Is Mechanical Breakdown Insurance For You?

Most people who have purchased a new or used car are familiar with extended warranties.

It is purchased at the same time the vehicle is and will either take over when the manufacturer’s warranty expires.

On older cars, it will cover the vehicle from the date of purchase.

But many people do not know they have an additional option, called mechanical breakdown insurance, which is offered by their auto insurance company.

The following is a comparison of the two types of protection to cover repairs after your manufacturer’s warranty expires to help you decide which one will give you more and cost you less.

What is Mechanical Breakdown Insurance?

Both mechanical breakdown insurance and an extended warranty are designed to cover repairs to your vehicle once the manufacturer’s warranty expires. Extended warranties are usually offered as a contract for a certain length of time, and are paid in full at the time you finance a new or used vehicle. Mechanical breakdown coverage is a part of your auto insurance premium and is included in your payment.

Extended warranties can be canceled, but requires writing a letter to the warranty company requesting cancellation, then waiting to receive a refund of the unused portion of the warranty. Mechanical breakdown insurance, much like your auto insurance, can be canceled at any time you choose. You will also be required to pay a deductible for any repairs, much as you would for any damage repair, but in most cases, it is very inexpensive.

Do your homework before you buy

The one situation where an extended warranty may be your only option is if you are purchasing a much older used vehicle or a vehicle with excessive mileage. In these cases there is potential for a major repair to be needed, so in essence, an extended warranty is akin to high-risk auto insurance, it is more expensive because of the increased potential for a problem. Mechanical breakdown insurance usually has limitations to the age of a vehicle as well as the mileage.

Like anything related to auto insurance, these limitations can vary from company to company, so before buying a used car, you may want to call your agent and find out exactly what they are. Also, keep in mind that whether you choose mechanical breakdown insurance or an extended warranty, they will vary as to exactly what repairs are covered, so you want to be sure with either type of coverage, you find out what it will and will not pay for.

Choosing the right type of coverage has many variables, but at least knowing the differences between the two types of coverage can help you explore your options before you purchase a vehicle. Make sure that if you are purchasing a new or used vehicle that still has remaining manufacturer’s warranty, you determine what type of coverage you want to take once the warranty has expired.

If the vehicle is only a few years old, but has high mileage, you may just want to choose the extended warranty from the start. If you’re buying a brand new vehicle and do not drive very many miles per year, you may want to look into the mechanical breakdown coverage. Much like choosing a car, choosing the type of extended repair coverage is an individual decision.

Be an educated consumer and find out which is best for you to make sure that not only your vehicle repairs are covered, but also you are not spending more of your hard-earned money than you need to.

This guest post was written by the insurance experts at California Auto Insurance HQ.

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