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Mechanical Breakdown Insurance: Protect Your Car From Unexpected Repairs

Published July 21, 2022
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This article has been reviewed by licensed insurance industry expert Moshe Fishman.

Anyone who’s ever owned a car knows that it’s a big financial investment and surprises can pop up when you least expect them. There are unexpected recalls, repairs, and breakdowns. No matter how long you’ve driven your vehicle, the reality is that it’s a machine with several moving parts. And those parts are bound to eventually wear out, requiring auto repairs.

Since most states only require you to carry liability insurance, you may not be familiar with breakdown insurance. Some auto insurance companies offer breakdown insurance for an additional monthly fee or premium. 

This car insurance helps you budget for breakdowns, such as the loss of a transmission or a blown head gasket, once the manufacturer's warranty has ended. Mechanical breakdown insurance is separate from your liability or full coverage. It’s also different from an extended warranty. Here’s what you need to know. 

The Ins and Outs of Mechanical Breakdown Insurance

Whether you purchase or lease a car, you’re responsible for all maintenance and repairs. Both new and used vehicles can come with limited warranties, depending on the cars’ age and the number of miles. Although warranties are standard with brand new vehicles, some dealerships will offer select warranties on certified used cars. These select warranties are generally not offered for older vehicles.

For example, you might get a 90-day warranty on a certified vehicle’s major parts. However, any repairs outside of a warranty come at full cost. An extended warranty can help cover these expenses, but owners often need to pay upfront. Breakdown coverage added to your regular policy allows you to pay for car repair insurance in monthly installments.

That said, breakdown coverage does require a deductible. It’s similar to your liability or comprehensive coverage. You pay $250 or $500 per claim. Then, your insurance foots the bill for the remainder of the repair costs as long as they’re covered. 

Breakdown coverage does not cover the cost of routine repairs or maintenance, such as oil changes and brake replacements. It helps you pay for repairs that fall outside of the definition of normal wear and tear. Breakdown coverage also does not cover repairs for damage related to extreme weather or an accident. Your regular car insurance handles these types of coverages.

When can I add breakdown coverage?

One of the drawbacks of breakdown coverage is you have to add it when you purchase the car. The insurance coverage is usually added to your policy when you agree to take it out with your agent. If you’re buying a new or used car with a warranty, the mechanical breakdown coverage will coincide with the warranty. However, your warranty will kick in first.

Therefore, you may find yourself paying for coverage when you don’t really need it. But unlike extended car warranties, you can’t decide to take out the coverage later when an overlap doesn’t exist. 

If you add mechanical breakdown coverage, you won’t have to worry about major breakdown costs after your warranty expires. Unlike an extended warranty, you can take your vehicle to the repair shop of your choice. And you can budget your premium costs over several months instead of forking over a large amount at once. 

Talk to your insurance agent when you take out your liability or comprehensive coverage policy. If that provider doesn’t offer mechanical breakdown coverage, research online to see which carriers offer these coverage options. You may save money by bundling all your car insurance coverages with a single company.

Can I add coverage to any car?

In most cases, cars with over 100,000 miles are not eligible for mechanical breakdown coverage. Some repair shops won’t perform work like transmission fluid changes and flushes at this many miles. High mileage vehicles also stand a greater chance of breaking down or needing major work due to wear and tear.

For example, a Honda Civic is known for its ability to run for hundreds of thousands of miles. Still, once the vehicle’s odometer reaches 100,000, you have to occasionally put in thousands of dollars to maintain the car. 

Just because a vehicle has a good track record doesn’t mean it lasts forever. Eventually, the engine and other major parts cost more to maintain and repair than replace. Check with your insurance agent about the specific car you’re thinking of buying.

If you have a VIN, the agent can get most of the details they need. Without a VIN, you’ll want to provide year, model, trim level, and existing mileage (if any). Another problem some owners run into is coverage for luxury or high-value vehicles. Some may not be eligible for breakdown coverage. 

Is the coverage affordable?

While your costs will vary by provider and vehicle, mechanical breakdown coverage is generally affordable. It’s usually under $100 a year to add the coverage to your policy. When compared to the costs of extended warranties, breakdown coverage is more affordable.  

Considering that you may never use an extended warranty or breakdown coverage, it doesn’t make sense to pay thousands of dollars for three years of coverage versus a couple hundred for six years of protection. Remember that breakdown coverage is a type of catastrophic car insurance. You’re essentially hedging against a bunch of what-ifs. 

Do I really need mechanical breakdown coverage?

The answer comes down to how long you see yourself owning the vehicle. Approach the decision like buying versus renting a home. If you intend to stay in the residence or area for a long time, it usually makes more sense to buy. 

Likewise, if you tend to keep driving your cars for 10 years or more, breakdown coverage is probably worth it. But if you’re leasing a vehicle or intend to trade in your car within five years or less, don’t add the coverage to your policy. The chances that you’ll need it are slim to none.

What if your car is not eligible for mechanical breakdown insurance?

There are other third-party companies that will provide an extended warranty beyond 100k miles but do your homework. Be sure to check reviews on such companies and know exactly what repairs and coverages the warranty will cover. You may also want to check with the Better Business Bureau to see if complaints have been reported regarding repairs coverage, customer service, etc.

Be sure it makes sense for you.

Mechanical breakdown insurance helps cover the costs of unexpected, major repairs on your vehicle. It’s a low-cost way to bet against your odds of running into huge expenses once your warranty expires, and it may give you peace of mind. You can add the coverage when you take out your liability or comprehensive auto insurance policy. However, be sure that it makes sense for your driving habits and needs.

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