Mechanical Breakdown Insurance Vs. Extended Warranty

Key Points:

• Mechanical breakdown insurance (MBI) is add-on coverage offered by car insurance companies. While it’s cheaper than an extended warranty, it rarely covers cars with more than 15,000 miles.
• Extended warranties can protect you from paying out of pocket for costly repairs to your used vehicle. However, these plans are more expensive than MBI coverage.
• Our extensive research leads us to recommend Endurance and Carchex for extended warranty coverage and Geico for mechanical breakdown insurance.

There are three main forms of mechanical repair protection: factory warranty plans, extended warranty coverage, and mechanical breakdown insurance (MBI). All three options provide car owners with peace of mind on the road, but many drivers don’t know the differences between mechanical breakdown insurance vs. extended warranty coverage.

In this article, we’ll review the advantages and disadvantages of mechanical breakdown insurance vs. extended warranty plans. We’ll also explain what car insurance is, as well as the differences between a car warranty and car insurance. 

Our research team has carefully reviewed the nation’s best extended car warranty companies. To help you decide on coverage that fits your needs, we’ll compare average extended warranty costs and coverage plans with mechanical breakdown insurance.

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Mechanical Breakdown Insurance Vs. Extended Warranty Overview

While mechanical breakdown insurance is similar in nature to extended warranty protection, there are several differences between them, which we outline below.

What Is Mechanical Breakdown Insurance?

Mechanical breakdown insurance (MBI) is a specialty type of coverage that’s usually offered as an add-on by auto insurance companies. With MBI coverage, your car insurance company will protect you from unexpected repair bills if your car faces mechanical or electrical failure.

Is Mechanical Breakdown Insurance Worth It?

MBI plans are usually affordable, and drivers can easily roll the cost into their car insurance bills. Mechanical breakdown insurance coverage can be a great investment, but it rarely covers cars with more than 15,000 miles. The worth of this type of insurance greatly depends on your individual needs.

What Is An Extended Car Warranty?

A car warranty is a contract signed between a consumer and a dealership or third-party provider that protects a vehicle from certain costly repairs. The types of vehicle repairs that car warranties cover are detailed in a warranty provider’s contract.

There are two types of car warranties: factory warranties and extended warranties. A factory warranty, also called a manufacturer’s warranty, covers a new car for a specified period of time or miles, whichever comes first. A new car warranty includes bumper-to-bumper and powertrain coverage free of charge, and is offered by car manufacturers to encourage prospective customers to buy new vehicles.

Extended warranties are offered by car dealerships, car manufacturers, and third-party companies and are intended to protect your vehicle once your factory warranty expires. This warranty is also known as a vehicle service contract or a vehicle protection plan. You can usually choose from coverage levels that range from powertrain protection to coverage similar to your manufacturer’s warranty. With an extended warranty, you’ll also likely gain perks such as roadside assistance and trip interruption benefits.

Is An Extended Car Warranty Worth It?

Extended warranty plans tend to offer a wide range of coverage levels and benefits, as well as low up-front costs at the repair shop. The downside is that monthly costs can be more expensive for an extended warranty than for mechanical breakdown insurance.

How Is A Car Warranty Different From Car Insurance?

A car warranty is designed to pay for mechanical problems and breakdowns, which are inevitable as your vehicle ages and gains miles. The covered components typically include: 

• Air conditioning and heating systems
• Electrical components
• Powertrain components (engine, transmission, drivetrain, etc.)
• Technological systems (center console, GPS, cameras)
• Safety components (seat belts, airbags, etc.)

The purpose of a car insurance policy is a bit different. Car insurance covers damage from unexpected causes, like collisions, weather events, and theft. You are required to insure your car in every state to drive legally, while a warranty is optional.

Because the protection offered by an auto insurance company is so different from the protection offered by a car warranty provider, many car owners choose to purchase both insurance and a warranty. This way, they’ve got coverage for both accidents and mechanical failures.

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MBI Coverage Vs. Extended Warranty Coverage

Mechanical breakdown insurance covers your vehicle’s major components in the case of part failures or faulty workmanship, not unlike an extended warranty. MBI policies vary somewhat in scope but generally cover parts ranging from your drivetrain and fuel system to your air conditioning.

