There are three main forms of mechanical repair protection: factory warranty plans, extended warranty coverage, and mechanical breakdown insurance (MBI). All three options provide car owners with peace of mind on the road, but many drivers can’t explain mechanical breakdown insurance vs. extended warranty coverage.

In this article, we’ll review the advantages and disadvantages of mechanical breakdown insurance vs. extended warranty plans. We’ll also explain what car insurance is, as well as the differences between a car warranty and car insurance. After reviewing the nation’s best extended car warranty companies, we’re ready to compare average extended warranty costs and coverage plans with mechanical breakdown insurance.



Mechanical Breakdown Insurance Vs. Extended Warranty Overview

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.

Pros Easy add-on to your auto insurance policy Monthly bill is often cheaper than for an extended warranty Regulated by state insurance commissioners
Cons High average deductible Doesn't cover wear and tear or routine services such as oil changes and tuneups Only covers new and low-mileage vehicles No refund if you cancel your policy

What Is An Extended Warranty On A Car?

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.

Pros Low average deductible Comprehensive coverage choices for older and high-mileage vehicles Typically offers a prorated refund after 30 to 60 days
Cons Doesn't cover wear and tear or routine services such as oil changes and tuneups High monthly payments required in some cases Not regulated by state insurance commissioners

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.



MBI Coverage Vs. Extended Warranty Coverage

Mechanical breakdown insurance covers your vehicle’s major components in the case of part failures or faulty workmanship, so it’s pretty similar to an extended warranty. MBI policies vary somewhat in scope but generally cover parts ranging from your drivetrain and fuel system to your air conditioning.

Both mechanical breakdown insurance and extended warranties take care of covered repairs on certain parts and systems. They don’t cover routine maintenance, damage from misuse, or parts subject to normal wear and tear, such as brake pads and windshield wipers.

Additional Extended Warranty Benefits

Mechanical breakdown insurance plans tend to offer fewer benefits than extended warranties. For example, most reputable extended car warranty companies offer the following:

  • 24/7 roadside assistance: This service can help if your vehicle breaks down or you lock yourself out. It also helps out if you have a flat tire or need gas delivery.
  • Rental car reimbursement: This helps pay for transportation expenses while your vehicle is being repaired under an extended warranty claim.
  • Towing coverage: This takes care of the cost of having your vehicle towed to the nearest repair facility.
  • Trip interruption benefits: This benefit reimburses you for expenses such as lodging if your vehicle breaks down a certain distance from home.

If these benefits seem helpful, the mechanical breakdown insurance vs. extended warranty choice might be easier than you’d originally thought. While MBI offers impressive parts coverage, only extended warranties provide such a breadth of additional benefits.



MBI Cost Vs. Extended Warranty Cost

Mechanical breakdown insurance typically costs between $30 and $100 per year, and the price is solely based on the year and mileage of your car. Extended car warranties usually have up-front costs, while mechanical breakdown insurance is paid as part of your car insurance policy.

Extended warranties can cost between $1,000 and $3,000 total, but they usually average around $1,500. The cost of an extended car warranty depends on factors such as:

  • Vehicle’s age, make, model, and mileage
  • Amount of coverage
  • Location of your vehicle
  • Warranty provider



Should You Purchase An Extended Warranty or MBI?

Whether an extended car warranty or mechanical breakdown insurance is worth it or not depends on your individual situation and personal goals. 

For example, if you cannot afford unexpected repair costs between $2,000 to $4,000, it is recommended that you consider an extended auto warranty.

Owning a car warranty will protect you from having to foot a large bill in case of a major mechanical breakdown in your vehicle, especially for a high-mileage or used car.

On the other hand, if you have enough savings to easily afford a $2,000 to $4,000 car repair, it is probably not worth it to purchase an extended auto warranty. There is a good chance that you will pay more money in the long-term with an extended warranty than just paying the repair bill.

For more information on this topic, we recommend that you read our article on whether extended car warranties are worth it.

Dealership Vs. Third-Party Extended Warranty

Prospective customers who decide to purchase extended warranty coverage often want to know what company they should buy their warranty from. Car manufacturers, such as General Motors, offer extended warranties as do third-party extended warranty companies.

In general, purchasing an extended warranty from a dealership will cost much more than an extended warranty from a reputable extended car warranty company because of the name recognition. One advantage of purchasing an extended warranty through a car manufacturer is that the covered repairs are done with brand-name parts. A third-party warranty will often let you choose your own repair shop, while a manufacturer’s extended warranty often states in the fine print that you have to visit one of the brand’s repair facilities.

However, our review team has found that extended warranties from third-party providers work just as well for most customers and also save them considerable amounts of money.

In addition, third-party extended warranty companies allow you to receive free quotes and sample contracts online, and they often provide higher coverage limits than extended warranties from car manufacturers do.

For example, while Chevrolet’s extended warranty offers protection up to a total of 5 years/60,000 miles, Endurance offers protection up to a total of 8 years/ 200,000+ miles.



