What Is Mechanical Breakdown Insurance?

Mechanical Breakdown Insurance

Definition
Mechanical breakdown insurance covers the cost of car repairs and failures unrelated to an accident.
 A man looks in the engine of a car on the roadside.
Photo:

Urbazon / Getty Images

Mechanical breakdown insurance covers the cost of car repairs and failures unrelated to an accident. Coverage kicks in when your manufacturer’s warranty no longer provides coverage for damaged parts.

Definition and Examples of Mechanical Breakdown Insurance

Mechanical breakdown insurance covers the cost to repair, replace, or service operational or structural car breakdowns that aren’t caused by a collision. This policy covers failures that your manufacturer’s warranty doesn’t, or which aren't covered by a standard auto insurance policy.

  • Alternate name: Car repair insurance
  • Acronym: MBI

Let’s say you’re cruising down the road and suddenly you can’t shift gears. You run a diagnostics and discover your transmission has a malfunction. Your manufacturer’s warranty is already expired and your auto policy won’t cover repairs that are not caused by a collision. This is where mechanical breakdown insurance comes in. 

You only pay a deductible and your insurer pays for the parts and labor required to repair the transmission. 

Note

Mechanical breakdown insurance is an agreement between you and your insurer, not you and a car dealer.

How Mechanical Breakdown Insurance Works

Mechanical breakdown insurance pays for the cost to repair sudden, unexpected component breakdowns in your car. Not all insurance companies sell this policy and those who do often avail it as an add-on. You could also buy a mechanical breakdown insurance policy from some financial institutions like banks and credit unions.

Mechanical breakdown insurance isn’t available for all cars. Generally, your car must be relatively new and the insurance company will impose a maximum age and mileage limit. 

For example, Geico’s MBI policy is available for new or leased cars less than 15 months old and with fewer than 15,000 miles on the odometer. You may renew coverage for up to seven years or 100,000 miles, whichever occurs first.

Note

When a covered loss occurs, you’ll need to meet your policy’s deductible before your insurer can pay for all the repairs. You can have your car or RV repaired anywhere you want, as long as they are approved and licensed for the service in question. Some insurers may also direct you to their preferred repair facilities. Expenses associated with covered repairs are paid directly to the repair shop.

Insurers want you to use an approved repair facility since they typically provide a 12-month or 12,000-mile warranty on all parts and labor from the date of service.

Some mechanical breakdown insurance policies may carry additional perks at no extra cost, including:

  •  24/7 roadside assistance: You may receive 24-hour emergency roadside assistance if you own an MBI policy.
  • Transferable coverage: Some insurers will let you transfer your MBI policy (once) to someone who buys your car while the policy is still in force. 
  • Lifetime deductible guarantee: You will not pay a deductible for second or subsequent failures to the same component. 
  • Alternate transportation reimbursement: Your insurer may cover the cost of renting a car if you must leave yours at the repair facility. 

What Does Mechanical Breakdown Insurance Cover?

Different mechanical breakdown insurance contracts carry different agreements that typically expire after a specific period or the number of miles. You can often find different levels of protection from the same provider.

Depending on the plan, a mechanical breakdown policy can cover:

  • Powertrain: A vehicle powertrain includes the engine, transmission, and all drive axles. 
  • Core systems: These are your vehicle’s main electrical and mechanical systems apart from the powertrain. They include brakes, suspension, steering, engine cooling, fuel system, and electrical components.
  • Comfort and tech: These are components that add to the comfort and safety of your vehicle, including AC and heating, convenience tech like power seats and infotainment systems, and safety tech like automatic braking systems. 

Some MBI policies may also cover lost or damaged key fobs, damaged windshields, paintless dent repairs, or tire damage from road hazards.

Here’s how different types of insurance will cover different situations. 

