What Is Mechanical Breakdown Insurance, and Should I Get It?

What Is Mechanical Breakdown Insurance, and Should I Get It?

Mechanical breakdown insurance (MBI) is an optional part of car insurance meant to cover trips to the mechanic not caused by an accident.

For example, a busted engine or puncture in your air conditioner hose will be covered by MBI. While the coverage seems reasonable in principle, many experts question its value. Car breakdowns can be expensive, but the frequency at which they happen is low. Comparing rates from multiple insurers, however, is one of the best ways to find cheap coverage.

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In this article, we break down the benefits and detriments of MBI, and how it is different from an extended warranty.

What is mechanical breakdown insurance?

Mechanical breakdown insurance covers major failures that can occur in your car, which are often excluded in basic auto insurance. Whether it's bad brakes, transmission issues, the electrical system or any other major vehicle system malfunction, MBI covers the repairs. File an online claim like you would with any car-related issue, and the company will reimburse you for the cost of repairs.

MBI does not, however, cover routine tune-ups, tire issues or damages caused by poor maintenance on the driver's part. Any repairs caused by a car accident or crash go through your collision or comprehensive coverage.

Unlike better-known types of car insurance, MBI is not offered by every company, nor does every car qualify.

  • The largest company to offer MBI is Geico, which allows customers to opt for the coverage in online quote forms. To qualify for MBI at Geico, your car needs to be less than 15 months old and have less than 15,000 miles on the odometer.
  • Smaller companies that offer it include Mercury Insurance. Mercury's plan is a bit broader and will accept a wider range of cars, so long as they are under warranty.
  • Progressive and 21st Century also market MBI plans, but both are underwritten by other companies — and are more akin to extended warranties, which are discussed below.

Admittedly, there is a lot of overlap between MBI and your car's warranty in terms of coverage. Many of the things that can break down with a new car will be covered by the warranty. On the other hand, MBI plans are a bit broader than a regular warranty and may cover breakdowns that don't match the specific descriptions laid out in a warranty. MBI plans also last longer than warranties, which are usually for three years.

Unfortunately, you have to buy MBI coverage while the warranty is still in force, in anticipation of its eventual termination. Geico's and Mercury's MBI plans are good for periods of six to seven years, or 100,000 miles, whichever comes first.

How much does mechanical breakdown insurance cost?

Compared to the cost of insuring a car, MBI is usually not too expensive. We found quotes from New York, where it only costs $30 per year for a 2016 Ford Edge with a $250 deductible. A Wall Street Journal investigation found policies could be $75 a year with deductibles up to $400.

Below we list the annual cost of MBI for cars ranging in value from about $24,000 to $64,000. Cars with greater values, like the Tesla Model S ($70,000 and up) and the Audi R8 ($160,000), may not be covered by MBI plans. When we contacted Geico, the company informed us that cars of too high a value may not qualify for MBI.

Car model
MBI annual cost
2016 Ford Edge$30
2016 Toyota Camry$30
2016 BMW M3$30

Mechanical breakdown insurance vs. extended warranty

Essentially, MBI is the same thing as an extended warranty, but they operate in a few different ways.

The main advantage of MBI over extended warranties is that MBI is usually less expensive.

A Consumers Reports study found that that the average initial cost of an extended warranty was $1,214 for a three-year plan. Based on the prices we found, MBI costs would come out to about $180 to $450 for the six years the policy is in effect.

Other important points of comparison include:

  • Extended warranty plans require you to pay the amount up front, as opposed to in installments.
  • MBI plans tend to have more flexibility in where you can bring your car for repairs. Extended warranties may require you to only use certain mechanics and garages.
  • Extended warranties tend to have smaller deductibles. In the New York quote for MBI mentioned above, we were unable to adjust the $250 deductible. An extended warranty will usually have a deductible under $100.
  • Lastly, as stated above, high-value cars may not qualify for MBI, while they may qualify for an extended warranty.

Is mechanical breakdown insurance worth the price?

For MBI to be worth it, you would need to have a breakdown that exceeds the combined price of the plan and the deductible.

Assuming a $75-per-year plan for six years and a $250 deductible, you would need a breakdown of greater than $700 in those six years for it to be worth it. If you do experience a system failure in your vehicle, the cost of repairs will most likely exceed $700.

A blown transmission costs on average between $1,800 and $3,400 to replace, while a broken head gasket could cost $1,200 to $1,600 to fix. So, if one of those were to happen, you would save anywhere from $500 to $2,700.

If a major breakdown did happen, you could save a lot of money with MBI — it comes down to the likelihood that your car will have a non-accident breakdown and the value of the peace of mind.

Type of repair
Cost of repair
Cost of MBI(deductible + six-year premium)
Savings
Blown head gasket~$1,400~$700$700
Blown transmission~$3,000~$700$2,300

How can you measure your chances of having a major car malfunction? The first thing to consider is how long you are going to use your car. Newer cars tend to break down less often than older ones, so you should only get MBI if you plan to keep your vehicle for more than five years. Remember though, Geico will only insure the vehicle up to 100,000 miles. If you anticipate hitting that number just as your initial warranty ends, then there is no point in purchasing the coverage.

The next thing to consider is the reliability of your car. In the Consumer Reports study of extended warranties, BMW and Mercedes-Benz owners were more satisfied with their plan. Those cars break down more frequently, so customers were able to use the warranty. If the type of car you drive has a record of going many years without breaking down, then there is a smaller chance you will need to use MBI. Fortunately, you don't have to guess at the reliability of your car, as you can look it up with Consumer Reports or TrueDelta.

Lastly, you should remember that MBI will not cover minor — and therefore more likely — repairs. These plans come with $200 to $400 deductibles, so unless the cost of covered repairs far exceeds those amounts, the coverage won’t be worth it.

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