Learn the differences between these two types of coverage and decide which is right for you


Car repairs can be very expensive for U.S. citizens. According to RepairPal, a common catalytic converter replacement costs between $2,174 and $2,213. Major repairs such as a transmission replacement can even cost between $4,000 to $8,000, according to Angie’s List.

In order to feel peace of mind, many car owners pursue long-term coverage before the factory warranty on their vehicle expires. According to IBIS World, almost 18 billion dollars in the U.S. last year was spent on extended car warranties. Alternatively, many owners purchase insurance for car repairs to protect their vehicle.

In this article, our review team discusses the difference between extended car warranties and insurance for car repairs, also known as mechanical breakdown insurance. In addition, we help you decide which type of coverage is right for you and share our recommended providers.


In This Article:

What Is A Factory Warranty?

Before considering extended car warranties and insurance for car repairs, it is important to know what a factory warranty is. A factory warranty protects a new vehicle from costly repairs for a certain number of years or miles, depending on its particular brand.

For example, the best SUV warranty comes from Hyundai, which offers 5 years/60,000 miles of coverage to its new vehicles, whichever comes first.

While such a warranty is helpful in case of costly repairs in the short term, it does not protect a vehicle when it is older and has more mileage. Unfortunately, a vehicle is much more likely to require expensive repairs when it is beyond its factory warranty. 

What Is Car Repair Insurance?

Car repair insurance, also known as mechanical breakdown insurance (MBI), covers repair costs due to mechanical failures after your factory warranty expires. As opposed to auto insurance, insurance for car repairs does not cover the costs of accidents or natural disasters.

MBI plans are offered as an optional add-on, also known as a rider, to your car insurance policy. Therefore, your auto insurance provider must offer MBI plans in order for it to be an option for you.

What Is An Extended Warranty?

Like car repair insurance, an extended warranty is also designed to protect your vehicle from costly auto repairs. You make a small monthly payment toward your contract and then pay a deductible if and when you need covered services from a mechanic.

Extended warranties are not tied into your auto insurance policy like MBI plans are so they can be purchased from any extended warranty companies or dealerships.

Advantages & Disadvantages of Insurance For Car Repairs

To help you compare an MBI plan vs. an extended warranty, below are three advantages and disadvantages of purchasing mechanical breakdown insurance in comparison to an extended warranty.


  • Rates regulated by state governments: Since MBI is sold as an insurance product, it is monitored and regulated by a vehicle owner’s state government. Therefore, the rates charged for these policies may be lower in some cases than the rates for an extended warranty.
  • No down payment: MBI policies do not usually require a down payment and extended warranty companies often do. However, our review team found that leading extended warranty providers such as CARCHEX may be willing to waive a down payment.
  • Work with your insurance provider: If you like your current auto insurance provider and they offer MBI, they can simply add mechanical breakdown coverage to your policy. This will save you time researching extended warranties, which are not sold by insurance companies.


  • Restrictions: Many MBI policies come with strict mileage restrictions and/or age restrictions for vehicles. Extended warranty companies typically offer plans that are more inclusive of older and higher mileage vehicles.
  • Limited choice of provider: Since MBI policies are sold as optional add-ons to your auto insurance policy, you have to purchase them from the company that provides you with auto insurance.
  • High Deductibles: The deductibles on MBI plans are generally much higher than deductibles offered by extended car warranty companies. The reason for this difference might be because of greater competition among extended car warranty companies for customers’ business. For example, Geico’s deductible is $250, while the highest deductible offered to our review team when examining top extended warranty companies was $100.

Which Type Of Coverage Is Right For You?

Generally, our review team believes that extended warranties are a wiser choice because of their more inclusive policies, lower deductibles, and greater options for a provider.

However, if you have a strong relationship with your auto insurance provider and they offer an MBI plan with a reasonable cost, then an MBI plan may be an excellent choice for you.

If you cannot decide which type of coverage is better for you, getting a quote for an MBI plan with your auto insurance provider and then comparing it to quotes from top extended car warranty companies is a great option.

Our Recommended Providers


If you decide to purchase mechanical breakdown coverage and you are open to switching insurance providers, we recommend that you get a quote from USAA, AAA, or Mercury because these companies have the most inclusive MBI policies for high mileage and old vehicles.

For those who decide to purchase an extended warranty, we recommend requesting a free quote fromEndurance and CARCHEX

You can read more information about these two top providers below.

#1 Endurance

Endurance, which offers direct-to-consumer extended service plans, was named our Best Overall Provider for the following reasons: 

  1. Covers automobiles with high mileage: Endurance offers extended warranties to automobiles with up to 200,000 miles. This mileage rate is much higher than most other providers.
  2. Outstanding reputation: Endurance appeared on the 2019 Inc. 5000 list as one of the fastest growing companies in the U.S. It also received a 2019 Stevie Award as a “Great Employer” for its top-notch employee benefits and is a Gold Member of the Vehicle Protection Association.
  3. Strong industry partnership: Endurance holds a prestigious partnership with Andretti Motorsports, one of the most successful auto racing companies in the world.


CARCHEX has proven itself to be a leading provider for these reasons and more:

  1. Strong industry partnerships: CARCHEX partners with industry leaders such as Edmunds.com, Kelley Blue Book, and CARFAX. These partnerships are a strong sign that CARCHEX is a leading extended warranty provider.
  2. Excellent reputation: CARCHEX is an eight-time Inc. 5000 Hall of Fame honoree and was named a Top Workplace by the Baltimore Sun for seven consecutive years. The company also boasts an A+ BBB rating.
  3. Most affordable among leading providers: Our review team received sample quotes on a vehicle from the top providers in the industry and CARCHEX was among the most affordable extended warranty providers.

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