Everything You Need to Know About Mechanical Breakdown Insurance

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Written by J.J. Starr Edited by Nick Versaw

Updated February 27, 2024

For drivers concerned about paying for an unexpected repair — whether because you’re low on savings or on a tight monthly budget — mechanical breakdown insurance (MBI) offers an additional financial cushion for a relatively affordable monthly cost. It’s cheaper than an extended warranty, too.

MBI is an optional coverage that offers car repair insurance for mechanical systems failures (air conditioning, electric, exhaust, etc.) due to faulty parts, defects, and other issues. But policies also come with some limitations.

Ultimately, only you can decide if an MBI policy is right for you — and this article provides everything you need to make that decision.

What Is Mechanical Breakdown Insurance?

Mechanical breakdown insurance (MBI) is a type of car insurance that covers the repair cost of unexpected mechanical failures or breakdowns on new cars. MBI plans typically cover repairs or replacements of major mechanical components — such as the engine, transmission, and electrical system — due to defects or failures that aren’t caused by accidents.

For a small additional cost, MBI can provide peace of mind and financial protection against costly repair bills for vehicles outside the manufacturer’s warranty.

How Does Mechanical Breakdown Insurance Work?

Policyholders pay an MBI premium to an insurance company agreeing to cover the costs to repair defects or other malfunctions. You can submit a claim to the insurer when your car breaks down. The insurer will assess the claim and issue payment (minus the deductible) up to coverage limits if the repairs are covered under your policy.

MBI is usually only available for cars under a specific mileage and age (i.e., MBI is typically not available for older vehicles). For example, GEICO only issues MBI policies to cars newer than 15 months old and with less than 15,000 miles. You can renew your policy for up to seven years or 100,000 miles, whichever happens first.

What does MBI cover?

Mechanical breakdown insurance covers breakdowns and mechanical failures of vehicle systems that aren’t covered by your warranty. The exact components covered will depend on the policy and insurer, but it’s common for an MBI policy to cover the following systems:

• Brakes
• Electrical systems
• Emissions components
• Engine components
• Fuel systems
• Steering systems
• Suspension components
• Transmissions

Some companies also include roadside assistance and rental car coverage with MBI insurance policies. But expenses like routine maintenance (tune-ups, alignment, fluid changes, tires, etc.) and breakdowns resulting from misuse, improper maintenance, and corrosion aren’t typically covered.

What’s the difference between MBI and an extended warranty?

MBI and extended car warranties (or vehicle service contracts) are similar but usually differ in what events or mechanical systems they cover. Coverage varies among policies and warranties, but all extend beyond what the typical manufacturer warranty covers. Both exclude routine maintenance and general wear and tear.

The main difference between the two products is the cost. ConsumerAffairs reports the average extended car warranty costs around $1,000 per year. MBI costs a fraction of that.

When choosing between the two, compare what’s covered and up to what amounts. It’s possible an extended warranty will offer you better coverage, which may make the higher price worth it.

Do You Need Mechanical Breakdown Insurance?

If you have concerns about covering unexpected repairs, mechanical breakdown insurance can offer you peace of mind. It’s a great option for people without emergency savings. Coverage is so inexpensive that a single claim can recoup all or most of that year’s premiums.

For example, replacing a faulty A/C compressor runs between $1,546 and $1,705, according to Kelley Blue Book (KBB). But many common repairs are only a few hundred dollars.

For some, coverage isn’t worth it. Mechanical breakdowns occur more often after a vehicle has more than 100,000 miles. Issues that occur before then often result from normal wear and tear or improper maintenance, which would exclude the repair from coverage.

Ultimately, it depends on what type of risk you feel comfortable taking. MBI can pay for itself if you end up needing a repair. But if you never make a claim over the course of your policy, you’ve most likely spent around $700 for unused coverage.

How Much Does Mechanical Breakdown Insurance Cost?

Mechanical breakdown insurance costs range depending on several factors. Many policies cost around $100 per year (or roughly $8 per month), but it’s also worth considering the deductible amounts. The MBI deductible will typically range between $250 and $500, which you’ll pay out of pocket when you file a claim.

The final consideration is the indirect costs of making an MBI claim. While MBI claims don’t usually raise rates, you may see an increase if you lose a claims-free discount.

