Do You Need Mechanical Breakdown Insurance on a New Car?

Purchasing a new car is an exciting experience. But once the manufacturer’s warranty expires, you’re responsible for repair costs. Mechanical breakdown insurance (MBI) covers repairs for certain components after your warranty runs out. Is this extra protection worth it on a new car?

Getting MBI quotes and comparing to expected repair costs for your model can determine if it’s a smart investment. This article explores when MBI makes sense for new cars and how to decide if it fits your situation.

What is Mechanical Breakdown Insurance?

Mechanical breakdown insurance goes by a few different names – vehicle service contracts, extended warranties, repair insurance, etc. But they all serve the same function.

MBI covers the cost to repair certain components like the engine, transmission and electronics that break down due to normal wear and tear after your factory warranty expires.

It protects against expensive repair bills. While you’ll pay a deductible, your MBI provider covers the remaining cost of covered repairs up to the limits in your contract.

Does My New Car Need Repair Coverage?

New vehicles come with manufacturer warranties that provide repair coverage for the first 3 years or 36,000 miles on average.

Once this warranty coverage expires, you’re responsible for all repair costs unless you extended the warranty or purchased an MBI policy.

With today’s complex vehicle systems, a single breakdown can cost $1,500 or more. And some models have higher than average repair costs.

While a new car likely won’t need major repairs right away, protection can give you peace of mind and prevent financial stress if an unexpected breakdown does occur.

What Does MBI Cover on a New Car?

MBI providers like Endurance allow you to customize coverage for your new vehicle’s needs. Plans may include:

Powertrain coverage – for the engine, transmission, drive axle, turbocharger, etc.

Electrical coverage – for alternators, starters, electronics, sensors and wiring

Cooling coverage – for the radiator, water pump and cooling fans

Fuel system coverage – for the fuel pump, fuel injectors and fuel tank

Suspension coverage – for wheel bearings, CV joints and shock absorbers

Brake coverage – for brake components like the master cylinder, calipers and ABS

You can often choose additional coverage like roadside assistance, rental reimbursement and trip interruption too.

What Doesn’t MBI Cover?

While MBI provides extensive protection, certain items are excluded. These typically include:

• Normal maintenance like oil changes, fluid flushes or tire rotations
• Alignments
• Wear and tear parts like brake pads, wiper blades or filters
• Body components like trim, paint or glass
• Damage from accidents or misuse

Review contract details closely so you understand exclusions. Routine maintenance and wear parts will be your responsibility.

What MBI Costs Can I Expect?

The cost of MBI depends on factors like your car’s make/model, age/mileage and coverage length. A basic powertrain plan starts around $100 annually for a new car. More extensive coverage is around $200 to $300 per year.

You’ll also select a deductible, typically $100 or $200. This is what you pay for covered repairs before the MBI provider covers the balance. Higher deductibles reduce your premium.

Overall, expect to budget about 2% to 3% of your car’s value for MBI annually. Get quotes to see exact pricing for your situation.

When Does MBI Make Sense for a New Car?

Adding MBI is smart for certain new car buyers:

You want budget protection. Out-of-pocket repair costs can strain finances. MBI gives you a maximum cap through predictable monthly payments.

You keep vehicles a long time. Lengthier ownership means more chances for a breakdown. MBI protects against expensive repairs outside the short factory warranty period.

You drive more miles annually. High mileage accelerates wear and tear. MBI covers repair costs during your higher mileage driving.

Your model has high maintenance costs. Some brands and vehicles cost more to repair. MBI saves you money over the long run if your car has above average maintenance needs.

You want trip interruption perks. Many MBI plans include travel benefits like lodging reimbursement and rental cars if a breakdown leaves you stranded.

You want rental car access. MBI can provide a rental car allowance while your vehicle is being repaired after a mechanical failure.

When Can You Skip MBI on a New Car?

Here are some scenarios where you may not need the extra coverage:

Your car has a long factory warranty. Hyundai and Kia have 5-year/60,000 mile warranties. MBI won’t be necessary during this extensive coverage period.

You have ample savings. If you have funds set aside for repairs, you can pay for any needs out-of-pocket rather than through monthly MBI premiums.

You are selling soon. Keeping the car short-term reduces the chance of a breakdown during ownership. MBI likely won’t be worth it.

Your model has low repair costs. Toyota, Honda and other reliable brands have inexpensive maintenance needs. Repairs will be affordable even without MBI.

You drive minimal miles. Low annual mileage reduces wear and tear. Your factory warranty should cover any issues for several years unless mileage exceeds the limit.

How Does MBI Compare to an Extended Warranty?

Both MBI and extended warranties offer protection after your factory warranty expires. But they differ in some key ways:

• Cost – MBI is typically more affordable, with annual costs in the low hundreds rather than thousands.

• Coverage limits – Extended warranties offer higher coverage limits overall, while MBI caps limits on pricier repairs.

• Length – Extended warranties are available for longer terms and higher mileages than MBI.

• New car eligibility – MBI has stricter requirements on vehicle age and mileage. Extended warranties are more flexible.

• Cancellation – MBI through insurance companies may be non-cancellable. Extended warranties are often cancellable for prorated refunds.

Either option can provide value. Compare costs, coverage details, limitations and provider reputations when deciding.

7 Steps to Choosing MBI for a New Car

Follow these tips when researching MBI for your new vehicle:

1. Review expected repair costs for your particular make and model.

2. Compare MBI costs from providers like Endurance and CARCHEX.

3. Understand differences in coverage tiers available.

4. Select a plan that aligns with your car’s repair risks.

5. Pick a deductible amount that fits your budget.

6. Ask about potential discounts you may qualify for.

7. Read sample contracts and study exclusions before purchasing.

Doing your homework upfront ensures you get the right protection at a fair price.

Can You Add MBI to Car Insurance?

Some car insurance companies like Geico allow adding mechanical breakdown insurance onto your existing policy.

Benefits of MBI through an auto insurer include:

• Potential multi-policy discounts
• Convenient single bill for auto insurance and MBI
• Dealing with one provider for claims

Downsides include less flexible plan options and shorter maximum coverage terms in some cases.

Weigh bundling MBI with your car insurance against purchasing a separate contract from a warranty company. Compare costs and coverage to decide which makes most sense.

Is MBI Worth It for Peace of Mind?

While a new car likely won’t need major repairs soon after purchase, you never know when a crucial component might fail. MBI can provide peace of mind against expensive repair bills down the road.

For some new car buyers, budgeting a few hundred dollars annually is worthwhile for the protection MBI contracts provide.

Make sure to get quotes and weigh the benefits against the cost for your situation. Analyze the repair record for your particular vehicle’s make and model. Carefully consider your ownership plans and budget to determine if mechanical breakdown insurance provides value.

In many cases, the peace of mind MBI delivers makes it a worthwhile investment for new car owners who plan to hold onto their vehicle beyond the brief factory warranty period. Protecting your investment against high repair bills can give you confidence in your new car for years to come.