Is mechanical breakdown insurance worth it?

Your car insurance covers accidents and related damage, but it won't help with a worn-out brake or a stalled transmission. That's where mechanical breakdown coverage (MBI) comes in — it covers unexpected mechanical or electrical issues after your manufacturer's warranty expires, or if your warranty doesn't cover that repair.

MBI is usually purchased as an add-on to your car insurance, but third-party providers like Endurance offer standalone service contracts.

Here's what you need to know about how mechanical breakdown coverage works, what it covers, who offers it, and more.

While the covered items and events vary by contract and provider, mechanical breakdown insurance typically covers:

• Engine
• Transmission
• Steering
• Axles
• Suspension
• Exhaust system
• Fuel system
• Brakes (excluding routine wear items like pads)
• Air conditioning/heating
• Electrical systems (alternator and starter)

Some policies cover indirect damage caused by the mechanical failure, and some include roadside assistance, which pays for tows, jumpstarts and lockouts. If you're stranded, your plan may also cover lodging and the cost of getting a temporary replacement vehicle.

MBI doesn't help with accidents or pay for routine care, like oil changes, air filters, fluids, brake pads, wiper blades, or tune-ups.

It also doesn't cover intentional damage, corrosion or damage caused by neglect or misuse.

Mechanical breakdown insurance is usually available from car insurance providers. While many require you to have an auto policy with them to take out MBI, we noted providers who have standalone coverage.

Best for choosing your own garage: Good Sam

Good Sam's MBI policy allows you tto pick your own repair shop — just call the claims number on your policyholder card, give the card to your garage and they'll handle the rest. If you're stranded, Good Sam pays up to $100 per day for lodging and meals and up to $60 a day for a rental car.

Best for affordability: Progressive Vehicle Protection

Progressive Vehicle Protection is an optional add-on available with Progressive auto insurance that covers non-accident mechanical breakdowns, minor dents and key/fob replacement. Rates start at as little as $12 per month and plans are renewable until the vehicle reaches up to eight years old.

Best for older cars: Mercury

Mercury offers standalone MBI that doesn't require you to get your auto insurance from the brand. In addition, its Powertrain Plus coverage has no maximum age or mileage limit, making it a good option if you own an older vehicle.

Best for broad coverage: Allstate

Allstate's MBI plan is available to Allstate car insurance customers and includes coverage for the engine, transmission, drive axle, steering, suspension, transmission, emissions and exhaust systems, as well as for AC/heating, seats and seat belts. Repairs come with a $50 deductible and policyholders can choose their repair shop.

Best for renewals: Geico

If you have Geico auto insurance, you can get Geico MBI on a covered car up to 15 months old or with 15,000 miles. There's no inspection and you can renew for up to seven years or 100,000 miles.

Best for roadside assistance: AAA

AAA's MBI provides up to $150 per day for lodging, meals and other inconveniences if your car breaks down away from home. Members can also get up to $500 for emergency repairs without approval.

The benefits and drawbacks of buying an MBI policy:

The cost of mechanical breakdown insurance depends on the provider, as well as the make, model, mileage and age of your vehicle. You may get a lower rate if you buy it directly from your auto insurer than if you get a quote for standalone coverage from a third-party company.

Mechanical breakdown insurance from insurance companies costs between $30 and $100 a year, according to MarketWatch, plus any deductibles.

Premiums are significantly higher for standalone policies: When CNBC Select gathered quotes for a 2020 Toyota Corolla in Florida with 30,000 miles on it, we received a quote of about $33 a month from Good Sam and $122 a month from Endurance.

These plans are still typically cheaper than an extended warranty from a car dealership, which can cost more than $1,000 a year. The expense can be even higher if your warranty is rolled in with your auto loan and you're paying interest.

Mechanical breakdown insurance can be a good idea if you have an older or used car that will need regular repairs but is still within the coverage limits. You may save money by getting a policy from your insurance company, rather than from a third party.

Before you buy, see if your car is still covered by its manufacturer's warranty, which can last 3 years or 36,000 miles — or longer, depending on the manufacturer and part. If your warranty is valid, you'd need to use it before your MBI policy applies.

Manufacturer warranties follow the car, not the owner, so it could still be valid for a car you bought used.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mechanical breakdown insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

CNBC Select reviewed eight top mechanical breakdown insurance (MBI) policies in two categories: those through third-party companies and those through insurance companies.

When available, we considered the cost of an MBI policy, collecting quotes for a 2020 Toyota Corolla with 30,000 miles in Orlando, Florida.

We also considered what each plan covered, any applicable limits, state availability and customer service using data on consumer reviews and complaints from the Better Business Bureau.

We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools. 

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