You may be given the option to buy extended warranty and mechanical breakdown insurance if you purchase a new or used vehicle. Here's what you need to know about your options when you want to seek insurance for maintenance problems that may arise with your vehicle.
Mechanical Warranty: What Is It?
Mechanical warranty is the extended coverage provided by the car dealership which usually applies for mechanical breakdowns and parts. It can be given for any number of years depending on your plan and how much you want to spend.
Mechanical Warranty And Mechanical Breakdown Insurance
Several people do not realize that they may have more than one option when it comes to buying mechanical breakdown coverage. Depending on how long you're going to own your vehicle, or even if you don't intend to own it for a very long time, but want to resell it in a few years, there may be benefits to buying a mechanical repair from a dealer or purchasing a mechanical failure policy from an insurance company. It's a good idea to analyze what the insurance company is offering and understand which choice can give you the most benefit and save you cash.
What Is Mechanical Breakdown Insurance?
Mechanical Breakdown Insurance (MBI) is a coverage that pays for car repairs that are unrelated to an accident that can be purchased through your car insurance company instead of extended warranty through the dealer.
Like extended warranty, mechanical breakdown insurance coverage pays for repairs to a car in surplus of the manufacturer's warranty and may also provide additional insurance coverage as part of the insurance package depending on the insurance company. Mechanical Breakdown Insurance can be added as a subscription to your auto policy. Mechanical breakdown insurance coverage may provide advantages over extended car warranty because it is offered through an insurance company and is regulated by the insurance industry for standards and claims.
Does Car Insurance Cover Mechanical Breakdown?
No, regular car insurance does not cover continuous breakdowns or maintenance. You can purchase Mechanical Breakdown Insurance separately or by signing up to your car policy. Note that MBI is not a replacement for regular car insurance, it is an add-on.
You still need to purchase your basic car insurance to cover minimum state car insurance requirements as well as additional coverage, such as comprehensive, collision or other insurance.
How Much Does MBI Cost?
The cost of Mechanical Breakdown Insurance is usually less expensive than the extended warranty on the dealer. The price varies depending on the year and the model of the car, the coverage could be as cheap as $300 but could be as much as a few thousand, it really depends on the car. Unlike regular car insurance, which takes into account your driving record and many other personal factors, sometimes including your credit rating, mechanical breakdown coverage is based only on the year and model of your car. The price calculation does not take any of your personal information into account.
Is It Worth Purchasing MBI or Extended Warranty On New Vehicle?
It really depends on a number of factors. If you have already decided to purchase an extended warranty, the Mechanical Breakdown Insurance is a good option for you to consider. If you don't know if you're going to need extended coverage, some research on your car will help:
- Look up Consumer Reports or other car reviews that show what you can expect from the performance of your car over time. Usually, there are available data that can help you understand what kind of problems you might expect in the future. You may also find that some car manufacturers have more reliable mechanical operation than others. These are factors that will come into play while trying to determine whether money is worth spending on extended warranty or mechanical breakdown insurance.
- Consider how long you're going to keep your car. Weigh the cost of coverage against the cost of the expected repairs. For example, if you keep your car for only 3 years and it's a new car, you're less likely to encounter major mechanical issues (not covered by the standard warranty) than if you own the car for 10 years.
- Ask the dealer for examples of cases where the mechanical breakdown would apply to your circumstances as long as you plan to own your car.
Should I Get Mechanical Breakdown Insurance?
Insurance is a cover to protect you from unexpected costs. If you have enough money to pay for unexpected repairs yourself, you can be self-insured by not buying an extended warranty or mechanical breakdown insurance coverage.