What Is Mechanical Breakdown Insurance? (2024 Guide)

Mechanical breakdown insurance and extended warranties have some of the same features, but these two types of coverage differ in a few key ways:

Vehicle Eligibility

MBI is only available for vehicles with low mileage, commonly in the range of 15,000. But some third-party warranty companies offer plans for vehicles with up to 300,000 miles.

Term Length

MBI policies typically have longer terms than extended warranties. For example, Geico’s MBI plan offers coverage for up to 7 years/100,000 miles. Car warranties, on the other hand, tend to cover fewer years and fewer miles. Many factory auto warranties provide up to 3 years/36,000 miles of bumper-to-bumper protection and up to 5 years/60,000 miles of powertrain coverage. Extended car warranties usually have longer limits, such as 6 years/75,000 miles.

Cost

While the cost of MBI policies varies, you can expect to pay somewhere in the neighborhood of $30 to $100 per year, which comes to $210 to $700 total for a 7-year plan. In our 2022 consumer survey, we found that the median cost for an extended car warranty is $2,458.

Deductible

The deductible for Geico’s mechanical breakdown insurance is $250, but your deductible could be lower depending on your insurance carrier. For extended car warranties, the deductible often ranges from $100 to $500.

While MBI policies and extended car warranties both offer protection for vehicle breakdowns, you can see from the above that they’re not exactly the same. Mechanical breakdown insurance costs less than an extended car warranty but covers less as well.

Determining which is right for you will depend on a number of variables, including the age of your car, the number of miles on the odometer and your personal finances. Also keep in mind that some vehicles are more prone to breakdowns and mechanical issues.

When Should I Get Mechanical Breakdown Insurance?

If you have a new car with fewer than 15,000 miles and are worried about paying for potential repairs out of pocket, then mechanical breakdown insurance could be useful for you. Newer vehicles with lower mileage often have fewer mechanical issues. But on the flip side, newer cars might also have more high-tech bells and whistles that could be more expensive to fix.

An MBI policy will pay for itself if the cost of repairing your vehicle is higher than your protection plan’s premium and deductible.

For example, say you’ve been paying $100 per year for your MBI policy for three years when the air conditioning in your car goes out. Your mechanic estimates it will cost about $600 to fix it. So far you’ve paid $300 for MBI, but to have the repairs completed, you’ll need to pay your $250 deductible to the repair shop. That brings your total MBI cost to $550, which ultimately saves you $50 on the cost of repairs.

Now let’s imagine the same scenario, but it’s your transmission that goes out instead. The repair facility says it’ll cost $2,000 to fix. Again, you’ve paid $300 on your MBI and will now pay the $250 deductible as well for the same total of $550. But this time, you’re saving $1,450 by having mechanical breakdown insurance coverage.

So when deciding if you need mechanical breakdown insurance, weigh peace of mind against the premium and deductible. If you have a new vehicle with low mileage and it’s important to you to know that a major car problem might only cost you the amount of your deductible, then MBI is a great option for you.

If your vehicle is older and has higher mileage — or if you have at least $1,500 set aside to cover repairs – then mechanical breakdown insurance might not be worth it.