What is mechanical breakdown insurance: Should you have it?

Finding the best mechanical breakdown insurance

The best mechanical breakdown insurance is the plan that covers the repairs you are most worried about without duplicating coverage you already have. Compare deductibles, covered systems, mileage limits, claimAn insurance claim is a request you make to your insurance company for coverage after your car is damaged or you have an accident. You can file a claim online, by phone, or in writing. limits, repair shop rules, and exclusionsItems that are specifically denied coverage under the terms of an insurance policy. For example, most auto insurance policies exclude coverage for normal wear and tear, drag racing and intentional acts. before you buy. Not every insurer offers MBI, and plan details vary.

Mechanical breakdown insurance is sold through several different sources:

Car insurance companies
Car dealers
Financial institutions that handle car financing, such as banks or credit unions

Just like an extended car warranty, these policies do not cover routine maintenance or wear and tear on your car. However, mechanical breakdown insurance can add a layer of protection on top of a warranty or help cover costs after your warranty expires. You can purchase repair coverage at various levels for a set number of miles or months.

For example, a minimum level of coverage might apply to repairs, such as:

Transmission and transaxle cases and their internal components
Engine parts, such as the oil pump, pistons, timing gears, flywheel, and valves
Drive axle housings and internal components, axles, and joints

As you increase your coverage level, you can add electrical, cooling, steering, air conditioning, and fuel system repairs.

Most mechanical breakdown insurance policies also cover costs associated with breakdowns, such as towing and rental car coverage. What's more, they may come with added benefits, including 24-hour roadside assistance and lock-out service.

Consider these six factors before buying a mechanical repair plan:

Deductible (i.e., out-of-pocket cost before coverage begins)
Maximum coverage limits
Vehicle mileage limits
Limitations on which repair facility you can use
Any exclusions
Whether the plan duplicates services you already have through a car warranty or a roadside assistance plan

Mechanical breakdown insurance cost

On a new or nearly new car, mechanical breakdown coverage through your car insurance company costs about $35 to $100 a year. The older the car and the higher the mileage, the costlier the breakdown policy — especially when the car is no longer under the factory warranty.

Your price depends on:

Vehicle make and model
Vehicle age
Mileage
Coverage level
Deductible
Contract length
Claim limits
Where you live
Which company sells the plan

Newer, lower-mileage cars are often easier and cheaper to cover. Older vehicles and cars with higher repair costs may cost more or may not qualify.

Insurers vary greatly in their terms for breakdown coverage. GEICO, for example, offers mechanical breakdown coverage only for cars less than a year old with less than 15,000 miles. Other carriers may write coverage on cars, new or pre-owned, as old as seven or eight years, with as many as 100,000 miles.

David Scott, vice president of Mercury Insurance’s mechanical breakdown division in Oklahoma City, says the insurance cost is based on your vehicle type, the contract length and number of miles covered, and the level of protection you choose. It can run anywhere from hundreds of dollars to thousands.

Mercury offers four levels of mechanical breakdown insurance, from a basic bronze level of powertrain coverage to a platinum level that covers everything except items specifically excluded (such as normal wear-and-tear items like brakes, tires, shocks, and wiper blades).

Perks of a Mercury mechanical breakdown plan include:

Rental Vehicle Assistance
Tire Protection
Trip Interruption Coverage
Nationwide Protection
Repairs can be done at any licensed U.S. repair facility you choose where to take your vehicle
There is no limit to the number of claims you can make

"Another benefit of our coverage is that you can transfer it to the buyer of your car," says Scott, who adds that offering to transfer the service contract may make the car more attractive to potential buyers.

How does an extended car warranty work?

Most new cars come with a factory warranty that covers certain defects for a set time or mileage limit. Once that warranty expires, you pay for repairs yourself unless you buy added protection, such as mechanical breakdown insurance or a vehicle service contract.

Extended warranties may be sold by a dealership or other third party, and many auto manufacturers also offer their own extended warranty plans. The details vary by plan, but the chart below shows the types of warranties and levels of coverage you might find.

