Few things are more nerve-wracking than having your car suddenly break down -- and wondering if you can foot the bill to repair it.

Mechanical breakdown insurance promises peace of mind in such difficult situations. This breakdown insurance helps you to pay for unexpected repair bills related to a mechanical breakdown, so you don’t have to dig deep into your wallet to finance expensive fixes to your vehicle.

The policies appear to be relatively inexpensive, at least on the surface. But are they right for you?

Learn about Mechanical Breakdown Insurance

What is mechanical breakdown insurance?

A mechanical breakdown insurance (MBI) policy is essentially a car insurance add-on that covers certain types of repairs to your vehicle.

Mechanical breakdown insurance coverage

Some of the parts of your car that might be covered by such car insurance include the:

  • Engine
  • Transmission
  • Fuel system
  • Power system
  • Brakes
  • Air conditioning
Mechanical breakdown insurance coverage

However, these mechanical breakdown policies typically do not cover standard wear and tear to your vehicle or basic maintenance costs. Some things that are not covered include oil changes, belts and hoses, and tune-ups.

Things like corrosion and rust and damage that occurred to the vehicle before you bought it also would not be covered by mechanical breakdown insurance. Also, MBI coverage generally does not reimburse damages that occur due to an accident. For that type of coverage, you need standard auto insurance with collision and comprehensive coverage.

In some cases, insurers offer multiple mechanical breakdown insurance coverage levels. The more comprehensively you want the car covered, the higher the premium you will pay.

Not all vehicles are eligible for mechanical breakdown insurance coverage. The age of your car and the number of miles it has been driven may determine whether or not you can cover the vehicle with MBI.

How much does mechanical breakdown insurance (MBI) cost?

Mechanical breakdown insurance cost varies from insurer to insurer. Some estimates suggest you might pay anywhere from $30 to $100 a year for the coverage.

However, it is important to remember that as with standard car insurance, mechanical breakdown policies usually come with a deductible, so your overall cost will actually be higher than the premium itself. For example, if your deductible is $250 or $500, you will have to pay that amount out of pocket for any repair before your MBI coverage kicks in.

Mechanical breakdown insurance vs. extended warranty

Mechanical breakdown insurance is different than an extended warranty policy, also known as a service contract. Car dealerships typically offer an extended warranty, but coverage often is limited to items named in the warranty.

By contrast, proponents of MBI laud its wider scope of coverage. For example, Geico says its MBI policy covers “all parts and systems.” This would include things like:

  • Engine
  • Drive axel
  • Transmission
  • Steering
  • Suspension
  • Cooling system
  • Electrical

Again, by contrast, the Federal Trade Commission says “few service contracts cover all repairs.”

The FTC also notes that the cost of an extended warranty typically depends on a car's make, model and condition (new or used), as well as the type of coverage and length of the contract. That means there is a wide range of upfront costs -- "from one to several thousand dollars – when you purchase such a warranty, the FTC says. Plus, you may need to pay a deductible before the warranty kicks in.

Other differences between an extended warranty and mechanical breakdown insurance may appear subtle, but they can be crucial. The California Department of Insurance notes that while an MBI is an insurance policy, extended warranties typically are not. That means different laws may apply to MBIs and extended warranties.

Because the CDI regulates the prices of mechanical breakdown insurance, it often keeps the price of MBI insurance lower than that of extended warranties, which are not regulated in the same way. Thus, the CDI advises Golden State drivers that "Consumers may get the most for their money with an MBI policy, especially one purchased directly from the insurance company."

Mechanical Breakdown Vs Extended Warranty

The best mechanical breakdown insurance companies

Several insurance companies offer some form of MBI auto insurance. Some of the best are:

Geico

Mechanical breakdown auto insurance is available for new or leased cars less than 15 months old and with less than 15,000 miles on the odometer. These policies can be renewed for up to seven years or 100,000 miles, whichever comes first.

Policyholders are responsible for a $250 deductible for covered losses. After that, car repairs to all mechanical parts of the car are covered. However, it's important to note that the insurance does not cover maintenance and normal wear and tear.

Allstate

The insurer's Vehicle Service Contract offers a range of coverages for car repairs. In addition, you can transfer your coverage to someone else who buys your car. Allstate says policyholders can have repair work performed at a range of approved shops throughout the U.S. and Canada.

Mercury Insurance

The insurer's Mechanical Protection covers the cost of breakdowns ranging from engine problems to faulty electrical systems. Policyholders have several options to choose from, all of which offer varying degrees of protection.

The coverage does not extend to routine maintenance, normal wear and tear, or non-mechanical items like vehicle trim. Poor driver practices -- such as failing to change the oil at regular intervals or using the wrong fuel type -- also are not covered.

Liberty Mutual

This insurer’s car repair policy is known as Lifetime Repair Guarantee. With this coverage, Liberty Mutual makes arrangements for your repairs at one of 2,000 facilities and guarantees the work for as long as you own the car.

It's important to note that this coverage applies to "fixing your car after an accident." That makes it different from most other types of car repair policies.

Frequently asked questions about mechanical breakdown insurance coverage

Do the mechanical breakdown insurance company have to approve my chosen repair facility?

Most insurance companies permit you to choose a repair shop on your own. However, it is essential to ask the insurance company you are purchasing this add-on from as their rules may vary.

Does standard car insurance cover mechanical breakdowns?

No. Standard car insurance, which usually consists of comprehensive, collision and liability coverage does not provide coverage for mechanical breakdowns.

Is mechanical breakdown insurance an add-on to car insurance or a separate policy?

Some major insurance companies offer mechanical breakdown coverage as an add-on to a standard auto insurance policy. If your car insurance company does not offer this type of coverage, you can purchase it separately from a company that does.

Final thoughts: Is mechanical breakdown insurance worth it?

So, is mechanical breakdown car insurance worth it? If you like the peace of mind of knowing you will never get stuck with the full cost of an outrageously high repair bill – or simply worry that you will not be able to afford future repairs – this policy can make sense.

But MBI may not be for everybody. In some cases, it might make sense to say no to this coverage.

It is important to remember that for most drivers, major repair bills are the exception, not the rule. Therefore, odds are good that you would rarely need MBI.

Also, don’t forget that in addition to paying a premium, you will almost certainly need to pay a deductible before your premium kicks in. That raises the bar even higher before MBI pays off.

The FTC notes that some consumer advocates believe it is best to skip purchasing an extended warranty and instead of placing the money you otherwise would have spent on the warranty in a savings account. The same logic can apply to purchasing mechanical breakdown insurance.

As the FTC notes, "If you need repairs, you’ll have your savings to fall back on. And if you don’t need repairs, you’ll have a little extra money in the bank."

A 2014 Consumer Reports survey found that 55% of vehicle owners who bought an extended warranty never used the policy. So, extended warranties and mechanical breakdown insurance policies may be less valuable than some car owners think.

Whether or not insurance for mechanical breakdown is worth it to you depends on your financial situation and the level of risk you are comfortable with.