You may have heard about a type of insurance coverage called mechanical breakdown insurance and wondered if it might be a better deal than buying an extended warranty on a new or used vehicle. There are pros and cons to both types of protection. However, they also both have limitations that might not be attractive in your situation.
In this article, we’ll cover both mechanical breakdown insurance and extended warranties. Better yet, we’ll give you the pros and cons for each of these options.
What Is Mechanical Breakdown Insurance?
Car insurance policies today often offer a coverage called mechanical breakdown insurance (MBI) to protect you against the costs of owning a vehicle beyond ordinary maintenance and expected wear and tear. What kinds of costs does an MBI plan actually cover, and who’s eligible for the coverage?
When MBI plans stipulate that regular maintenance and wear and tear isn’t covered, the things they have in mind are tune-ups and replacing worn tires. Maintenance also includes oil changes, worn belts and hoses, filters, and spark plugs. Outside of these types of expenses , a mechanical breakdown insurance will cover repairs like these:
- Engine failure
- Exhaust system replacements
- Suspension system failures
- Brakes system failures
The list is what most MBI plans cover. However, you’ll want to take a close look at what is and isn’t covered when considering a specific plan.
Also, most mechanical breakdown plans are intended for new or very slightly used vehicles that aren’t expected to experience breakdowns. For example, la typical MBI
What Are the Advantages of MBI Plans?
There are a few things that can make an MBI plan attractive for car buyers. First, you are not required to put down a large lump sum to purchase mechanical breakdown insurance. Instead, it’s sold as a periodic premium or added to an existing insurance policy. this means that you pay as you go. If you decide to sell the vehicle in the future, you can cancel the coverage.
Another selling point for some customers is that an MBI plan doesn’t require you to take your vehicle to a particular repair shop or dealer service center for repairs. This can be a great feature if you prefer to go
What Is an Extended Warranty?
An extended warranty adds mileage or years to the manufacturer’s warranty that comes with a vehicle at an additional cost. For new cars, this amount is often added to a final price of a car and rolled into an auto loan if you opt to finance your vehicle. However, you can also find extended warranties sold by third parties that reimburse you for repairs outside of a manufacturer’s warranty.
What Are the Benefits of Purchasing an Extended Warranty?
Buying an extended warranty is like paying for future repairs and service for your vehicle in a single lump sum. You won’t need to make any other payments for repairs made on your vehicle during the warranty period. Extended car warranty plans from reputable companies usually give more comprehensive coverage and more options compared to a mechanical breakdown insurance.
Covers high-mileage and pre-owned cars
Another advantage of extended warranties is that they aren’t limited to newer vehicles. Older vehicles with high-mileage can also qualify for extended warranties. Moreover, you can find numerous choices for pre-owned cars.
If you have a newer car and plan to sell it in the near future, getting an extended car warranty may be the better option. Most extended car warranty companies allow for coverage transfer. There have been cases wherein an extended car warranty seals the deal.
Extended car warranties added service
Most reputable third-party extended car warranties offer additional perks to their plans. Some of these added benefits are:
- Roadside assistance
- Trip interruption benefits
- Wear and tear benefits for selected plans
- Rental cars while your car is in the shop
The Bottom Line
At the end of the day, which of these two options is better depends on your situation and preferences. If you own a newer car and prefer to pay as you go, mechanical breakdown insurance can be a good option. On the other hand, extended warranties offer more coverage, and older cars are eligible. For some buyers, an extended warranty is a better deal because they don’t have to worry too much about what is covered and not.