Below, we’ll explain some significant differences between mechanical breakdown insurance vs. extended warranty plans.
What Is Mechanical Breakdown Insurance?
Mechanical breakdown insurance (MBI) is a specialty type of coverage that’s typically 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.
Mechanical Breakdown Insurance Pros And Cons
MBI plans are usually pretty affordable, as drivers can simply add slight costs on top of their car insurance bills. Mechanical breakdown insurance coverage can be a great investment, but it rarely covers cars with more than 15,000 miles on them.
A car warranty is a contract signed between a consumer and a dealership or third-party warranty provider that protects a vehicle from certain costly repairs. The types of auto repairs that car warranty covers 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 is provided free of charge 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 coverage.
Extended Warranty Pros And Cons
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 vs. mechanical breakdown insurance.
How Is A Car Warranty Different From Car Insurance?
A car warranty is designed to pay for natural, mechanical breakdowns which happen over time as your vehicle ages and gains miles. These breakdowns include issues with some of these systems in your vehicle:
- 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. As you may know already, car insurance is designed to repair your vehicle if it’s damaged in a collision or for other unnatural reasons, including tornadoes, hurricanes, 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 car insurance and a car warranty.