Example warranty coverages

What’s covered by basic, mid-level, and premium extended warranty plans
Warranty	Basic	Mid-Level	Premium*
Air conditioning		X
Braking			X
Drive Axle	X	X	X
Electrical		X	X
Engine	X	X	X
Steering			X
Suspension			X
Transmission	X	X	X

*Sometimes called “Bumper-to-Bumper”

The best extended auto warranty might last for 7 years, while plans with less coverage might run for 2, 3, or 5 years. Price varies depending on the year, vehicle model, and level of coverage.

While these plans might make sense in some situations, mechanical breakdown insurance may be cheaper and easier to cancel. With an extended car warranty, you often pay the full cost upfront and may not be eligible for a refund if you cancel. However, mechanical breakdown insurance may be billed monthly, quarterly, or annually and canceled at any time.

And of course, it's important to be wary of scams. Recent years have seen so many robo-calls about "your car's extended warranty" that they've become fodder for jokes and memes. Make sure you work with a reputable company, as scams are everywhere.

What is a vehicle service contract?

A vehicle service contract is an agreement that helps cover certain repairs or services listed in the contract. It may cover repairs like engine failure, transmission issues, or electrical system problems. You may see these offered by a dealer, the manufacturer, or a third-party company. It is not the same as insurance, and it may have requirements, such as using specific repair shops or keeping up with regular maintenance.

If you want to save on a vehicle service contract, you may have the most negotiating power when you purchase your car. Dealers eager to close a sale may be willing to throw in a contract at a greatly reduced rate. However, be aware that most vehicle service contracts require you to use a specific service center or dealership, so ensure the location is convenient for you.

What does roadside assistance cover?

Roadside assistance helps when your car is disabled, but it does not replace repair coverage. It covers towing, jump-starts, lockouts, flat tires, and fuel delivery. If your engine or transmission fails, roadside assistance may tow the car, but mechanical breakdown insurance may help cover the repair.

It usually provides a 24/7 hotline for members to call in the event of a vehicle breakdown. A representative assesses the situation and then arranges for the appropriate assistance. For example, if your car has gone into the ditch, a tow truck may be dispatched to your location, or in the event of an accident, the police may be notified on your behalf.

These plans may be sold as add-ons to auto insurance policies, offered as a perk to members of groups such as AAA, or provided as a benefit with certain credit cards. When purchased this way, the cost of roadside assistance may be only a few dollars a month.

If you only have roadside assistance through your insurance company or a member organization, the plan may cover some or all of the towing cost. However, it is unlikely to pay for any mechanical repairs. For that, you'll need mechanical breakdown insurance. Fortunately, most mechanical breakdown policies include roadside assistance, so you can get both services for one price.

Is mechanical breakdown insurance worth it?

Mechanical breakdown insurance may be worth it if your car qualifies, you plan to keep it after the warranty ends, and you would struggle to pay for a major repair. It may not be worth it if you already have strong warranty coverage, reliable savings, or a plan with too many exclusions.

Again, that's a decision every car owner must make for themselves. But the following two things are clear:

Mechanical breakdown insurance can be cheaper and more convenient than an extended car warranty.
Mechanical breakdown insurance is more comprehensive than roadside assistance alone.

You may want to consider mechanical breakdown insurance if you have difficulty paying for repairs or have purchased a used car and think regular repairs may be necessary.

It's free and easy to compare quotes. Contact a few companies to get prices for your vehicles, then decide whether the cost is worth the peace of mind.

FAQ: Mechanical breakdown insurance

Does mechanical breakdown insurance cover regular maintenance?

No. Mechanical breakdown insurance does not cover regular maintenance such as oil changes, tune-ups, tire rotations, brake pads, or wiper blades. It is designed for covered mechanical failures, not the routine cost of owning a car.

Is mechanical breakdown insurance the same as an extended warranty?

No. Mechanical breakdown insurance is sold as an insurance product, while an extended warranty is often a vehicle service contract. Both can help pay for repairs, but eligibility, pricing, claims, cancellation rules, and regulations can differ.

Can you buy mechanical breakdown insurance for a used car?

Yes, some companies offer mechanical breakdown plans for used cars, but others limit coverage to new or nearly new vehicles. GEICO, for example, requires the car to be new, fewer than 15 months old, and under 15,000 miles.

Is mechanical breakdown insurance better than roadside assistance?

No. They cover different needs. Roadside assistance can tow your car or help with a flat tire, lockout, or dead battery. Mechanical breakdown insurance can help cover repairs after a mechanical failure.