Mechanical breakdown insurance (MBI) helps pay for car repairs unrelated to an accident. An optional coverage available from some insurance companies, MBI covers things like replacing an alternator or starter motor, or engine repair.
Usually, only newer cars are eligible for MBI. However, once purchased, the coverage can be kept in force for several years beyond the vehicle’s factory warranty.
MBI is also similar in many ways to an extended vehicle warranty. We’ll look at the key differences later in this article.
What does it cost to repair a car in 2022?
If you’ve ever had your car break down, you know that getting back on the road can come at quite a cost. According to RepairPal, here’s the average cost of some common car repairs in 2022:
- Suspension ball joint replacement: $243-$334
- Alternator replacement: $599-$777
- Water pump replacement: $746-$884
- Blown head gasket replacement: $1,845-$2,241
- Turbocharger replacement: $1,887-$2,177
- Automatic transmission replacement: $5,098-5,297
The good news is that major breakdowns rarely happen. But if you’d prefer to avoid the chance that you’ll have to pay for repairs like this, you can consider MBI.
What does mechanical breakdown insurance cover?
MBI pays to repair or replace items associated with your car’s major systems when they break down due to incidents not covered by your standard insurance policy.
Exactly what MBI covers varies by provider. But you can usually expect coverage to include repairs to your car’s engine, transmission and drivetrain, suspension, exhaust, braking system and electrical system. MBI usually does not cover routine items such as oil and fluid changes or other preventative maintenance. Nor should you expect it to pay for consumable items such as filters, spark plugs, brake pads and rotors, batteries, or tires.
MBI also doesn’t pay for repairs related to an accident. For example, say your car’s engine is damaged in a front-end collision. Depending on who’s at fault in the accident, the engine repair or replacement would be covered under the other driver's liability coverage or your own policy's collision coverage.
How does mechanical breakdown insurance work?
You buy MBI from an auto insurance company. Several companies, including Progressive, Allstate, and Geico, offer coverage (note that MBI is often underwritten by a third-party provider but marketed as the insurance company's offering).
Typically, cars under two years old with less than 15,000 miles on the odometer are eligible. However, once purchased, the coverage can remain on your policy for several years. You pay for MBI as part of your policy premium and can choose to keep or drop the coverage when your policy renews.
The insurance company should provide a contract explaining what is and isn’t covered with your MBI, and instructions on how to file a claim.
If you need a repair — let’s say your alternator fails — you can file a claim by following the insurance company’s instructions. The insurer may provide a list of preferred mechanics in your area to provide the needed repair/replacement, or they might allow you to visit any provider you like. The insurer will require you to provide an estimate for the repairs and a final invoice before it settles the claim. The claim payment, minus any deductible, will likely be made directly to the mechanic. Paying the mechanic the amount of your deductible is your responsibility.
So let’s say you have MBI with a $200 deductible:
- Mechanic’s estimate to replace alternator: $750
- Insurance company pays: $550
- You pay: $200
How much does mechanical breakdown insurance cost?
As with any type of insurance, the cost of MBI varies by company. Choosing a lower deductible (if offered) will also result in your paying a higher premium. However, most people pay around $100 to $200 annually for the coverage.
Consider checking with several insurers to see who offers the lowest premium, or contact an independent insurance agent to discuss your needs and options.
Mechanical breakdown insurance versus extended warranty
You may think that MBI seems a lot like the extended warranty plans offered by car dealerships and other providers. The fact is, they are pretty similar. Both are intended to help you pay for mechanical repairs not related to a collision or other incident covered by a standard car insurance policy.
An extended vehicle warranty is usually purchased after the manufacturer’s warranty expires. This is unlike an MBI, which is purchased when the vehicle is still under warranty. Because of this, getting an extended vehicle warranty for an older or used car is usually much easier. However, an extended warranty may be a bit more expensive and typically requires payment in full at the point of purchase.
| MBI | Extended warranty | |
|---|---|---|
Provided by | Insurance company | Car dealership or third party |
Cost | $100 - $200 per year | $1,000 - $3,000 for up to 7 years of warranty |
Deductible | $250 | $0 - $250 |
Payment schedule | Pay as part of your car insurance policy payment | Pay in full at warranty’s inception |
Eligibility | Newer vehicles (less than 15,000 miles) | Vehicles whose manufacturer’s warranties have expired |
Should you get mechanical breakdown insurance?
MBI can indeed help you avoid some huge repair bills — paying $100 in premium plus a $250 deductible is much better than paying $7,000 for a transmission replacement or other major repair.
But as MBI is an optional coverage, you owe it to yourself to think critically about the likelihood you’ll need it. According to RepairPal, the average car visits a repair shop once every two years for a significant unscheduled repair, while only 12% of those repairs are considered severe. Most drivers can probably forgo buying MBI.
Some more questions to ask yourself:
- What are the reliability ratings for the make and model of my car? Ratings can give you a better sense of the likelihood that your vehicle will need a major repair. Sites such as RepairPal and Consumer Reports are great places to start your research.
- How well do I take care of my car? Following the manufacturer’s schedule for oil changes and other routine maintenance can help you avoid any unscheduled and costly trips to a mechanic.
- What’s my risk tolerance? Owning a car always comes with the risk of needing major repairs. It’s a good idea to set aside an emergency fund to pay those bills — should repairs be needed.
MBI can offer extra peace of mind
The need for major car repairs is, fortunately, rare. This is especially true if you have a reliable make and model and take good care of it. But when they are needed, repairs can be costly. MBI can help you avoid those costs, giving you greater peace of mind when you're behind the wheel.