Understanding Auto Insurance: Breaking Down The Basics

Auto insurance is a complex topic, and understanding the different types of coverage available is essential. One type of coverage that is often overlooked is mechanical breakdown insurance (MBI). MBI is an optional add-on to standard car insurance policies that covers repairs to a vehicle's major systems, such as the engine and transmission, which are typically not covered by basic auto insurance. This type of insurance is similar to an extended warranty but provides more comprehensive coverage and is usually purchased through a car insurance company. While MBI can provide valuable protection, it is important to weigh the costs and benefits to determine if it is the right choice for your situation.

What is covered by mechanical breakdown insurance?

Mechanical breakdown insurance (MBI) is an optional coverage that offers protection from high repair costs for major mechanical failures not caused by a car accident or wear and tear. It is similar to an extended warranty but typically costs less and is limited to newer vehicles.

MBI covers repairs to your vehicle's essential components, such as the powertrain, transmission, and engine, if your car breaks down. It is important to note that MBI does not cover routine maintenance services, including oil changes, spark plug replacement, tire rotations, and other wear and tear components.

The cost of MBI varies depending on the type of car, mileage, and insurance provider, but it generally ranges from $30 to $100 per year. Some companies, like GEICO, offer MBI with a deductible, which is the amount you pay before your insurance coverage kicks in. For example, if you have a $250 deductible and your repair cost is $2000, you will pay $250, and the insurance will cover the remaining $1750.

When deciding if MBI is worth it, consider your vehicle's reliability and average repair costs. If your car has lower dependability scores or higher repair costs, MBI could save you money. Additionally, if you have a newer vehicle and want peace of mind against unexpected repair costs, MBI can be a good option. However, if your vehicle is older, has higher mileage, or you have a budget for repairs, MBI might not be necessary.

What is not covered by mechanical breakdown insurance?

Mechanical breakdown insurance (MBI) does not cover routine maintenance and wear and tear items. This includes:

• Fluids (coolant, oil, wiper fluid, etc.)
• Repairs categorised as normal maintenance
• Brake pad replacement
• Towing
• Damage resulting from accidents, collisions, or environmental factors
• Damage caused by corrosion, misuse, or improper maintenance
• Breakdowns caused by overheating, alterations to your vehicle, or towing excessive weight
• Pre-existing conditions

MBI is also unlikely to cover steering, air conditioning, and the car's fuel system, though some policies do.

How does mechanical breakdown insurance work?

Mechanical breakdown insurance (MBI) is an optional coverage that provides protection for repairs not typically covered by standard car insurance. It is similar to an extended warranty but tends to be less expensive and is limited to newer vehicles. MBI covers repairs to your vehicle's essential components, such as the engine, transmission, and air conditioning, in the event of a mechanical breakdown. It does not cover routine maintenance or damage caused by accidents, collisions, or wear and tear.

MBI is available for new or leased cars that are less than 15 months old and have less than 15,000 miles on the odometer. The cost of MBI varies depending on the type of car, mileage, and insurance provider, but it typically ranges from $30 to $100 per year. When purchasing MBI, you will need to choose a deductible, which is the amount you will pay out of pocket before the insurance coverage kicks in. Deductibles for MBI are typically higher than those for extended warranties, ranging from $100 to $500.

To use MBI coverage, you will need to call your insurance provider and obtain authorization before any repair work is done. Once your claim is approved, you can take your vehicle to an approved repair facility or a mechanic of your choice. After paying your deductible, the insurance company will pay the remaining balance directly to the repair shop.

MBI can be a valuable option for those with newer vehicles who want protection against unexpected repair costs. It may not be worth it for those with older, more reliable vehicles or those who have money set aside for potential repairs.

How much does mechanical breakdown insurance cost?

The cost of mechanical breakdown insurance (MBI) varies depending on several factors. On average, MBI costs around $100 per year, with a deductible of around $250. However, the price can differ based on the insurance company and the type of vehicle you own.

The cost of MBI is influenced by the length of the policy, the value of the car, the mileage, and the repair costs of the vehicle type. For example, luxury cars or electric vehicles, which are generally more expensive to repair, will likely have a higher MBI cost than standard private passenger cars.

When purchasing MBI, you can choose a deductible that fits your budget and vehicle type, typically ranging from $100 to $500. MBI is often less expensive than an extended warranty, which can cost between $1,300 and $4,600 per year.

Compared to the cost of insuring a car, MBI is usually not too expensive. For instance, a policy for a 2016 Ford Edge in New York with a $250 deductible was quoted at only $30 per year.

It's important to note that MBI is not offered by every insurance company, and not all cars qualify for this coverage. To qualify for MBI, your car typically needs to be relatively new, with less than 15,000 miles on the odometer, and some companies may have additional requirements.

Is mechanical breakdown insurance worth it?

Mechanical breakdown insurance (MBI) is an optional coverage that provides protection for repairs not typically covered by standard car insurance. It covers repairs to your vehicle's essential components if your car breaks down, but it doesn't cover routine maintenance services, including oil changes, spark plug replacement, tire rotations, and other wear and tear components.

MBI is worth considering if you have a newer vehicle and want to avoid out-of-pocket repair costs, or if you plan to keep your vehicle for a long time. However, it may not be worth it for those who have reliable vehicles with low average repair costs or those who have money set aside for repairs.

MBI costs between $30 and $100 per year on average, which is more affordable than an extended car warranty. The cost depends on factors such as the type of car, mileage, and insurance provider.

When deciding if MBI is worth it, consider your vehicle's reliability and average repair costs. If your vehicle has low dependability scores or high repair costs, MBI could save you money. Additionally, if you plan to keep your vehicle for more than five years, MBI may be a good option. However, if you have a reliable vehicle or have a budget for repairs, you may be better off without it.

Frequently asked questions