Mechanical Breakdown Insurance Vs. Extended Warranty: Conclusion

The choice of mechanical breakdown insurance vs. extended warranty plans depends on your situation. If you have a new vehicle with low mileage, then MBI might be the right choice. But keep in mind that you won’t get the benefits that typically come with extended warranties. An older vehicle with higher mileage might benefit more from a pricier extended warranty.

Mechanical Breakdown Insurance Vs. Extended Warranty Comparison

If you’re still unsure about mechanical breakdown insurance vs. an extended warranty, check out the chart below:

Comparison PointsMechanical Breakdown InsuranceExtended Warranty
Term lengthsUsually 7 years/100,000 milesUsually 3 to 10 years
Types of cars eligibleGenerally, cars with fewer than 15,000 milesNew cars and used vehicles with less than 150,000 miles
Cost$30 to $100 per year$1,000 to $3,000 in monthly installments or a lump-sum payment up front
Deductible$250 to $400$0 to $200
AvailabilityInsurance providers such as Geico and MercuryExtended service plan providers such as Olive and Protect My Car

Recommended Extended Warranty Providers

Based on extensive research, we believe that Endurance, CARCHEX, and Olive are three of the strongest options for our readers. Each of these providers offers different coverage options, with the level of coverage ranging from a powertrain warranty to higher coverage warranties. These providers also offer additional perks like roadside assistance including towing, gas delivery, trip interruption services, and rental car reimbursement.

For mechanical breakdown insurance, it would be smart to get free quotes on affordable plans from Geico. We discuss the extended vehicle warranty providers and Geico in further detail below and how to decide between them.

Endurance: Best Coverage

Endurance offers direct-to-consumer extended warranties, which means that warranty services and claims are handled directly by Endurance. There is no middleman or underwriting provider. We named Endurance as the Best Coverage provider.

Here are a few things our review team likes about Endurance:

  • Direct-to-consumer model: Our review team appreciates Endurance’s direct-to-consumer model, which avoids the complexity and inconsistency of third party warranty administrators.
  • Treats its employees well: Endurance was named a Great Employer at the 2019 Stevie Awards. The company was selected due to its “impressive set of employee benefits and activities, particularly given the size of the enterprise.”
  • Company growth: Endurance made the Inc. 5000 list in 2019 as one of the fastest-growing companies in the U.S. This quick growth demonstrates that Endurance’s plans are appealing to many customers and that the company is capturing market share in its industry.

CARCHEX: Best For Used Cars

With more than 20 years of experience, CARCHEX has become an industry leader for its affordability and broad spread of coverage. Available in all 50 states, the extended warranty broker maintains an A+ rating and accreditation from the BBB and won three Golden Bridge Awards® due to the positive customer service mentioned in CARCHEX reviews.

CARCHEX offers five coverage levels and perks such as a 30-day money-back guarantee and roadside assistance. In our review, the company earned 4.4 out of 5.0 stars overall and the title of Best For Used Cars in large part due to its generous 10-year/250,000-mile coverage limit.

Here are a few reasons our review team recommends CARCHEX:

  • Solid reputation: CARCHEX is an eight-time Inc. 5000 Hall of Fame Honoree and received a Top Workplaces Award by the Baltimore Sun for seven consecutive years.
  • Strong industry partnerships: CARCHEX has partnered with leading industry companies such as CARFAX, Kelley Blue Book, and This is a strong indication that they are a top extended warranty provider for automobile owners.
  • Sample contracts and free, customized quotes online: CARCHEX provides sample contracts online so you can learn exactly what their plans would offer before you purchase one. Likewise, CARCHEX also allows you to receive a free quote on its website so you can discover what an extended warranty would cost for your vehicle.

Olive: Best Online Warranty

Olive offers its vehicle service contracts in an all-online format, making it easy for drivers to find the coverage they need. The company offers mechanical breakdown insurance products in California and extended warranty plans elsewhere across the U.S.

Keeping its coverage plans simple, Olive offers three vehicle protection options that last up to 3 years/185,000 miles. Thanks to excellent Olive warranty reviews, an A+ rating from the Better Business Bureau (BBB), and cost-effective monthly subscription plans, we gave Olive 4.2 out of 5.0 stars and named it Best Online Warranty provider.

Best Online Warranty 4.5/5

There’s no waiting period for coverage with this extended warranty company.

Geico: Best Mechanical Breakdown Insurance

As one of the top car insurers on the market, Geico holds an A++ financial strength rating from AM Best along with an A+ rating from the BBB. It’s also regularly recommended for its impressive mechanical breakdown insurance plans.

As the industry standard for MBI coverage, Geico offers plans that can last up to 7 years/100,000 miles. To qualify for a Geico MBI plan, your vehicle must be less than 15 months old and have less than 15,000 miles on it. If you’re looking for affordable and trustworthy MBI coverage, Geico mechanical breakdown insurance is hard to beat.

MBI Vs. Extended Car Warranty: FAQ

Below are frequently asked questions about mechanical breakdown insurance vs. extended car warranties.