What Is Mechanical Breakdown Insurance, and Should I Get It?

For example, a busted engine or puncture in your air conditioner hose will be covered by MBI. While the coverage seems reasonable in principle, many experts question its value. Car breakdowns can be expensive, but the frequency at which they happen is low. Comparing rates from multiple insurers, however, is one of the best ways to find cheap coverage.

In this article, we break down the benefits and detriments of MBI, and how it is different from an extended warranty.

What is mechanical breakdown insurance?

Mechanical breakdown insurance covers major failures that can occur in your car, which are often excluded in basic auto insurance. Whether it's bad brakes, transmission issues, the electrical system or any other major vehicle system malfunction, MBI covers the repairs. File an online claim like you would with any car-related issue, and the company will reimburse you for the cost of repairs.

Unlike better-known types of car insurance, MBI is not offered by every company, nor does every car qualify.

Admittedly, there is a lot of overlap between MBI and your car's warranty in terms of coverage. Many of the things that can break down with a new car will be covered by the warranty. On the other hand, MBI plans are a bit broader than a regular warranty and may cover breakdowns that don't match the specific descriptions laid out in a warranty. MBI plans also last longer than warranties, which are usually for three years.

Unfortunately, you have to buy MBI coverage while the warranty is still in force, in anticipation of its eventual termination. Geico's and Mercury's MBI plans are good for periods of six to seven years, or 100,000 miles, whichever comes first.

How much does mechanical breakdown insurance cost?

Compared to the cost of insuring a car, MBI is usually not too expensive. We found quotes from New York, where it only costs $30 per year for a 2016 Ford Edge with a $250 deductible. A Wall Street Journal investigation found policies could be $75 a year with deductibles up to $400.

Below we list the annual cost of MBI for cars ranging in value from about $24,000 to $64,000. Cars with greater values, like the Tesla Model S ($70,000 and up) and the Audi R8 ($160,000), may not be covered by MBI plans. When we contacted Geico, the company informed us that cars of too high a value may not qualify for MBI.

Mechanical breakdown insurance vs. extended warranty

Essentially, MBI is the same thing as an extended warranty, but they operate in a few different ways.

A Consumers Reports study found that that the average initial cost of an extended warranty was $1,214 for a three-year plan. Based on the prices we found, MBI costs would come out to about $180 to $450 for the six years the policy is in effect.

Other important points of comparison include:

Is mechanical breakdown insurance worth the price?

For MBI to be worth it, you would need to have a breakdown that exceeds the combined price of the plan and the deductible.

If a major breakdown did happen, you could save a lot of money with MBI — it comes down to the likelihood that your car will have a non-accident breakdown and the value of the peace of mind.

How can you measure your chances of having a major car malfunction? The first thing to consider is how long you are going to use your car. Newer cars tend to break down less often than older ones, so you should only get MBI if you plan to keep your vehicle for more than five years. Remember though, Geico will only insure the vehicle up to 100,000 miles. If you anticipate hitting that number just as your initial warranty ends, then there is no point in purchasing the coverage.

The next thing to consider is the reliability of your car. In the Consumer Reports study of extended warranties, BMW and Mercedes-Benz owners were more satisfied with their plan. Those cars break down more frequently, so customers were able to use the warranty. If the type of car you drive has a record of going many years without breaking down, then there is a smaller chance you will need to use MBI. Fortunately, you don't have to guess at the reliability of your car, as you can look it up with Consumer Reports or TrueDelta.

Lastly, you should remember that MBI will not cover minor — and therefore more likely — repairs. These plans come with $200 to $400 deductibles, so unless the cost of covered repairs far exceeds those amounts, the coverage won’t be worth it.

Methodology

To find the average price of breakdown insurance, we collected sample quotes for three 2016-model cars in New York state: a Ford Edge, a Toyota Camry and a BMW M3. All quotes are from Geico and include a $250 deductible.