How to Compare Breakdown Insurance Plans
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Car ownership comes with plenty of expenses. Beyond simply paying for the vehicle itself, there’s a slew of additional costs you can’t avoid. Covering the cost of expensive mechanical repairs is one relatively unpredictable expense that can throw you for a loop if you don’t have a plan in place.
The week after your manufacturer warranty expires, you hear a suspicious rattling under the hood. What could it be – engine problems or maybe your transmission? Either way, you know you’re facing a hefty repair bill — unless you have a mechanical breakdown insurance protection plan for your car.
So, is mechanical breakdown insurance the right protection for your vehicle? Let’s take a closer look.
What is Mechanical Breakdown Insurance?
Mechanical breakdown insurance (MBI) is a specialized form of car insurance that will kick in to cover certain repair bills. It protects your wallet against certain costly mechanical problems.
Breakdown protection doesn’t mean free repairs. In most cases, you’ll pay a certain amount for every trip to the mechanic, whether that’s a set fee or a percentage of the repair bill. With that in mind, you’ll still need to have some savings on hand for unexpected car repair bills that pop up in your life – just not as much.
Policies vary widely from insurer to insurer and may have different names, such as “vehicle protection plan.” Car insurance companies sometimes sell MBI coverage as an add-on to your regular auto insurance policy. This insurance can sometimes be transferred if the car is sold, but it depends on the insurer.
What Does Mechanical Breakdown Insurance Cover?
The exact coverage offered through a mechanical breakdown insurance policy varies. But in general, you should expect to find the following covered:
- Power system
In some cases, policies pay for other major repairs related to steering, fuel systems, electrical systems, and air conditioning systems as well.
Keep in mind, breakdown insurance is no substitute for good car maintenance. It typically won’t cover repairs caused by abuse or improper care. So, even with MBI, you’ll be on the hook for regular car repairs and maintenance.
For example, you’ll still need to pay for:
- Regular oil changes
- Spark plugs
- Brake pads
- Fluids such as coolant and wiper liquid
Anything that is considered routine maintenance will not be paid for by a mechanical breakdown insurance policy.
How Does Mechanical Breakdown Insurance Work?
If you want to sign up for a mechanical breakdown insurance policy, you’ll need to commit before your car’s warranty coverage expires.
You can sign up for MBI with a used vehicle. But most insurance companies will require it to have a limited number of miles. Depending on the insurance provider you work with, you’ll likely find an MBI coverage term of six to seven years. But in most cases, the MBI coverage has a mileage limit as well, regardless of the term.
If your vehicle has a mechanical breakdown, you’ll be able to get it fixed at an approved repair shop. When you file the claim, your insurance company will cover some of the cost of repairs. But just like other types of insurance, you’ll likely need to pay a deductible.
Mechanical Breakdown Insurance vs. Extended Warranties
Breakdown insurance may sound a lot like the extended car warranty offered by a car dealer, or the bot phone calls you receive nonstop, but it’s not quite the same thing.
Here are three major differences.
- Timeline: An extended warranty is typically purchased when you buy a new vehicle. Mechanical breakdown insurance doesn’t kick in until after the manufacturer warranty expires, so it can be purchased later.
- Costs: You pay for the extended warranty upfront (or as part of your loan), so you’re stuck with the expense — there’s no going back. While your MBI is paid over time and can be dropped when you choose.
- Choice of repair shop: With an extended warranty, you’re required to bring your car to the dealership for repairs. But MBI plans typically let you use your preferred repair shop.
Advantages and Disadvantages of Mechanical Breakdown Insurance
Every insurance product has advantages and disadvantages. Here’s what to consider before selecting a mechanical breakdown insurance plan.
Let’s start with the pros of mechanical breakdown insurance:
- No upfront payment: When you sign up for a mechanical breakdown policy, you usually won’t need to make a down payment. Instead, you will start making regular monthly payments for this coverage.
- Affordable peace of mind: Typically, a mechanical breakdown policy is an affordable way to safeguard your finances.
- Cancel when you want: If you don’t want to continue with your plan, you can easily cancel your policy.
Of course, there are also some disadvantages to this insurance product as well:
- Few companies offer this: Although some insurance providers offer this policy type, it’s relatively rare. Many companies that do offer this option allow it as an add-on to your regular coverage. So, if you really want this add-on, it narrows the field.
- Limitations: Not all vehicles will qualify for this type of policy. That’s because many insurers have mileage limits and age restrictions.
- High deductibles: In most cases, you’ll face a high deductible with this insurance policy.
Cost of Mechanical Breakdown Insurance
The cost of mechanical breakdown insurance varies widely based on the vehicle. Insurance companies weigh the following factors when determining your rate:
- Vehicle mileage
- Vehicle age
- Vehicle model year
- Vehicle make and model
- Level of coverage
- Driving habits
- Dealership versus third-party purchase
In comparison to regular car insurance policy premiums, MBI is fairly affordable. On average, you’ll pay $100 per year for this add-on. But you’ll need to shop around for the exact costs in your situation.
