Extended Car Warranty in California: What to Know Before You Buy

Extended car warranties can help pay for vehicle repairs outside the scope of a standard factory car warranty.1 But if you live in California, you’ll be able to buy this type of policy only from a licensed car dealership.2

A mechanical breakdown insurance (MBI) policy can provide similar coverage. This type of policy pays to repair the major systems in your car if it breaks down unexpectedly.

If you’re thinking about getting MBI, here are our top picks for the best companies that offer mechanical breakdown coverage in California.

What is an extended car warranty?

An extended car warranty, also known as a third-party vehicle service contract (VSC), is optional coverage that pays for certain car repairs after your manufacturer’s warranty expires. It covers certain mechanical and electrical components and excludes routine maintenance, wear and tear, pre-existing conditions, and accidents. Vehicle service contracts can be expensive, and the coverage varies by company.

These contracts aren’t the same as car insurance, which most states require and covers accidents, liability, theft, damage from natural disasters, and more. Vehicle service contracts also differ from manufacturer extended warranties, which car makers automatically include when you purchase a new car and some used vehicles.

These factory warranties typically last for a certain number of years or miles and cover certain issues due to a defect or failure.3

Best extended car warranty companies in California

Only car dealerships can legally sell extended car warranties in California. If you don’t want to get this type of coverage at a dealership, you can buy mechanical breakdown insurance from a third-party provider. MBI policies pay to repair your vehicle’s major systems, like the transmission and engine, after an unexpected breakdown.

Here are the best mechanical breakdown insurers in California based on coverage options, cost, and customer reviews.

Progressive: Best overall

GEICO: Best for newer cars

Mercury Insurance: Best for used cars

Why California drivers should consider an extended warranty

California’s long commutes, steep roads, and summer heat can really take a toll on your vehicle. Add in some of the highest labor and repair costs in the country, and it’s easy to see why mechanical breakdown insurance can be a smart move.

MBI helps cover major repairs when your car’s warranty expires and can prevent surprise bills. It’s especially useful if you drive often or plan to keep your car for years. On the flip side, if your vehicle is new, leased, or still under a manufacturer’s warranty, you might not need MBI just yet.

What an extended warranty covers

Extended vehicle warranties vary with each provider and plan, but they usually cover major systems. Some of these policies extend the manufacturer’s bumper-to-bumper warranty or offer add-on services like roadside assistance and tire coverage.

In California, you can buy extended warranties only from licensed car dealerships. If you want to work with a different type of company, you may purchase mechanical breakdown insurance. MBI policies usually cover a vehicle’s:

• Air conditioning

• Brakes

• Drivetrain

• Electrical systems

• Engine

• Exhaust

• Fuel system

• Starters

• Steering

• Suspension

Extended car warranty laws in California

California has some of the toughest rules in the country when it comes to extended car warranties. In this state, only licensed dealerships can sell traditional vehicle service contracts (VSCs), which are similar to extended warranties.

If you’re looking for this type of coverage outside of a dealership, you can buy mechanical breakdown insurance (MBI). Companies that sell MBI policies must be an insurance company or partner with one.

The California Department of Insurance reviews all MBI plans and policies to ensure coverage is solid, the companies are financially sound, and the terms are fair and easy to understand. It also sets rate limits for MBI policies. With VSCs, dealerships can charge whatever they want for a plan, but they’re often willing to negotiate.

If you buy a VSC plan from a dealership, you get a 30-day free look period, which lets you cancel for a full refund if you change your mind. After that period, you can still cancel and get a prorated refund.2

How much does an extended car warranty cost in California?

The cost of mechanical breakdown protection varies with each insurer, policy, and vehicle. Generally, drivers with older or high-mileage vehicles pay higher rates.

For example, you could take out an MBI policy with Endurance for a 2025 Ford F-150 truck with 2,500 miles. You could either pay $105 per month for 24 months or save a bit and pay the entire $2,282 up front. Coverage lasts six years, and the deductible would be $100.

Meanwhile, an MBI policy for the same vehicle would cost $8 per month when added to an existing GEICO car insurance policy. The deductible would be $250.

The terms of your policy also affect your costs. Choosing a higher deductible leads to lower premiums, and lower deductibles come with higher premiums. Additionally, the longer your coverage term is, the more you’ll pay over the lifetime of your policy.

How to choose the right warranty plan in California

Here’s what to check when comparing mechanical breakdown insurance policies in California:

Extended car warranties in California FAQs