantages of mechanical breakdown insurance over an extended warranty

In addition to being more flexible, mechanical breakdown insurance doesn’t require a large lump sum payment upfront upon purchase. It also gives you the freedom to have your car repaired whenever you want, rather than on a dealer’s schedule.
You'll be under no pressure to buy MBI, either. Many car dealers put pressure on customers to buy extended warranties because it's an opportunity to make more money. So long as your car qualifies, it’s best to buy a cheaper and more flexible mechanical breakdown insurance policy as opposed to an extended warranty from a dealer.

Are mechanical breakdown insurance and extended warranties worth it?

Ultimately, it depends on you and your car. If you’re looking for more protection in case of mechanical breakdown, then it’s a good idea to look into a plan that works best for you.
It’s always a good idea to do some research if you fear mechanical breakdowns may haunt you and your car’s future.
Kelley’s Blue Book
, and the
National Automotive Dealers Association
are all great resources to help you get an idea of how well your vehicle will hold up—especially if your car is used.
Specifically, you’ll want to research your car’s overall performance and how often it tends to require maintenance.
Also, ask yourself how long you plan on keeping the car. If you see it as a long-term vehicle, and if it's a used car, adding mechanical breakdown insurance could be a good idea to guard against any future mechanical issues that may crop up.
Key Takeaway If you’re worried about future mechanical issues with your car and may not have money on hand to cover a big mechanical repair, breakdown insurance is a cost-effective way to protect yourself from costly fixes.
Some people ask—and rightly so—if mechanical breakdown insurance or an extended warranty is worth it due to their cost.
Consider that a major breakdown, such as a blown head gasket, can cost roughly $1,400 to repair. If you went ahead and bought mechanical breakdown insurance, costing roughly $700 per year, you’d still be ahead by that much after the problem was fixed.
If you’re driving (or thinkig of buying) a
luxury car
, odds are it won’t qualify for mechanical breakdown insurance—but an extended warranty is still a possibility.

Should you get mechanical breakdown insurance?

If you’re driving a used car and are worried about how big car repair expenses may impact you in the future, it’s a no-brainer. Getting mechanical breakdown insurance for used cars is usually a good idea.
New cars tend to require less maintenance than used cars, so if the model you buy is known for high quality and low maintenance, you may feel better about passing on mechanical breakdown insurance.
Likewise, if you know you’ve got the money on hand to cover mechanical issues, you might be comfortable passing on added coverage.

Roadside assistance

Even with mechanical breakdown insurance you could still find yourself stalled on the shoulder with a flat tire or empty fuel tank. Although your insurance might cover some more technical auto repairs, chances are they won't offer
roadside assistance
when you're in a pinch.

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Frequently asked questions

What’s the difference between mechanical breakdown insurance and an extended warranty?

There are a few differences, but the main one is that mechanical breakdown insurance tends to be cheaper than an extended warranty. You buy mechanical breakdown insurance as an add-on from your insurer, while an extended warranty is purchased through your dealer.
Also, not all cars qualify for breakdown insurance. If you drive a luxury car and want more protection, you’ll likely have to buy an extended warranty from your dealer.

Does mechanical breakdown insurance cover everything outside normal wear and tear?

While mechanical breakdown insurance covers a lot beyond wear and tear and accident damage, what is and isn’t covered depends on your insurer and the type of car you drive. It is best to ask your insurer what qualifies as wear and tear and what qualifies as a breakdown—and thus, insurable—coverage.
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