It’s worth pointing out that not all vehicles will qualify for this specialized coverage. Most older cars won’t qualify for this type of insurance. So if you have an aging vehicle or high mileage vehicle, then you likely won’t be able to tap into this insurance policy option.
Is Mechanical Breakdown Insurance Worth It?
Ultimately, you’ll need to run the numbers to decide if mechanical breakdown insurance is the right fit for your situation.
Beyond your planned usage, consider the known reliability of the vehicle you are purchasing. Some brands are known to have more mechanical issues than others. Take a look at the reviews for your car’s manufacturer to get an idea of how often your vehicle tends to need mechanical repairs.
Not sure how reliable your vehicle is expected to be? Check out the car dependability report by J.D. Power. On the top end of the dependability index, you’ll find Kia, Buick, Hyundai, and Toyota. On the opposite end of the spectrum, you’ll find Land Rover, Ram, Volvo, and Alfa Romeo.
You can use this information to estimate the potential use you’d get out of a mechanical breakdown insurance policy. For brands that are extremely reliable, it might not be worth the cost of a policy. But for brands notorious for breaking down, an MBI policy might be worth its weight in gold.
Future Plans for the Car
Another consideration is your future plan for the vehicle. If you plan to use the car for several years, then you might get some use out of a policy. But if you are planning to get another car within the next five years, then an MBI policy might not be as useful.
Also, pay close attention to mileage restrictions of any mechanical breakdown policy you’re considering. If you put a lot of miles on the vehicle, you might reach the insurance limitations quickly. But if you aren’t a high-mileage driver, then you could get plenty of years out of an MBI policy.
Take the time to consider your unique car considerations to decide if this insurance policy is a good idea for your situation.
Compare Breakdown Insurance From Major Insurers
Not all companies offer this type of coverage for your car. Here are a few that do, along with details of what they offer.
GEICO breakdown insurance is available for new or leased cars that are less than 15 months old and with fewer than 15,000 miles. Once purchased, the policy can be renewed for up to seven years or 100,000 miles. After a $250 deductible, the policy covers repairs to all mechanical parts, excluding maintenance and wear and tear.
Mercury mechanical breakdown protection offers various coverage levels for new and used vehicles up to seven years and 100,000 miles. The plan includes free roadside assistance, car rental assistance, tire protection, trip interruption protection and no limit on the number of claims.
Progressive breakdown insurance, which it calls a mechanical repair plan, is offered through a third party called WarrantyDirect. Progressive allows you to use any licensed repair shop and pay only one deductible per shop visit. This plan also includes extras like free roadside assistance, car rental reimbursement, trip interruption protection and no limit on the number of claims. Older, high-mileage cars are eligible, but the plan will cost more.
AAA breakdown insurance, called the AAA Vehicle Protection Plan, includes plans for any-mileage, any-year vehicles — and you pay no deductible if you bring your car to an AAA-owned repair shop. (The deductible is $50 at AAA-approved repair facilities.) AAA’s plan includes plentiful perks, such as a free battery replacement, rental car coverage, and trip interruption coverage to reimburse you for hotel and food expenses if you’re stranded. Read the fine print, however: AAA offers three levels of coverage, and unless you opt for the highest level, some repairs may not be covered.
Should You Get Mechanical Breakdown Insurance?
Mechanical breakdown insurance is an interesting option to consider for any driver, but it isn’t for all car owners.
If you have a robust emergency fund that you can tap into for an unexpected car repair, then MBI coverage isn’t necessary. But if you’re concerned about unexpected repair bills, it can be a valuable addition to your traditional car insurance.
Start shopping for car insurance today by comparing multiple auto insurers at one time with Compare.com
Mechanical Breakdown Insurance FAQs
What is considered a mechanical breakdown?
A mechanical breakdown typically refers to major parts of a vehicle that keep malfunctioning such as the transmission, engine, drivetrain, brakes and power system to name a few.
Can I cancel mechanical breakdown insurance?
Yes, you can cancel mechanical breakdown insurance at any time. If this expense no longer fits in your budget or you no longer find it beneficial, you can easily eliminate it. However, canceling the policy means you won’t be able to use it in the event of a breakdown. So, be prepared to cover those unexpected costs by beefing up your savings account.
Does mechanical breakdown cover wear and tear?
Mechanical breakdown doesn’t cover equipment failures caused by a lack of proper maintenance. For example, if skipping an oil change leads to a bigger mechanical issue, that might not be covered. So, it’s critical to practice proper maintenance.
What cars qualify for mechanical breakdown insurance?
As vehicles age, there’s a higher chance for mechanical failures. With that, drivers of older vehicles might be the most interested in this type of policy. But unfortunately, not all vehicles qualify. Specifically, older vehicles aren’t likely to qualify. Additionally, luxury cars might not qualify due to the high costs of repair. You’ll have to do your research to determine whether it’ll cover your car.
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