Mechanical Breakdown Insurance (MBI) covers major vehicle repairs not covered by standard auto insurance, including components such as the engine, transmission, and air conditioning.
It can be a great addition if you want to extend peace of mind beyond an extended warranty
What is mechanical breakdown insurance coverage?
Mechanical breakdown insurance (MBI) is an optional add-on that helps cover costly repairs for major mechanical failures unrelated to accidents, unlike standard auto insurance (which won’t cover a failing transmission or broken A/C) MBI steps in for these big-ticket repairs. It works similarly to an extended warranty, protecting essential parts such as the engine, brakes, and powertrain.
MBI isn’t included in a typical policy, but it can be a great addition for certain drivers. For instance:
- Drivers with a newer vehicle
- Those planning to keep their cars long-term
- Those who want more predictable expenses
- Owners of vehicles with complex tech
Is car repair insurance the same as mechanical breakdown insurance?
There’s no single policy called “car repair insurance.” This could technically mean any coverage that helps pay for vehicle repairs.
Mechanical breakdown insurance (MBI) is one option, along with traditional collision and comprehensive coverage (usually called full coverage), which covers damage from accidents and other external events. However, collision and comprehensive don’t cover mechanical failures, like drivetrain issues, while MBI does.
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What does mechanical breakdown insurance cover?
Mechanical breakdown insurance covers vehicular damage occurring outside of a car collision. Much like comprehensive or collision coverage, MBI is subject to variable deductibles. For mechanical breakdown insurance to provide coverage, the value of repair costs needs to be greater than the policy’s deductible. Mechanical breakdown deductibles are usually $250.
Typically, the following parts can be covered by MBI:
- Engine
- Transmission
- Exhaust
- Air conditioning
- Technical components, computer
Covered repairs are outlined in your policy, so check with your insurer to see what’s included or if additional protection can be added.
Unfortunately, a blown engine can be an expensive fix, and typical car insurance won’t cover it (unless it’s caused by a covered accident and you have full coverage). But if you have mechanical breakdown insurance, it can be really helpful if you blow an engine, a transmission fails, or your A/C goes out.
The key factor is maintenance—if you’ve kept up with regular service and your engine still fails due to a covered event, your insurance may help foot the bill.
How much does mechanical breakdown insurance cost?
MBI can cost around $100 a year, but the price varies depending on your provider and car (its make, model, mileage, etc.). So, if you have an electric car, you’ll pay a different rate than someone with a Toyota Corolla or a Ferrari. But remember that MBI often comes with a high deductible, which means the policyholder (you!) may end up paying out-of-pocket for many expenses.
The cost of MBI varies by insurer and vehicle, but it is typically more affordable than extended warranties offered by dealerships. For instance, GEICO’s MBI charges a small premium per policy period instead of a large lump-sum payment upfront.
“Generally, companies will let you purchase additional coverage to protect your assets fully. However, MBI may have some limitations. For example, GEICO’s MBI coverage specifies that vehicles must have 15,000 miles or fewer and be newer than 15 months old. The owner must also be the first person to own the car.[1] This definitely reduces the number of people who can purchase and benefit from MBI. Still, third-party companies (who aren’t insurers) may have different options for vehicle service contracts (VSCs).”
-Beth Swanson, Insurance Analyst at The Zebra
Which companies offer mechanical breakdown insurance?
Not all insurance companies offer Mechanical Breakdown Insurance (MBI) because it’s costly, less in demand, and faces tough competition. Big repairs, such as engine or transmission failures, can be expensive for insurers to cover, making MBI a risky option for some. Plus, many new cars already come with manufacturer warranties, so drivers may not need extra coverage right away. On top of that, dealerships and third-party companies dominate the extended warranty market, so traditional insurers are less likely to offer MBI as part of their policies.
GEICO is one of the biggest providers of mechanical breakdown insurance. GEICO’s mechanical breakdown coverage is for new or leased vehicles with less than 15,000 miles, purchased within the past 15 months. Once you have this coverage, it may remain active for up to seven years or 100,000 miles.
Below are the damages covered and not covered by GEICO’s mechanical breakdown insurance.
Mercury Insurance offers its own MBI plan, called Mercury Mechanical Protection. This operates like an extended warranty, with a few tiers of coverage. Mercury’s platinum plan has the highest level of coverage, covering nearly all mechanical and electrical claims. Below is what is included in each tier.
Managed and serviced by Assurant Solutions, USAA’s option for MBI is called Extended Vehicle Protection. While less specific about its coverage option than GEICO, USAA’s MBI program applies to the failure of a covered fault under normal and usage of the vehicle. There are three main qualifications your vehicle must meet:
- The vehicle needs to be younger than 10 years old
- Less than 250,000 miles
- Be covered under its original dealership warranty
Although they do not specifically state what is and is not covered, Assurant and USAA program offers additional coverage such as roadside assistance, car rental services, and overnight expenses. This is in addition to their mechanical breakdown coverage options.
Once your vehicle’s original dealership warranty expires, you will no longer be eligible for USAA’s MBI coverage. Because it is managed by Assurant rather than USAA, you will be dealing with their customer service and claims team. Assurant does not state how much this coverage will cost.
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Is mechanical breakdown insurance worth it?
It can be worthwhile for drivers who want added protection from unexpected repair costs and who meet certain conditions. It’s most useful for drivers who:
- Own a new or near-new vehicle that qualifies for MBI
- Plan to keep the car long-term, especially after the factory warranty expires
- Would struggle to cover a major repair out of pocket
- Drive a vehicle with complex or expensive components, such as hybrids or advanced electronics
- Prefer predictable expenses and want to reduce financial uncertainty around repair
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