Both mechanical breakdown insurance and extended warranties take care of covered repairs on certain parts and systems. They don’t cover routine maintenance, damage from misuse, or parts subject to normal wear and tear, such as brake pads and windshield wipers. Other exclusions may apply, so be sure to read the fine print when deciding on coverage.

Additional Extended Warranty Benefits

Mechanical breakdown insurance plans tend to offer fewer benefits than extended warranties. For example, most reputable extended car warranty companies offer the following:

• 24/7 roadside assistance: If your vehicle breaks down or you lock yourself out, this service can help. It also helps out if you have a flat tire or need gas delivery.
• Rental car reimbursement: This helps pay for transportation expenses while your vehicle is being repaired under an extended warranty claim.
• Towing coverage: If you need your car towed to the nearest repair facility, this benefit covers the cost. 
• Trip interruption benefits: This benefit reimburses you for expenses such as lodging if your vehicle breaks down a certain distance from home.

If these benefits seem helpful, the choice between mechanical breakdown insurance and an extended warranty might be easier than you’d originally thought. While MBI offers impressive parts coverage, only extended warranties provide a wide variety of additional benefits.

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MBI Cost Vs. Extended Warranty Cost

The cost of mechanical breakdown insurance is combined with your car insurance policy payments, and is solely based on the year and mileage of your car. Extended car warranties usually have up-front costs, and their pricing is based on additional factors, such as: 

• Your vehicle’s age, make, model, and mileage
• Amount of coverage
• Location of your vehicle
• Warranty provider

Our comprehensive research in the warranty sphere has shown that the average cost for a year of extended warranty coverage is $977, but pricing will differ based on your vehicle. 

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Should You Purchase An Extended Warranty or MBI?

Whether an extended car warranty or mechanical breakdown insurance is more worth it for you depends on your individual needs and goals. 

For example, if you cannot afford unexpected repair costs between $2,000 to $4,000, it’s likely worth considering an extended warranty. Owning an auto warranty will protect you from having to foot a large bill in case of a major mechanical breakdown in your vehicle, especially for a high-mileage or used car.

On the other hand, if you have enough savings to easily afford a $2,000 to $4,000 car repair, it is probably not worth it to purchase an extended auto warranty. There is a good chance that you will pay more money in the long term with an extended warranty than just paying the repair bill.

For more information on this topic, we recommend that you read our article on whether extended car warranties are worth it.

Dealership Vs. Third-Party Extended Warranty

Drivers who decide to purchase extended warranty coverage often want to know what company they should buy their warranty from. Car manufacturers like General Motors offer extended warranties through dealerships, but you can also purchase one from a third-party extended warranty company.

In general, purchasing a car brand’s extended warranty from a dealership will cost more than one from a third-party company. One advantage of purchasing an extended warranty through a car manufacturer, however, is that the covered repairs are done with original equipment manufacturer (OEM) parts. Third-party warranty plans may use aftermarket parts to repair your vehicle. 

That being said, a third-party warranty is more flexible, as it will often let you choose your own repair shop, while a manufacturer’s extended warranty may require you to use the brand’s official repair facilities. Third-party extended warranty companies also allow you to receive free quotes and sample contracts online, and they often provide higher coverage limits than extended warranties from car manufacturers do.

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Mechanical Breakdown Insurance Vs. Extended Warranty: Conclusion

The choice between mechanical breakdown insurance and extended warranty plans depends on your situation. If you have a new vehicle with low mileage, then MBI might be the right choice. But keep in mind that you won’t get the benefits that typically come with extended warranties. If you have an older vehicle with high mileage, these benefits might make an extended warranty a better option. 

Ultimately, we encourage you to consider your situation and weigh the pros and cons of each type of coverage. This way, you’ll make an informed decision that fits your vehicle’s needs. 

Recommended Extended Warranty And MBI Providers

Based on extensive research, we believe that Endurance and Carchex are two of the best extended warranty provider options for our readers. Both of these providers offer a variety of coverage options, ranging from powertrain to higher coverage warranties. They also offer additional perks like roadside assistance, towing, trip interruption services, and rental car reimbursement.

