Wondering about mechanical breakdown insurance? How about an extended car warranty? What’s the difference and which is better? In both cases, you get a plan that pays for unexpected breakdowns, but there are important differences to keep in mind. Let’s find out which protection plan makes sense for you.

Cover costly car repairs with an extended car warranty from CARCHEX. Get a free quote today.

What They Are Not

Some people confuse mechanical breakdown insurance with auto insurance, but they are not the same. Auto insurance pays for the damage to or the loss of your vehicle due to an accident or theft. Mechanical breakdown insurance, on the other hand, pays for unexpected mechanical problems that are not related to accidents. Extended car warranties – also known as extended vehicle protection plans – pay for unexpected repairs as well.


Both mechanical breakdown insurance and extended car warranties pay for repairs that don’t occur from normal wear and tear (see exception below). You typically pay for these plans through a monthly charge. However, some mechanical breakdown insurance payments are bundled into an auto insurance plan. Remember, you are charged extra for mechanical breakdown insurance; it’s not included with auto insurance.

Generally, you’ll have to pay a deductible before the mechanical insurance or extended car warranty plan covers any repairs.  The better plans will allow for vehicle repairs from any authorized mechanic or dealer.


Only those business entities with a Property and Casualty insurance license can provide  mechanical breakdown insurance. Vehicle protection plans are provided by companies that specialize in these plans. In both cases, it’s in your best interest to look for a reputable company.  Check the number of years the company has been in business, and look for a company with an A rating from the Better Business Bureau.

Vehicle protection plans may also include additional perks that mechanical breakdown insurance may not offer. For example, some extended car warranties may provide:

  • Trip interruption benefit – have room and board paid for if you break down while travelling
  • 24/7 roadside emergency service
  • Rental car – provided while repairs are finished
  • Transfer benefit – for a fee you can transfer the warranty if you sell your car
  • Wear and tear benefit – available on select plans at an extra cost to cover things like brake pad replacement

Which One Should You Choose?

Extended warranties and mechanical breakdown insurance are both legitimate options. Extended car warranties have several added benefits that are important to consider, and of course, you’ll want to compare the pricing for individual plans as well.

Either way, when a steering pump replacement could cost you over $1,200 to replace, and transmission work will run you over $2,000 – it pays to have some kind of repair coverage.

Extended car warranties pay for unexpected vehicle repairs. Consider a plan from CARCHEX. Get a free quote today.