Mechanical Breakdown Insurance Vs. Extended Warranties (2024 Guide)

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.