Is mechanical breakdown insurance worth it?

MBI may be worth it for some drivers, but whether it’s right for you will depend on your specific needs, budget, and preferences. For some, the added peace of mind is worth the cost. Others prefer to save that money in a rainy day fund to cover the cost of unexpected car repairs.

A few things to consider when deciding if MBI is worth it to you include:

• The average repair cost for your vehicle
• Your budget and savings
• The cost difference between an extended warranty and MBI

The Best Mechanical Breakdown Insurance Companies

Mechanical breakdown policies differ from company to company. While premiums are usually inexpensive, some companies offer better coverage, while others have better customer service records.

Here are our favorite car insurance companies for MBI coverage.

Allstate

• Compare.com rating: 4.2 out of 5
• NAIC complaint index: 3.06 (much higher than average)

Allstate covers your vehicle’s core systems and adds bonus coverage for roadside assistance, rental cars, rideshare, and trip interruption. It’s good until vehicles reach seven years old or 100,000 miles.

The company also earns higher-than-average customer satisfaction scores from J.D. Power.

GEICO

• Compare.com rating: 4.65 out of 5
• NAIC complaint index: 1.88 (higher than average)

GEICO offers long-term and robust MBI coverage — it covers “all parts and systems,” according to its website. But you must sign up when your car is relatively new and has low mileage. The company also offers cheap rates and boasts solid customer satisfaction ratings.

Progressive

• Compare.com rating: 4.2 out of 5
• NAIC complaint index: 1.97 (higher than average)

Progressive offers MBI coverage for both cars and RVs. Progressive Vehicle Protection for cars has flexible deductibles, travel protection, and transportation benefits and works with any repair shop in the U.S. and Canada.

The insurance giant also partners with Good Sam for mechanical breakdown insurance to protect RVs newer than 16 years old with less than 100,000 miles.

Mercury

• Compare.com rating: 3.6 out of 5
• NAIC complaint index: 0.22 (lower than average)

Mercury’s MBI policies have road-hazard tire protection, transferrable coverage, roadside assistance, rental vehicle coverage, and trip interruption coverage. You can also choose any U.S. repair provider.

But the company has lower-than-average customer satisfaction and is only available in 11 states.

Mechanical Breakdown Insurance FAQs

Mechanical breakdown coverage is relatively unknown in the car insurance world, so many drivers have questions about what it is and how it works. Here are answers to the most common questions about mechanical breakdown insurance.

What does mechanical breakdown insurance do?

Mechanical breakdown insurance covers the cost of repairs if your vehicle breaks down, has a mechanical problem, or needs replacement parts. Exact coverage details vary depending on the policy.

MBI is an optional insurance coverage.

What’s considered a mechanical breakdown?

A mechanical breakdown refers to a failure or malfunction of a mechanical component or system in a vehicle. It can encompass various issues, such as engine failure, transmission problems, brake system malfunctions, electrical system failures, or anything that renders the car unusable or significantly impairs its performance.

Where can you buy mechanical breakdown insurance?

You can buy mechanical breakdown insurance from a car insurance company in many states. Sometimes the company will partner with a service center to offer coverage. In some states, including California, you can only purchase it from a contracted provider (typically a dealership).

Allstate, GEICO, Mercury, and other well-known insurance companies offer MBI coverage to their policyholders.

Does car insurance cover a blown engine?

No. Neither comprehensive nor collision car insurance covers a blown engine, but mechanical breakdown insurance usually does. Review your car insurance policy to understand better what is and isn’t covered.

Sources

1. J.D. Power, “2023 U.S. Auto Insurance Study,” Accessed February 18, 2024.
2. Kelley Blue Book, “Car A/C Repair Costs,” Accessed February 18, 2024.
3. California Department of Insurance, “Vehicle Service Contracts: Extended Warranties & Other Repair Agreements,” Accessed February 18, 2024.

J.J. Starr Insurance Writer

J.J. Starr is an insurance writer for Compare.com who specializes in auto insurance and personal finance. She has a passion for helping people save money by explaining complex topics like car insurance in a way that is simple and easy to understand. Prior to writing for Compare.com, J.J was a registered banker and life insurance consultant. She holds a master's degree in writing from New York University and a bachelor's degree from Stephens College.