What Is Mechanical Breakdown Insurance?

Mechanical breakdown insurance is a type of insurance that pays for vehicle repairs if they break down or fail in some way.

While mechanical breakdown insurance is not usually included in a standard auto insurance policy, it can often be added to your policy depending on your car insurance company.

How Mechanical Breakdown Insurance Works

Mechanical breakdown insurance is a policy that pays for repairs, replacements, and other services performed on your vehicle as a result of a failure or defect. This type of coverage can reduce your out-of-pocket expenses for car repairs while also providing coverage that is not typically provided by a standard auto insurance policy.

• Alternate name: Car repair insurance
• Acronym: MBI

Accidental damages are not covered by mechanical breakdown insurance. Instead, it covers defects or failures to your vehicle's parts and systems. Your policy may cover more than what is specifically listed in your dealer's car warranty, depending on your policy.

This type of coverage is typically only available for newer cars with low mileage. For example, Geico, a mechanical breakdown insurance provider, only offers new policies for cars that are less than 15 months old and have less 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

Assume you're driving home from the library and notice smoke billowing from your car's hood. You bought the new car recently, so you know it shouldn't have any mechanical issues just yet. You take the car to your mechanic and discover it is missing a part.

Under normal circumstances, there are two options. First, if your car were still under warranty, the dealer would replace the part for you (assuming it's covered under the warranty). If that wasn't the case, you'd have to pay for the repair yourself.

However, if you have mechanical breakdown insurance, your policy should cover the cost of the repair as well as labor costs, up to the limit of your policy. The only out-of-pocket expense you will incur is your deductible.

• The deductible on a mechanical breakdown insurance policy will vary depending on your insurance company, but it is typically between $100 and $500 per claim.

Most auto insurance policies are intended to pay for damage to your vehicle (or someone else's) caused by an external factor. When you are at fault for an accident, liability insurance pays for damage to someone else's vehicle, whereas 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 protects you against failures and defects in your vehicle's parts and systems. In general, your policy may take one of two forms. Some policies will expressly state which parts and systems in your vehicle are covered. Other policies may cover all parts and systems unless they are expressly excluded.

The following are some examples of parts and systems that may be covered by your mechanical breakdown insurance policy:

• 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 does not typically cover general wear and tear on your vehicle. It will cover the cost of repairing your new car's brakes if they are defective, but if you replace your brakes after several years of use, they are unlikely to be covered.

• In the same way that mechanical breakdown insurance does not cover normal wear and tear, it also does not cover problems caused by neglect. If you fail to properly care for your vehicle, don't expect your insurance company to pay for repairs that come as a result.

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 is determined by the insurance company with which you sign your policy. These policies are typically very affordable, costing between $50 and $100 per year.

Of course, your insurance premium isn't the only cost you'll have to bear. If you must file a claim, you must also pay your deductible before your insurance company will pay for the remainder of the damages, up to the limits of your policy. Mechanical breakdown insurance deductibles typically range from $100 to $500, with a $250 average.

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

An extended warranty is intended to cover your vehicle for a specified number of years. Unlike your standard vehicle warranty, the extended warranty is provided by a third party rather than the vehicle manufacturer.

Mechanical breakdown insurance and extended warranties share some characteristics. For starters, both generally only provide coverage for a limited time. Mechanical breakdown coverage may be available for vehicles up to a certain age or mileage. Extended warranty coverage, on the other hand, lasts for a set number of years after the policy is purchased. As a result, it may apply to older vehicles.

However, there are some significant differences between these policies. While mechanical breakdown insurance typically requires a small upfront payment when you pay your auto insurance premium, an extended warranty frequently requires a large upfront payment.

Mechanical breakdown insurance typically allows you to have your vehicle repaired at a mechanic of your choosing. However, in the case of extended warranties, you may be required to have your repairs performed at the dealer or by an approved mechanic.

Do I Need Mechanical Breakdown Insurance?

Mechanical breakdown insurance can help you save money on vehicle repairs. Mechanical breakdown insurance can be purchased for as little as $50 to $100 per year. Meanwhile, a new transmission or engine can cost thousands of dollars. It's a small price to pay for the possibility of saving a lot of money.

Mechanical breakdown insurance, on the other hand, is not for everyone. For starters, many insurance companies only offer this type of coverage for newer or low-mileage vehicles. As a result, if you own an older or high-mileage vehicle, you may be unable to obtain mechanical breakdown insurance.

Mechanical breakdown insurance may also be unnecessary for those who have 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)

Who offers mechanical breakdown insurance?

Insurance companies typically offer mechanical breakdown insurance as an add-on to an auto insurance policy. Some credit unions also provide this type of protection.

How do I make a claim on mechanical breakdown insurance?

Making a claim on your mechanical breakdown insurance is similar to making any other auto insurance claim: Contact your car insurance company's claims department or your local agent.

How old can an RV be and still get covered by mechanical breakdown insurance?

Mechanical breakdown insurance is typically only available for newer vehicles with low mileage. The insurance company determines how old a vehicle can be and still be covered.