For mechanical breakdown insurance, we recommend getting free quotes on affordable plans from Geico. We’ll discuss the extended vehicle warranty providers and Geico in further detail below and how to decide between them

Endurance: Best Overall

Endurance offers direct-to-consumer extended warranties, which means that warranty services and claims are handled directly by Endurance–there is no middleman or underwriting provider. We named Endurance as the Best Overall provider in our comprehensive review.

Here are a few things our review team likes about Endurance:

• Selection of plans: Unlike other providers, which may only offer a low, middle, and high tier of coverage, Endurance offers six different plans. This variety allows customers to more easily customize coverage for their needs. 
• Sample contracts are readily available: Many providers don’t offer sample contracts for you to browse through when deciding on coverage. Endurance is transparent in that it offers these contracts for you to read through, ensuring that you aren’t blindsided by any coverage terms or exclusions.
• Company growth: Endurance made the Inc. 5000 list in 2023 as one of the fastest-growing companies in the U.S. This quick growth demonstrates that Endurance is successfully capturing market share in its industry.

Carchex: Best Industry Reputation

With more than 20 years of experience, Carchex has become an industry leader due to its affordability and broad spread of coverage. Available in all 50 states, the extended warranty broker maintains an A+ rating and accreditation from the BBB and won three Golden Bridge Awards^® due to the positive customer service mentioned in Carchex reviews.

Carchex offers five coverage levels and perks such as a 30-day money-back guarantee and roadside assistance. In our review, the company earned 4.4 out of 5.0 stars overall and the title of Best Industry Reputation thanks to its experience and accolades.

Here are a few reasons our review team recommends Carchex:

• Solid reputation: Carchex is an eight-time Inc. 5000 Hall of Fame Honoree and received a Top Workplaces Award by the Baltimore Sun for seven consecutive years.
• Strong industry partnerships: Carchex has partnered with reputable industry leaders like Carfax, Kelley Blue Book, and Edmunds.com. This is a strong indication that they are a trusted extended warranty provider.
• Sample contracts and free, customized quotes online: Like Endurance, Carchex provides sample contracts online so you can learn exactly what their plans would offer before you purchase one. The provider’s website also allows you to get a personalized free quote.

Geico

As one of the top car insurers on the market, Geico holds an A++ financial strength rating from AM Best along with an A+ rating from the BBB. It’s also regularly recommended for its impressive mechanical breakdown insurance plans.

As the industry standard for MBI coverage, Geico offers plans that can last up to 7 years/100,000 miles. To qualify for a Geico MBI plan, your vehicle must be newer than 15 months and have fewer than 15,000 miles. If you’re looking for affordable and trustworthy MBI coverage, Geico mechanical breakdown insurance is hard to beat.

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MBI Vs. Extended Car Warranty: FAQ

Below are frequently asked questions about mechanical breakdown insurance vs. extended car warranties.

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How We Rate Car Warranty Companies

Our review team extensively researches extended car warranty providers to deliver informed and unbiased assessments of leading companies. We evaluate several key rating factors that are important to consumers to determine which providers are the best in the industry:

• Reliability: Warranty providers that earn strong ratings from the Better Business Bureau (BBB), work with reliable partners and administrators, and have a long history in the warranty industry score well in this category.
• Coverage Plans: We take a close look at the coverage plans available through each provider, including how many are offered, maximum term limits, plan exclusions, and more. We also evaluate the added benefits companies include with their warranty plans, such as roadside assistance and trip interruption benefits.
• Pricing: Our team performs a secret shopper analysis for a variety of vehicles and coverage plans to get a sense of a provider’s average costs. We see how each company’s pricing, deductible options, and discount opportunities compare to competitors when determining this score. 
• Transparency: We evaluate the availability and transparency of each company’s contracts, as well as whether each provider offers a money-back guarantee.
• Customer Experience: We consider customer reviews and complaints from sites like the BBB and Trustpilot. Our team also reaches out to customer service reps during our secret shopper analysis to get a sense of the customer experience with each company.

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