Mechanical Breakdown Insurance vs. Extended Warranty

Date Oct 28, 2021
Blog category Mechanical Breakdown Insurance
By Huey A
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Will you choose Mechanical Breakdown Insurance, or Extended Warranty? Which one do you think is best for you and your car?

Unlike most appliances and gadgets, your car isn’t easily replaced once something within it breaks down. Some car parts for replacement are quite expensive. For this, there’s two popular options that work preemptively: Extended warranties and mechanical breakdown insurance.

The concepts appear similar on the surface, but there are key distinctions between them. Deciding on which one you need will depend on what you are looking for.

What is an Extended Warranty?

Extended warranties are meant to cover your vehicle long after its original warranty expires. In some cases, this might even be better than the original coverage since it can take care of even more components. These are usually purchased directly from the manufacturer though there are third-party extended warranty providers available.

These providers may have more leeway with their terms, offering buyers some flexibility and sometimes, even add-ons that go beyond the manufacturer’s offer.

How much does an Extended Warranty Cover?

The level of cover provided by an extended warranty can differ for each provider. One type is referred to as a ‘powertrain warranty,’ which is a form of basic coverage that looks out for the car’s engine, drivetrain, and transmission. It protects the most expensive parts to repair or replace, but opting for just this basic level of cover leaves other parts vulnerable, such as brake pads.

On the other hand, some providers may offer a ‘bumper-to-bumper' warranty which is a more comprehensive plan. As the name suggests, this covers everything between the car’s bumpers.

However, there are some parts that aren’t covered such as tyres as well as the costs of general maintenance. Some providers may be able to include these in the plan depending on the terms discussed.

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What is Mechanical Breakdown Insurance?

Mechanical breakdown insurance helps cover parts that get damaged from regular wear and tear. Unlike regular car insurance, this doesn't cover damage from accidents. MBI exclusions also include expenses related to preventive care such as regular tune-ups and similar services.

Most of the time, mechanical breakdown insurance in NZ is purchased separately from where you bought your vehicle. This can be a good thing as it lends a certain degree of flexibility to the process, allowing you to get the better coverage option by checking other MBI providers.

How much does Mechanical Breakdown Insurance Cover?

Mechanical breakdown insurance covers components such as your powertrain, fuel system, steering, brakes, and others, unless it is explicitly excluded in your provider’s policy documents. It’s best to pay attention to see which parts are covered and which parts aren’t in order to make full use of your policy.

Sometimes, there’s a significant overlap between the parts covered by mechanical breakdown insurance and your car’s warranty. Of course, mechanical breakdown insurance tends to last longer than normal warranties, making it useful for damages resulting from wear and tear.

Note that you will need to buy mechanical breakdown insurance during the warranty period in anticipation of its eventual termination.

Mechanical Breakdown Insurance vs. Extended Warranty

It's up to each vehicle owner to see which plan works best for them. In addition to what was discussed above, you may also want to look into other points for consideration as well:

  • Mechanical breakdown insurance plans are a bit more flexible when it comes to bringing in your cars for repairs. With an extended warranty, you may need to work with the provider’s preferred mechanics and garages.
  • Mechanical breakdown insurance in NZ costs aren’t too cheap, ranging from $800 to $1000 for 1-3 years. It is usually added to a car loan which means you’ll also be charged interest while making your standard payments. However, this could be more convenient for some people as extended warranties often require a full upfront payment.
  • A Consumer Reports study found that extended warranties tend to have smaller deductibles than most mechanical breakdown insurance policies.
  • Extended warranties tend to be better for high-value cars. These cars aren’t often covered by mechanical breakdown insurance.
  • Some extended warranty policy providers can also offer additional benefits such as roadside assistance, rental car reimbursement, or trip interruption costs. 
  • Depending on the level of the policy and what was discussed between you and the provider, an extended warranty can also cover tyres.

Get Mechanical Breakdown Insurance in NZ!

It can be an expensive investment to make when you’re buying a vehicle for the first time but mechanical breakdown insurance can be worth it, especially if you foresee a really expensive breakdown that easily costs more than the combined price of the plan and the deductible. Of course, this will depend on your chances of experiencing such an incident in your car’s working life. Newer cars break down less often than old ones, so if you’re planning to keep a vehicle for longer than five years, then this can be a good investment.

Autosure mechanical breakdown insurance offers comprehensive protection for all vehicle types, whether you have a petrol, diesel, hybrid, or even an electric vehicle.

Like an extended warranty, they also offer benefits like allowances for towing and car hire, as well as a 7 day/24 hour AA roadservice assistance, making them one of the best options for drivers looking to insure their vehicles from a costly breakdown. You can view all available deals as well as compare them with other providers here at glimp!

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