What Is Mechanical Breakdown Insurance, and Do You Need It?

Car insurance doesn’t cover car repairs or replacements if your vehicle’s mechanical components break down unexpectedly. That’s where mechanical breakdown insurance (MBI) or car repair insurance comes in. 

This insurance coverage is similar to an extended warranty, with some notable differences. (Spoiler: Mechanical breakdown insurance is usually the lower-cost option.) Here’s what you should know about what MBI covers, what it excludes, how much it costs, and how it works with your existing auto warranty and car insurance policy.

What mechanical breakdown insurance covers 

Mechanical breakdown insurance covers your vehicle’s mechanical parts after an unexpected breakdown. For example, say your car’s transmission stops working. If it didn’t have prior transmission issues, MBI would pay for the cost of repairs. 

Besides your transmission, an MBI insurance policy usually covers your vehicle’s:

• Air conditioning

• Brakes

• Drivetrain

• Electrical systems

• Engine

• Exhaust

• Fuel system

• Starters

• Steering

• Suspension

Several mechanical breakdown providers will only insure new, low-mileage vehicles. Older, high-mileage vehicles face an increased likelihood of failure, making them riskier to insure. 

It’s worth noting that some MBI policies enforce term limits based on the number of years or miles you drive your car. For example, GEICO will renew your coverage for up to seven years or 100,000 miles — whichever comes first.1 Once your term ends, you no longer qualify for coverage.

What mechanical breakdown insurance doesn’t cover 

Mechanical breakdown insurance policies won’t cover damage from car accidents with other vehicles or objects. It also excludes coverage for theft, vandalism, and environmental factors.

Additionally, MBI policies won’t cover mechanical issues due to poor upkeep and neglect. Many car insurance companies require drivers to perform regular vehicle maintenance, like oil changes, tire rotations, or replacement of brake pads. Failing to do so can result in coverage denials. Mechanical breakdown insurance excludes coverage for the cost of routine maintenance. 

Benefits of mechanical breakdown insurance 

Mechanical breakdown insurance offers protection for your vehicle’s mechanical components. Consider the following advantages: 

How much mechanical breakdown insurance costs 

The cost of mechanical breakdown protection varies based on your vehicle. Drivers with older or high-mileage vehicles usually pay higher rates. 

For example, a Good Sam MBI policy for a 2017 Audi Q5 SUV with a gas engine, tow hitch, four-wheel drive, 85,000 miles, and a $100 deductible in Chicago costs $137 per month. 

Meanwhile, a 2023 Honda Civic with a gas engine, no towing ability, front-wheel drive, 500 miles, and a $500 deductible in Chicago costs $18 per month.

Your vehicle’s repair cost is another factor that influences your premiums. Luxury cars like Audis and BMWs are more expensive to repair, requiring premium parts and specialized labor. Similarly, cars with high-tech features like parking sensors and self-parking capabilities have increased replacement costs, resulting in higher rates.

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 mechanical breakdown insurance works with your existing coverage 

Mechanical breakdown coverage can work with your existing auto warranty and car insurance to provide more protection. 

Most car warranties come with the following coverages: 

• Powertrain: This covers parts of your car that make it drive, like your engine, transmission, and drivetrain. 

• Bumper-to-bumper: This offers comprehensive service for most of your vehicle, including its powertrain system, electrical components, and air conditioning.  

A bumper-to-bumper warranty usually has a shorter lifespan than a powertrain warranty. When your bumper-to-bumper warranty expires, you can buy an MBI auto policy to cover components that your powertrain warranty doesn’t.

An MBI policy can also supplement your auto insurance policy. A standard car insurance policy includes comprehensive coverage and collision coverage. This protects your vehicle against car crashes, theft, vandalism, severe weather, and more. 

Auto insurance doesn’t cover a mechanical breakdown due to a factory defect or malfunction. That’s where MBI comes in.2

Difference between mechanical breakdown insurance and extended warranty

Mechanical breakdown insurance and extended car warranties (or vehicle service contracts) both cover mechanical failures after your manufacturer’s warranty ends. While similar in coverage, they have crucial differences:3

Mechanical breakdown insurance for new vs. used vehicles 

The age of your vehicle can affect your MBI coverage. Insurers may not offer MBI coverage for older, used cars. 

Benefits for new vehicles

With new vehicles, you may not need MBI off the bat. But when part of your original warranty expires, you can buy MBI to remain fully insured. Mechanical insurance may also increase your car’s resale value. If you plan to sell your car, keeping it free from mechanical problems can attract potential buyers. 

Benefits for used vehicles

Like newer vehicles, MBI covers your used vehicle once your factory warranty expires. Pre-owned vehicles from a dealership typically come with an extended warranty alongside a certified inspection. Again, you may not need MBI immediately. But once part of your extended warranty expires, it could cover those gaps.

Mechanical breakdown insurance FAQs