Jane Dotson
Mechanical Breakdown Insurance (MBI) is an optional insurance policy that covers repairs to your vehicle in the event of a major breakdown outside of an accident. While it may seem like a good idea, many experts question its value. The cost of MBI can be high, and often the cover provided is limited, with many policies excluding specific parts and any pre-existing faults. The likelihood of a non-accident breakdown is also relatively low, especially for newer cars. Ultimately, whether MBI is worth it depends on the likelihood of a breakdown and how much you value the peace of mind of knowing you're covered.
| Characteristics | Values |
|---|---|
| Cost | Buying insurance can add more than a grand to your purchase |
| Coverage | An impressive array of things aren't covered, including pre-existing faults, specific parts, "design faults", and anything considered the result of faulty repairs. |
| Cost-effectiveness | Many experts question its value as car breakdowns are infrequent. MBI is usually only worth it if you can get cheap coverage. |
| Alternatives | You don't have to rely on MBI when buying a car from a dealer; if the car isn't of acceptable quality, the CGA requires the dealer to sort it out. It is recommended to invest in a pre-purchase inspection and get the vehicle regularly serviced. |
| Deductibles | MBI plans come with $200 to $400 deductibles, so the coverage may not be worth it unless the cost of repairs far exceeds those amounts. |
| Peace of mind | MBI provides peace of mind in knowing you're covered in the event of a non-accident breakdown. |
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What You'll Learn
MBI covers major breakdowns outside of accidents
Mechanical breakdown insurance (MBI) is an optional part of car insurance that covers major breakdowns outside of accidents. It is meant to cover trips to the mechanic caused by mechanical failures, such as a busted engine or punctured air conditioner hose, rather than collisions or comprehensive claims. MBI provides peace of mind for car owners who want comprehensive protection for their vehicles and can be especially beneficial for those who wish to keep their vehicles in optimal condition as they age.
MBI coverage typically does not include minor repairs or maintenance, and there may be exclusions for specific parts or design faults. The frequency of car breakdowns is generally low, so the value of MBI depends on the likelihood of a non-accident breakdown and the cost of repairs compared to the policy's price and deductible. For example, a blown transmission can cost on average between $1,800 and $5,000 to replace, so having MBI coverage with a deductible of $250 could result in significant savings.
When considering MBI, it is important to compare rates and reviews from multiple insurers to find the best fit for your needs. It is also worth noting that there may be overlap with your car's warranty, and MBI plans often require regular servicing at approved centres to maintain coverage. Ultimately, MBI can provide financial relief and peace of mind, but it may not be worth the cost depending on your vehicle's age, reliability, and the terms of your warranty.
MBI is a valuable option for long-term vehicle maintenance, offering extended coverage for mechanical repairs at a potentially lower cost than standard warranties. However, it is important to carefully review the fine print and exclusions of any MBI policy before purchasing to ensure it aligns with your specific needs and expectations.
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MBI doesn't cover minor repairs
Mechanical Breakdown Insurance (MBI) is an optional part of car insurance that covers repairs to your vehicle in the event of a major breakdown outside of an accident. It is meant to cover trips to the mechanic caused by, for example, a busted engine or a puncture in your air conditioner hose.
However, MBI does not cover minor repairs, which are more likely to occur and are therefore more important to consider when weighing up the value of the insurance. MBI plans come with deductibles ranging from $200 to $400, so unless the cost of covered repairs far exceeds those amounts, the coverage won't be worth it. For example, if you have a $250 deductible and need a $700 repair, you will only be reimbursed for $450.
MBI also does not cover routine tune-ups, tire issues, or damages caused by poor maintenance on the driver's part. It also won't cover any repairs needed due to an accident or crash, which would go through your collision or comprehensive coverage. MBI is also unlikely to cover pre-existing faults.
The cost of MBI coverage depends on the age and mileage of your car, as well as the company providing the insurance. For example, GEICO offers MBI coverage for six to seven years or 100,000 miles, whichever comes first, for cars that are less than 15 months old and have less than 15,000 miles on the odometer. The cost of this coverage is as little as $30 per year with a $250 deductible, although some policies can be as much as $75 per year with deductibles up to $400.
In summary, MBI coverage can provide peace of mind for those anxious about future mechanical failure repair bills. However, it is important to consider that MBI does not cover minor repairs, which are more likely to occur, and that the cost of coverage may outweigh the benefits depending on the age and mileage of your car.
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MBI is worth it only if you can get cheap coverage
Mechanical Breakdown Insurance (MBI) is an optional add-on to your car insurance that covers repairs in the event of a major breakdown outside of an accident. For example, a busted engine or a puncture in your air conditioner hose will be covered by MBI. While this coverage seems reasonable, many experts question its value. Car breakdowns are expensive, but they don't happen frequently. This is why MBI is worth it only if you can get cheap coverage.
The cost of MBI can add more than a grand to your purchase, and the coverage you get for your money is often not worth it. Many policies have broad-ranging exclusions for "design faults" and anything considered the result of faulty repairs. Even when a fault is covered, the amount provided to fix it may be capped at a low amount, and you will have to pay an excess for each claim. For example, Autosure's "Essential Cover" policy does not cover the vehicle's battery, exhaust system, shock absorbers, airbags, catalytic converter, fuel tank, brake pads and shoes, manual clutch, seat belts, audio system, and keys.
