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Mechanical Breakdown Insurance

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Did you know that some auto insurance companies offer repair coverage that's similar to an extended warranty?
Having this coverage can be a smart option for many car owners, so let's take a closer look at it.
What is Mechanical Breakdown Insurance?

As the name implies, mechanical breakdown insurance pays for the cost to repair cars after something goes awry. It doesn't cover the repair expenses after an accident; that's the job of comprehensive and collision insurance. And, it's not meant for routine maintenance work, such as oil changes or tune-ups.
Mechanical breakdown insurance kicks in when your car's manufacturer warranty runs out, or when the warranty doesn't offer broad enough coverage.
It's a part of your car insurance policy―just like liability insurance, uninsured motorist, or rental car coverage―that you chose to add. This insurance works for both new cars and leased vehicles.
However, you usually have a short window to sign up for it―such as during the vehicle's first 18 months or 18,000 miles. But, the actual protection extends well beyond that, sometimes until seven years or 100,000 miles have passed.

Why Not Just Buy an Extended Warranty?

Well, you can purchase an extended warranty, and you should evaluate the benefits and costs of an extended warranty before agreeing to add mechanical breakdown insurance to your policy.
However, carriers will tell you that mechanical breakdown insurance provides more complete protection at a lower overall price than extended warranties.
And, it's pay-as-you-go insurance, meaning you'll pay a small amount each auto insurance premium period to continue the coverage, so it's easier on your budget. (With extended warranties, you're stuck paying for the entire coverage upfront.) Plus, you can drop mechanical breakdown insurance from your policy whenever you want.
Also, you should experience a much wider choice in auto repair shops, and mechanical breakdown insurance follows you when traveling outside your area.
However, keep in mind you'll need to pay a deductible each policy period―usually less than $250―before the insurance coverage takes over.

Mechanical Breakdown Insurance: Do Your Homework

Essentially, before you commit to mechanical breakdown insurance, you should ask yourself these three questions:
1. How good is my car's manufacturer warranty?
2. Can I find an extended warranty that offers a better cost or coverage?
3. Is mechanical breakdown insurance a smart move for my situation?
Many decide that mechanical breakdown insurance is the right choice for them, only you can determine what's best for you. Talk with your auto insurance provider to get started.
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