Mechanical breakdown insurance (MBI) and extended warranties are two types of coverage that offer protection for vehicle breakdowns, but they differ in several key ways. One of the main differences between the two is vehicle eligibility. MBI is typically only available for vehicles with low mileage, often in the range of 15,000 miles. However, some third-party warranty companies offer plans for vehicles with up to 300,000 miles. This means that MBI may be more suitable for newer vehicles, while extended warranties can cater to older vehicles with higher mileage.
Another important distinction between MBI and extended warranties is the term length of the coverage. MBI policies usually have longer terms than extended warranties. For example, Geico’s MBI plan offers coverage for up to 7 years or 100,000 miles. In comparison, car warranties tend to cover fewer years and fewer miles. Factory auto warranties typically provide up to 3 years or 36,000 miles of bumper-to-bumper protection and up to 5 years or 60,000 miles of powertrain coverage. Extended car warranties may have longer limits, such as 6 years or 75,000 miles.
Cost is also a significant factor to consider when comparing MBI and extended warranties. The cost of MBI policies can vary, but on average, you can expect to pay somewhere between $30 to $100 per year, totaling $210 to $700 for a 7-year plan. In contrast, the median cost for an extended car warranty is $2,458 according to a 2022 consumer survey. This means that MBI policies are generally more affordable than extended warranties.
Deductibles are another point of differentiation between MBI and extended warranties. The deductible for Geico’s mechanical breakdown insurance is typically $250, although this amount may vary depending on your insurance carrier. On the other hand, the deductible for extended car warranties often ranges from $100 to $500. This means that MBI policies may have a higher deductible compared to extended warranties.
When deciding whether to opt for mechanical breakdown insurance or an extended warranty, it’s important to consider the age of your car, the number of miles on the odometer, and your personal finances. Additionally, some vehicles are more prone to breakdowns and mechanical issues, which may influence your decision.
If you have a new car with fewer than 15,000 miles and are concerned about paying for potential repairs out of pocket, MBI could be a good option for you. Newer vehicles with lower mileage typically have fewer mechanical issues, but they may also have more expensive high-tech components that could require costly repairs. In contrast, older vehicles with higher mileage may not benefit as much from MBI, especially if you have savings set aside for repairs.
Ultimately, the decision to choose mechanical breakdown insurance or an extended warranty will depend on your individual circumstances and preferences. By weighing the cost, coverage limits, and deductible of each option, you can determine which type of coverage best suits your needs and provides you with peace of mind in case of a vehicle breakdown.