Should You Consider Mechanical Breakdown Insurance?
Mechanical breakdown insurance can protect you in areas that your standard auto insurance lacks. While it can be a helpful insurance, it may not always be worth your money. The insurance can pay off in certain situations, but knowing how it works can help you make the right decision for yourself.
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Keep reading to learn if you should consider mechanical breakdown insurance for your car.
Understanding Mechanical Breakdown Insurance
Mechanical breakdown insurance covers you in areas that your standard auto insurance doesn’t cover. For example, if your brakes fail and you need them replaced, your auto insurance won’t cover it. Auto insurance only covers issues resulting from an accident, theft, or a natural disaster (e.g. storm damage). Mechanical breakdown insurance, however, may cover it.
In general, mechanical breakdown insurance covers issues your car experiences that aren’t due to:
- Neglect on your part (not keeping up with regular maintenance)
- The need for a tune-up
- Tire issues
- Necessary repairs after an accident
Who Can Get Mechanical Breakdown Insurance?
While mechanical breakdown insurance sounds like the perfect choice for anyone that owns a car, not everyone can buy it. Many insurance companies only allow you to purchase mechanical breakdown insurance for the first fifteen months of the car’s life. Some insurance companies also limit the policy for those cars with less than 15,000 miles. You also can’t purchase this policy if you have a high-end vehicle, such as an Audi or Tesla – these cars cost too much to repair and insurance companies don’t want the risk.
How is MBI Different From a Warranty?
The mechanical breakdown insurance sounds awfully familiar to a warranty, right? While they have some similarities, differences do exist.
First, warranties don’t cover routine repairs, such as brake replacement or certain engine issues. The issue your car experiences must fall under the warranty’s guidelines. If your car experiences something outside of the warranty’s coverage, the financial liability falls on you. Mechanical breakdown insurance, on the other hand, does cover such routine repairs. As long as you can prove that you kept up with the maintenance on the car and the repairs aren’t due to an accident, the MBI coverage should take effect.
Another difference between MBI and a warranty is the length of coverage. Warranties typically last for 3 years or 36,000 miles. Mechanical breakdown insurance provides coverage for six years and up to 100,000 miles, whichever comes first. Unfortunately, though, you must buy the MBI while you still have the warranty in effect. You may not use the insurance while the warranty is in effect, but if you don’t purchase it right away, you may not be eligible for the insurance in the future.
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Does an MBI Differ From an Extended Warranty?
When you buy a car, you have the option to buy an extended warranty. Like the traditional warranty, extended warranties won’t cover certain mechanical issues that MBIs may cover. Extended warranties often cost much more than Mechanical Breakdown insurance premiums cost too.
When you buy an extended warranty, you must pay the full amount upfront. Extended warranties can cost several thousand dollars depending on the coverage and type of car. Mechanical breakdown insurance, on the other hand, charges an annual premium, which you can pay per year, rather than upfront. The premiums for MBI typically cost much less than the cost of an extended warranty too.
Is a Mechanical Breakdown Insurance Policy Worth It?
Deciding if you should buy mechanical breakdown insurance depends on a variety of factors:
- Can you afford a major breakdown that your auto insurance doesn’t cover?
- What is the history of your chosen car brand? Do your research to determine if it routinely experiences early malfunctions or if the brand is more reliable.
- Will you keep the car more than a few years? New cars have a smaller chance of breaking down than older cars. If you know you’ll trade the car in sooner rather than later, you may not need the coverage.
- Will you keep up with the car’s regular maintenance?
If you know you can’t afford a major breakdown and that you’ll keep the car for at least several years, mechanical breakdown insurance may be a good option. Look at the big picture, though and see if it will pay off. For example, if the brand you plan to buy doesn’t have a history of early breakdowns and major repairs, buying MBI may not be worth it. On the other hand, if your car brand notoriously has issues or you know you’ll keep the car close to the 100,000-mile mark, it could be a good investment.
Look at both sides of the equation and look at the costs. Figure out how much the MBI will cost you over the lifetime, including the deductible. If you think you’ll come out ahead with mechanical breakdown insurance, invest in it, just make sure you find a reputable company that can provide the coverage you need.
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