Is Mechanical Breakdown Insurance Better Than Extended Warranties?A Mechanical breakdown insurance policy is an insurance product that covers repairs on all parts and systems of a vehicle, usually up to 7 years or 100,000 miles.
A MBI policy has several benefits when compared to an extended warranty.
First, since it is an insurance product, everything is regulated and monitored by the state. There are usually strict guidelines on how much an insurance company can charge for the coverage.
Unlike an extended warranty which requires a large lump-sum payment up front, a MBI policy is paid for as part of your ongoing insurance premium.
Just like a car insurance policy, you can stop the coverage any time you want.
Another advantage is the ability to get your vehicle repaired at any licensed repair facility. Some extended warranties require that the work be done only at specific dealerships.
A MBI policy may end up costing you less than an extended warranty, but you should be aware of some of the disadvantages.
Most require deductibles of up to $250. You can sometimes find policies with deductibles as low as $50.
Many MBI policies are only available on new vehicles - usually ones that are no more than 1 year old or have less than 15,000 miles.
In order to ensure coverage for the long-term, you would need to begin paying for a MBI policy while your vehicle is already covered under the factory warranty. You would essentially have two levels of overlapping coverage.
Some MBI policies cover used vehicles, but require that you begin coverage within 21 days of purchasing the car.
To give you an idea of the cost, your yearly MBI premium should be around $50 - $100 per year for a brand new vehicle.
As a smart consumer, you should compare the cost of Mechanical breakdown insurance against that of an extended warranty. Call around to a few different insurance providers, including your current car insurance company to get free quotes.
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