Mechanical breakdown insurance, also known as MBI, is an optional form of vehicle insurance. The main purpose of the insurance is to cover trips to the mechanic not caused by an accident or collision.
In other words, if your car breaks down for any reason outside of a collision, you might want to use your mechanical breakdown insurance to cover the costs. Whether your engine breaks down or your transmission explodes, your mechanical breakdown insurance should cover it.
Mechanical breakdown insurance sounds like a good idea. Every car breaks down, right? Breakdowns can be expensive. Engine or transmission problems can cost thousands. These problems aren’t common – but they’re costly when they do occur.
Nevertheless, mechanical breakdown insurance can be an unnecessary cost for many vehicle owners. Some cars are covered under warranties and extended warranties, for example. Keep reading to determine if MBI is the right choice for you.
What Does Mechanical Breakdown Insurance Cover? What Doesn’t It Cover?
In general, mechanical breakdown insurance covers major vehicle failures. If your vehicle experiences a major breakdown (unrelated to an accident or collision), then mechanical breakdown insurance will cover the repair costs of fixing that problem.
Obviously, all vehicles are legally required to have auto insurance. However, auto insurance doesn’t cover all vehicle breakdowns. In fact, most auto insurance won’t cover any type of non-accident-related breakdowns.
Here’s what it boils down to:
What Mechanical Breakdown Insurance Covers: Major failures that can occur in your car, including car problems excluded from basic auto insurance.
What Mechanical Breakdown Insurance Doesn’t Cover: Routine tune-ups or tire issues, damage caused by poor maintenance, and any repairs required after an accident or crash (accident and crash-related repair costs go through your collision or comprehensive coverage).
Obviously, those who own an older vehicle will be more interested in mechanical breakdown insurance than those with a newer vehicle. Older vehicles break down more frequently. Unfortunately, mechanical breakdown insurance is rarely available on older vehicles
Not Every Insurance Company Offers Mechanical Breakdown Insurance
If you’ve never heard of mechanical breakdown insurance, then you’re not alone: many insurance companies don’t offer MBI.
GEICO is the largest and best-known American insurance company to offer MBI. When you’re requesting a GEICO quote, you can choose to add MBI to your plan. Progressive and Mercury Insurance also offer MBI policies, although both plans are underwritten by other companies (they’re more like “extended warranties” than true MBI policies).
Are All Vehicles Covered Under Mechanical Breakdown Insurance?
It’s important to note that companies like GEICO only offer MBI on a specific range of vehicles. If your vehicle is more than 15 months (yes, months) old, for example, then you won’t qualify for mechanical breakdown insurance. And, if your vehicle has more than 15,000 miles on the odometer, then it won’t qualify.
Ultimately, this leads us to the biggest criticism of mechanical breakdown insurance: it’s not that different from a new vehicle’s warranty. The only real difference is that MBI plans offer broader coverage than a manufacturer’s warranty. They might also last longer than a standard warranty. There will also be overlap: you almost always have to buy MBI coverage while the warranty still covers your vehicle. People buy MBI in anticipation that their warranty will expire.
Typically, MBI policies lasts 6 or 7 years, or 100,000 miles (whichever comes first).
In addition, higher value vehicles – like an Audi R8 or a Tesla Model S – are not typically eligible for MBI. These vehicles inevitably have higher repair costs, and insurance companies aren’t interested in covering these repairs.
How Much Does Mechanical Breakdown Insurance Cost?
Mechanical breakdown insurance is relatively cheap compared to other types of vehicle insurance. If your vehicle qualifies for MBI, then you’ll typically pay $30 to $100 per year for coverage, with a $250 to $500 deductible.
As with any vehicle insurance, costs vary widely between states, drivers, and vehicles. Compare quotes online. If an insurance company offers mechanical breakdown insurance, you’ll typically see an option to select it when requesting a quote.
What’s the Difference Between Mechanical Breakdown Insurance and an Extended Warranty?
One of the biggest sources of confusion on MBI is the difference between MBI and an extended warranty.
Essentially, the two policies offer the same coverage, but they operate in different ways.
- An MBI is typically less expensive than an extended warranty; in one Consumer Reports study, for example, they found that the average extended warranty was priced at $1,214 for three years of coverage
- Extended warranty plans require you to pay for coverage upfront, as opposed to paying in installments like traditional insurance
- MBI plans are more flexible in terms of eligibility; a wider range of repairs will be covered under MBIs
- Extended warranties have smaller deductibles than mechanical breakdown insurance plans; you can expect a deductible of around $100 for most extended warranties, much smaller than the $250 to $500 deductible on MBI policies
Conclusion: Is Mechanical Breakdown Insurance Worth It?
Think of mechanical breakdown insurance from a math perspective. For your MBI policy to be “worth it”, the cost of a breakdown needs to exceed the combined price of the plan plus your deductible.
Let’s say you’re paying $100 per year for your MBI over a six year period with a $250 deductible. You need a breakdown within those six years that costs more than $800 for your insurance to be worth it.
Obviously, plenty of vehicles repairs cost more than $800 – but costly repairs are relatively rare on newer vehicles.
Ultimately, mechanical breakdown insurance can provide peace of mind, and it can be particularly valuable on breakdown-prone vehicles. It’s up to you to decide if mechanical breakdown insurance is worth the price.
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