Should You Purchase a Mechanical Breakdown Policy?
You’ve seen those pieces of junk mail that clutter your mailbox. The ones with “Buy An Extended Warranty!” emblazoned across the top. And they seem to start appearing around the time that your dealer warranty is about to run out. (No, that’s not a coincidence.)
Still, you may start to wonder: Should I go ahead and purchase an extended warranty? After all, I don’t want to be stuck with a huge auto shop bill — and my car’s not getting any younger. But do I really have to shell out all that money for something I might not use much … or at all?
The Good News Is There Is Another Option – Mechanical Breakdown Insurance
As the name implies, this coverage is intended to insure you against the costs of a major mechanical breakdown of your vehicle.
Once you purchase this policy, you are covered if your vehicle breaks down or its covered parts wear out. All you do is take your vehicle to the repair shop, pay a deductible, and the insurance company takes care of the balance of the covered repairs.
In many ways, a mechanical breakdown policy works a lot like an extended warranty that you may purchase from a dealer. But there are some significant advantages to having this type of insurance coverage.
Flexibility: Most warranties are one-size-fits-all, take-it-or-leave-it products. But with a mechanical breakdown policy, you can select the level of coverage you want. For instance, if you want to save some money, you can opt to insure just the power train. Or you can have certain components included in the coverage. And if you want comprehensive breakdown coverage, you can obtain that type of policy as well.
Deductible Choices: Like auto insurance, you have the ability to choose the deductible you want with your policy. For example, you can sign up for a $500 deductible and pay less than you would for a policy with a $250 deductible. Or you can pick $0 deductible coverage and not worry about paying anything in the event of a breakdown.
No Upfront Outlay of Funds: With an extended warranty, many dealers ask you to pay a lump sum up front (or “allow” you to finance it over time while they charge you interest). But with mechanical breakdown coverage, you can pay a monthly, semiannual, or annual premium — and you’re covered as long as your account is in good standing.
Your Choice of Auto Shops: Some warranties will only repair vehicles under warranty at dealerships. But with an mechanical breakdown policy, your car can be brought into any licensed auto shop for repairs. So you can pick the garage that’s closest to your home or office!
Other Perks: A mechanical breakdown policy is transferable, so if you change drivers or sell the vehicle, the coverage goes with it. Plus, most of these policies come with additional coverage such as towing, lockout service, or rental reimbursement.
Less Expensive: Last but not least, mechanical breakdown coverage usually costs much less than a dealer warranty — sometimes, up to 50% less!
It’s not just happenstance or Murphy’s Law — breakdowns become more common after a vehicle’s factory warranty expires. In fact, drivers are ten times more likely to suffer a mechanical breakdown than be involved in an auto accident.
So investing in a mechanical breakdown policy is a wise move if you intend to hold on to your vehicle for a long time.
This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverage’s in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.