  Collision Comprehensive Mechanical Breakdown Insurance
Damage from hitting another vehicle Yes No No
Damage from a tree branch hitting your car No Yes No
Faulty transmission No No Yes
Damage from vandalism No Yes No
Engine cooling repair No No Yes

Mechanical breakdown insurance won’t cover all damages unrelated to a collision. Read your policy’s fine print to understand its coverage exclusions. 

What Is the Average Cost of Mechanical Breakdown Insurance?

The car make and model are significant factors in the cost of a mechanical breakdown insurance policy. Your car’s age, odometer reading, length of the contract, and the kind of repairs covered will also be factors in your premium rate. You can expect to pay a higher premium as your car ages or takes on more mileage. 

Note

You’ll typically pay a deductible for all repairs made on a covered breakdown. The deductible is typically $250, but it could be higher or lower depending on factors like the vehicle type. Sometimes, you’ll pay no deductible on covered parts and labor. 

Mechanical breakdown insurance premiums range from $100 to $200 per year, although prices vary by provider, policy, and vehicle type. As with other types of insurance, a higher deductible lowers your MBI premium.

Do I Need Mechanical Breakdown Insurance?

Buying an MBI policy when your car is still new may pay off in the long run. Even if you use your car for your daily commute, you’ll still be within the mileage covered by your manufacturer’s warranty. With mechanical breakdown insurance, you’re assured you won’t have to pay unexpected repair costs out of pocket. 

Let’s crunch a few numbers to put things in perspective. 

For example, say you have a three-year premium for a mechanical breakdown insurance policy for $700. Now, let’s assume you need to replace the head gasket on your 2021 Ford Explorer, which costs $2,000. With MBI, you’ll save more than half that amount to replace the head gasket. 

Note

If you’re looking to reduce the cost of surprise repairs not covered by your manufacturer’s warranty, mechanical breakdown insurance is worth considering. Keep in mind that MBI usually does not cover routine tune-ups or damage from normal wear and tear.

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

Mechanical Breakdown Insurance Extended Car Warranty
A contract between you and an insurance company A contract between you and a car dealer
Regulated by the state department of insurance Not regulated by the state department of insurance
Offered to relatively new vehicles Also covers high-mileage vehicles

You may think you’re getting a car insurance policy when you get an extended car warranty, but you aren’t. They are quite different. The main difference is that MBI is sold by an insurance company, while an extended warranty is provided by a car dealer. Insurance agents, banks, and credit unions may also sell MBI policies.

You’ll need a relatively new car, usually with no more than 15,000 miles on it, to qualify for mechanical breakdown insurance. In contrast, your dealer may provide an extended warranty for a higher-mileage vehicle. 

Key Takeaways

  • Mechanical breakdown insurance covers the cost to repair, replace, or service operational or structural car breakdowns that aren’t caused by a collision.
  • Mechanical breakdown insurance won’t cover all damages unrelated to a collision. Read a policy’s fine print to understand its coverage exclusions.
  • Usually, you can only qualify for mechanical breakdown insurance if you have a relatively new car.

Frequently Asked Questions (FAQs)

Who offers mechanical breakdown insurance?

Mechanical breakdown insurance is often sold by insurance companies, though you may also buy the product through banks and credit unions.

How do I make a claim on mechanical breakdown insurance?

To make a claim on mechanical breakdown insurance, call your insurance provider as soon as possible to inform them about the breakdown. A claims examiner should reach out to guide you through the claim and repair process.

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

Mechanical breakdown insurance terms are determined by the insurer, including for RVs. Car repair insurance is typically geared toward newer vehicles, but the exact terms for age and mileage will vary by provider and policy.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. State of Montana. “Mechanical Breakdown Insurance, MCA.”

  2. California Department of Insurance. “Guide to Automobile Service Contracts, Extended Warranties, and Other Repair Agreements.”

  3. Geico. “Mechanical Breakdown Insurance: Coverage for Car Repairs.”

  4. AAA Automotive. “Vehicle Warranties Offer Low or No-Cost Repairs."

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