Mechanical Breakdown Insurance

Mechanical breakdown insurance (or MBI coverage, for those in the know) is a type of insurance that covers your car’s mechanical failures.

What is mechanical breakdown insurance?

Car insurance typically covers damage from an accident or an “act of God.” If an accident causes mechanical damage it would probably be covered by your car insurance, but if your engine fails while you’re cruising down the road, or your transmission malfunctions and you suddenly can’t reverse, you’re likely on the hook for repair costs.

If you’re anxious about those future bills, we get it. Mechanical breakdown coverage might let you relax a little. MBI coverage is an insurance policy that kicks in to cover many of those mechanical failures that are unrelated to stuff your car insurance policy already covers.

How do I get MBI insurance?

Mechanical breakdown insurance can be purchased from some car insurers as an add-on, but not every insurance company offers it. In fact, most do not. 

MBI can only be purchased when buying and insuring a new car, or one with very low miles (usually under 12,000), and can be canceled at any time. Keep in mind that this kind of policy will also only cover system failures—it won’t cover you for basic wear and tear of your car’s mechanical systems. It also won’t cover you for the cost of roadside assistance if you experience mechanical breakdown while out on the road.

What’s the difference between mechanical breakdown insurance and an extended warranty?

You might be think this sounds a lot like an extended car warranty, and you are sort of right, but there are a few key differences.

Pros of MBI:

• If you purchase an extended warranty from the dealership, you are usually responsible for paying in a lump sum. However, mechanical breakdown coverage is paid on a monthly basis, making it a bit easier on the wallet. 
• Extended warranties are often rolled into the financed car purchase. That means that not only are you paying for the warranty, you’re also paying interest on the purchase of it. Mechanical breakdown coverage does not have any interest charged on it. 
• MBI might be a little more reliable. The car insurance industry is highly regulated. Extended warranty companies have a long list of complaints against them, and there’s not much a consumer can do if it turns out that the coverage isn’t what they expected. Buyer beware. 

Cons of MBI:

• Mechanical breakdown coverage typically carries a larger deductible, while an extended warranty can be purchased with a small deductible of around $50. 

• MBI coverage has to be purchased on a new, or nearly new car, and payments have to be made every month. That means that until the manufacturer’s warranty expires, your monthly premium payments will overlap with the initial coverage from your MBI policy. 

• If you have a car with higher mileage, you may not be eligible for mechanical breakdown coverage. Extended car warranties, on the other hand, can usually be purchased until your car is five to seven years old, or until it has up to 100,000 miles on it. This gives you a lot more time to make a decision, and allows you to buy protection for a used car. 

• If you move your policies over to another insurance company, you may not be able to get MBI coverage from your new auto insurance provider. While extended warranties are usually purchased from a dealership when you buy a car, you can buy another in the future, from whatever company you choose. 

Does mechanical breakdown insurance cover everything that goes wrong?

An MBI policy does not cover everything, but it does cover a whole lot of things you may not have thought about. Let’s dive in. 

Probably covered: Typically, MBI coverage covers all repairs that aren’t specifically excluded from the policy. That means if your transmission stops shifting in reverse, you’ll be covered. If your control arm needs to be replaced, that would be covered. If you have problems with the suspension, engine, transmission, drive train, cooling system, air conditioning, or heating systems while you’re in the repair shop, they would be generally covered if you had a mechanical breakdown insurance policy. (That said, it’s always important to examine the specific details of your own policy.)  

Not covered: As the car owner, your job is to maintain your car and keep it in decent shape. MBI coverage does not apply to maintenance-related components or damage. So oil changes, coolant flushes, transmission fluid replacement, air filters, alignment, cabin filter, tune ups, and so forth are your responsibility. In addition, these policies don’t cover what is classified as “wear and tear” parts. This includes tires, brake pads, drive belts, and cooling system hoses. 

MBI coverage also does not cover repairs caused by a collision. This would include both body work and mechanical work. If you are involved in a collision—or your vehicle is damaged in a flood or a hail storm or in an accident involving a deer— you’d have to have the corresponding car insurance policy that applies. Those repairs would be reviewed for coverage under the collision or comprehensive coverage parts of your policy, if you selected them when you built your insurance quote.

Mechanical breakdown coverage is designed to offer car owners peace of mind. If a major system fails, and a big charge is looming, the insurer steps in and pays for the car repairs (minus your deductible). 

However, the idea behind MBI isn’t that you suddenly neglect your car with the expectation that someone else will foot the bill if things go wrong. These policies come with a caveat: You have to maintain your car in the way your vehicle manufacturer outlines in your owner’s manual. We know you stayed up all night reading that manual when you bought your car, but it might be time to revisit it and refresh your memory…

If you don’t change your oil regularly, or perform other required routine maintenance, not only will you cause damage to your car—but your insurer can reject a future claim for damage that was caused by negligence on your part.  

A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them. Coverage and discounts may not be available in all states.