Alyssa Lane
Auto insurance typically covers repairs only if they are related to a covered peril such as accidents, vandalism, theft, fire, or natural disasters. Mechanical issues are generally not covered unless they are caused by a covered incident. For mechanical failures unrelated to accidents or covered incidents, a separate mechanical breakdown insurance (MBI) policy is required. MBI covers repairs not related to routine maintenance, wear and tear, or accidents, but it does not include maintenance and has limitations on eligibility based on vehicle age and mileage.
| Characteristics | Values |
|---|---|
| Type of coverage | Comprehensive and collision coverage |
| Covered perils | Accidents, hitting an animal, objects falling onto the vehicle |
| Wear and tear | Not covered |
| Routine maintenance | Not covered |
| Mechanical issues | Not covered unless related to a covered peril |
| Engine issues | Not covered unless related to a covered peril |
| Non-accident repairs | Not covered |
| Breakdown repairs | Not covered unless related to a covered accident |
What You'll Learn
Wear and tear
To prepare for predictable losses from wear and tear, vehicle owners can set aside money each month in an emergency fund. Additionally, some insurance companies offer mechanical breakdown insurance (MBI), which can help cover the cost of mechanical repairs not caused by accidents. However, MBI does not cover the replacement of wear-and-tear items like brake pads, spark plugs, filters, or tires.
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Mechanical breakdowns
Mechanical breakdown insurance (MBI) is an optional add-on to your car insurance that covers repairs to your vehicle's mechanical parts in the event of a mechanical breakdown. It is designed to protect your finances in the event of unexpected breakdowns and repairs.
MBI covers repairs to the mechanical parts of your vehicle, including the engine, transmission, electrical system, and other major vehicle systems. It is important to note that MBI does not cover routine maintenance, tune-ups, tire issues, or damages caused by poor maintenance. Repairs caused by accidents or collisions are also not covered under MBI and would fall under your collision or comprehensive coverage.
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 customer must also be the first owner of the vehicle. Once purchased, MBI can be renewed for up to seven years or 100,000 miles, whichever comes first. After a deductible, which can range from $100 to $500, MBI will cover the remaining cost of covered repairs.
MBI is a more comprehensive alternative to an extended vehicle warranty. While a vehicle warranty may only cover specific parts for a limited time and only for manufacturing-related issues, MBI covers a broader range of mechanical issues for the full length of the coverage term. Additionally, MBI often provides more flexibility in choosing where to get your vehicle repaired, whereas extended warranties may require the use of specific mechanics and garages.
When considering MBI, it is important to weigh the likelihood of a major car malfunction, the reliability of your car, and the potential savings in the event of a covered repair. MBI may be a worthwhile investment if you plan to keep your vehicle for an extended period and want the added peace of mind of coverage for unexpected mechanical breakdowns.
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Accidents and liability
When an accident occurs, one of the involved parties is usually considered "at-fault" and is responsible for covering the injuries of the other driver and their passengers. This is typically done via liability insurance coverage. In some states, known as "no-fault" states, medical bills are covered by each driver's individual personal injury protection (PIP) coverage instead of the at-fault driver's insurance.
Liability insurance coverage is a component of your auto insurance policy that pays for injuries to the other party and damages to their property when you are at fault in an accident. This coverage is split into two categories: bodily injury liability and property damage liability.
Bodily injury liability covers medical expenses, loss of income, and pain and suffering of the injured party. It can also cover legal fees if the injured party decides to sue for damages. Property damage liability, on the other hand, covers damage to someone else's property, including vehicle repair or replacement, and damage to other properties such as buildings, utility poles, and fences.
In the event of a severe accident for which you are not at fault, you can make a claim against the at-fault driver's liability insurance. The at-fault driver's bodily injury liability coverage would compensate you for medical bills, lost wages, and pain and suffering. However, if their liability coverage is insufficient, you may need to make a claim on your own underinsured motorist coverage or sue the at-fault driver personally.
Determining fault in an accident is crucial for assigning liability and providing compensation to the affected parties. Insurance companies make this determination based on the police officer's report of the incident, photographs or videos of the accident scene, and applicable state traffic laws. In some cases, witness statements and accident reconstruction may also be necessary to establish fault.
It is important to note that liability insurance does not cover your own injuries or damage to your own vehicle. To protect yourself in such cases, you would need additional types of coverage, such as collision coverage or comprehensive coverage. Collision coverage protects you in case of an accident, regardless of who is at fault, while comprehensive coverage insures against damages caused by vandalism, theft, natural disasters, and other acts of nature.
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Extended warranties
There are two primary types of extended warranties: those offered by the carmakers (original equipment manufacturers or OEMs) and aftermarket warranties offered by third-party vendors. An OEM is a carmaker such as Chevrolet, Ford, or Toyota, while a third-party vendor is an insurance or warranty company not directly affiliated with a car brand.
When considering an extended warranty, it's essential to read the fine print and understand the coverage, exclusions, and limitations. Some key things to look for include the duration of the warranty, the types of repairs covered, any additional perks or services included, and the reputation of the warranty provider. It's also important to compare the cost of the extended warranty with other options, such as mechanical breakdown insurance (MBI) or auto repair insurance.
In summary, extended warranties can be a worthwhile investment for vehicle owners who want added protection and peace of mind. However, it's crucial to carefully review the terms and conditions before purchasing to ensure that the warranty meets your specific needs and expectations.
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Repair shop limitations
When it comes to repair shop limitations, it's important to note that MBI providers typically require policyholders to have their vehicles serviced at specific, approved auto repair shops. This restriction limits the flexibility of vehicle owners in choosing their preferred or trusted mechanics. It is worth noting that extended warranties may also have similar requirements, often mandating that repairs be performed at a dealership's service centre.
The limitations on repair shop options can be a significant consideration for vehicle owners who have established relationships with particular mechanics or who prefer to patronize local businesses. This constraint may be viewed as an inconvenience or a restriction on their ability to obtain satisfactory repair services.
In addition to repair shop limitations, it is essential to understand the scope of coverage provided by MBI policies. While MBI can be invaluable in covering major mechanical failures, it typically does not cover regular maintenance or the replacement of certain parts. For instance, MBI policies generally exclude coverage for oil filter replacements, windshield wiper blades, and damage caused by poor maintenance.
Extended warranties, on the other hand, often include coverage for routine maintenance tasks such as annual oil changes, tire rotations, and brake pad replacements. They provide financial assistance for expected maintenance costs, offering a more comprehensive solution for vehicle owners who want to proactively manage their car's upkeep.
When deciding between MBI and extended warranties, it is crucial to carefully review the terms and conditions of each option. Vehicle owners should pay close attention to the specific repair shop requirements, covered services, and exclusions outlined in the policies. By thoroughly understanding the limitations and coverage provided, individuals can make informed decisions that align with their preferences, driving habits, and vehicle maintenance needs.
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Frequently asked questions
Auto insurance does cover repairs, but only in the case of accidents or unforeseen events such as theft and fire. This depends on the type of coverage you have.
Auto insurance does not cover repairs for routine mechanical breakdowns or normal wear and tear.
MBI is a separate type of policy that covers mechanical failures on your vehicle. It is an optional coverage offered by some insurance companies.
MBI covers a wider range of parts and services than extended warranties, but it does not cover maintenance and wear and tear. Extended warranties are usually cheaper than MBI and are often sold by dealerships.
Yes, you can consider purchasing a car warranty, which is designed to help pay for certain mechanical breakdowns. Another option is roadside assistance, which can provide towing services, assistance with flat tires, and jump-starts for dead batteries.