To successfully claim on an MBI policy, you must comply with the policy's requirements, which typically include getting your car regularly serviced at an approved service centre. Policies usually require petrol vehicles to be serviced every 12 months or 15,000 km, whichever comes first. Additionally, MBI will not cover minor repairs, which are more likely to occur, and plans come with $200 to $400 deductibles, so the cost of covered repairs must far exceed those amounts for the coverage to be worth it.
Ultimately, the value of MBI depends on the likelihood of your car having a non-accident breakdown and how much you value the peace of mind of knowing you're covered. 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. To get cheap MBI coverage, you can compare rates from multiple insurers.
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MBI may not be worth the cost
Mechanical Breakdown Insurance (MBI) may not be worth the cost. Firstly, car breakdowns are infrequent, so the chances of needing MBI are low. Secondly, MBI does not cover minor repairs, which are more likely to occur, and policies typically have deductibles of $200 to $400, so the cost of covered repairs must exceed this amount for the insurance to be worthwhile. Additionally, MBI policies have various exclusions and limitations. For example, Autosure's "Essential Cover" policy does not cover the vehicle's battery, exhaust system, shock absorbers, airbags, catalytic converter, fuel tank, brake pads, manual clutch, seat belts, audio system, or keys.
Furthermore, MBI policies may have caps on the amount they will pay for repairs, which can be as low as $2000. If the repairs exceed this amount, the policyholder must pay the difference. Policies may also require the vehicle to be serviced regularly at an approved service centre, and failure to comply with these requirements can result in denied claims. Obtaining a pre-purchase inspection and regularly servicing the vehicle may be a more cost-effective option than purchasing MBI.
MBI policies are also known to be a "rip-off" for consumers, with dealers and insurers benefiting more from the high commissions earned on these products. Between 2018 and 2020, consumers paid approximately $442 million in retail premiums for add-on insurance products, with MBI being the most popular. However, the number of claims made was significantly lower than the number of policies sold, indicating that many consumers may have unnecessarily purchased coverage they did not need or use.
In summary, while MBI can provide peace of mind and financial protection in the event of a major car breakdown, the low frequency of breakdowns, policy exclusions and limitations, and the potential for high commissions and unnecessary costs for consumers mean that MBI may not be worth the cost for some individuals. It is essential to carefully consider the likelihood of needing MBI, compare rates from multiple insurers, and read the fine print of any policy before purchasing.
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MBI is unlikely to cover pre-existing faults
Mechanical Breakdown Insurance (MBI) is an optional part of car insurance that covers repairs to a vehicle in the event of a major breakdown outside of an accident. While MBI can provide peace of mind and financial protection against unexpected repair costs, it is important to consider the exclusions and limitations of such policies. One important factor to consider is that MBI is unlikely to cover pre-existing faults.
When considering whether to purchase MBI, it is crucial to understand that it typically does not cover pre-existing conditions or problems that existed before the insurance coverage was purchased. This includes issues that may not have been noticeable at the time of purchase but were nonetheless present. For example, a head gasket could have been problematic even before any symptoms became visible. Therefore, it is essential to carefully review the policy document and understand the definition of a pre-existing fault to avoid any surprises in the event of a claim.
MBI policies often include a waiting period before coverage begins, which can range from 30 to 60 days or up to 1,000 miles. Repairs during this waiting period are generally not covered by the policy. Additionally, MBI may have specific requirements for maintaining coverage, such as regular servicing at approved service centres or adhering to the manufacturer's guidelines for vehicle maintenance. Failure to comply with these requirements may result in the denial of claims related to pre-existing faults.
While MBI can provide valuable protection against unexpected mechanical failures, it is important to recognise that it may not be necessary for all drivers. Before purchasing MBI, individuals should consider their vehicle's age, reliability, and repair costs. Newer cars tend to break down less frequently, so MBI may be more suitable for those planning to keep their vehicle for an extended period. Additionally, comprehensive insurance may already provide sufficient coverage for some drivers, as it typically covers repair costs for accidents, theft, fire, vandalism, and natural disasters.
In conclusion, while MBI can offer financial protection against unexpected mechanical breakdowns, it is unlikely to cover pre-existing faults. Individuals should carefully review the policy terms, conditions, and exclusions before purchasing MBI to ensure it aligns with their specific needs and budget. Understanding the limitations of MBI can help individuals make an informed decision about whether it is worth the additional cost.
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Frequently asked questions
Mechanical Breakdown Insurance (MBI) is an optional part of car insurance that covers repairs in the event of a mechanical breakdown outside of an accident.
MBI insurance is generally not worth the cost. While it covers major breakdowns, it does not cover minor repairs, which are more likely to occur. Additionally, the policies often have broad-ranging exclusions and require regular servicing at approved service centres to be eligible for claims.
Instead of MBI insurance, you can invest in a pre-purchase inspection and regularly service your vehicle. If you have bought a vehicle that is not of acceptable quality, the CGA requires the dealer to sort it out.
Before purchasing MBI insurance, consider the likelihood of your car having a non-accident breakdown and how long you plan to use the car. Newer cars tend to break down less often, so MBI insurance is more suitable if you plan to keep your vehicle for more than five years. Additionally, compare rates from multiple insurers to find cheap coverage.
