What is Mechanical Breakdown Coverage and is it right for you?
At olive™, we’ve got your back when it comes to understanding your vehicle coverage options! So, what are your choices and how do they work? olive.ca is here to provide you with valuable information before making a purchase decision so you can adventure with confidence!
Mechanical Breakdown Coverage (MBC) is not a new concept, but it’s one that’s been gaining popularity in recent years. In a time when most people are trying to reduce their monthly expenses, it may seem like an unnecessary expense to pay for an extended warranty. But mechanical breakdown coverage can be a valuable asset if you find yourself with a large bill after your car breaks down unexpectedly. If you’re considering purchasing extended warranty coverage for your vehicle, here’s what you need to know about mechanical breakdown coverage:
What is Mechanical Breakdown Coverage?
Mechanical breakdown coverage is ideal for people who are looking for protection from the big expenses that can sneak up out of nowhere. If your car breaks down and requires immediate attention to get back on the road-without mechanical breakdown coverage-you may end up paying much more than necessary.
When your vehicle was brand new, it came with a factory warranty that protected most components in the first couple of years of your vehicle’s lifespan. As your vehicle ages and becomes more prone to breakdowns, the warranty expires, and you’re left to finance these repairs on your own. Mechanical Breakdown Coverage is an added layer of protection that keeps your finances safe when your vehicle breaks down. Depending on the policy you select, it extends most of what was covered by your vehicle’s factory warranty.
What did my factory warranty cover?
All auto manufacturers offer factory warranties on new vehicles to protect consumers against early mechanical failures. Also known as bumper-to-bumper coverage, these warranties last on average 2-3 years or _____ 100,000 kilometers What they cover is dependent on the manufacturer, but you can expect most bumper-to-bumper warranties to cover most main systems and components: the powertrain, electronics, fuel system, steering system, suspension, braking system, and safety equipment.
Vehicles consist of several components that offer a lot of opportunities for failure. As newer car models come out, technology advances, and materials change. However, there is always a small risk that a new vehicle can show mechanical issues early on. Factory warranties provide consumers with peace of mind that their new vehicle isn’t going to plague them with the financial burden of repairs due to the manufacturing problems.
Once the bumper-to-bumper coverage expires after a couple of years, your vehicle is only protected by the Powertrain Warranty for another short amount of time. The Powertrain Warranty typically only covers your vehicle’s propulsion system, which includes the engine and transmission.
After the Powertrain Warranty expires, the vehicle owner is 100% financially responsible for all mechanical repairs. Unfortunately, it is when a vehicle hits this 5-year mark that it becomes most susceptible to mechanical failure. This is where Mechanical Breakdown Coverage comes in handy as it protects vehicle owners against expensive mechanical breakdowns.
For most manufacturers, the only components not covered by the factory warranty are those that are subject to wear and tear over time, such as tires, and windshield wipers, as well as routine maintenance tasks like tire rotations, brake pad replacements and oil changes. Factory warranties also do not cover damage to a vehicle caused by collisions, accidental damage, theft, fire, etc. These are all covered by car insurance, which also protects you, your passengers, and other drivers in the event of an accident or injury.
How does MBC work?
Mechanical breakdown coverage protects a wide range of your car’s systems, components, and parts. This includes:
- Brakes and power steering
- Electrical system (alternator, battery)
- Cooling system (radiator, thermostat)
- Fuel system (fuel pump, fuel filter)
Most plans have a deductible ranging from $100-500. Once that deductible is met, your coverage will take care of the rest, including all covered parts and labour. Some policies will settle repair costs immediately with the repair shop, while others will reimburse you once the repairs are completed. olive.ca pays the repair shop directly so you do not have to wait for reimbursement.
How does MBC differ from insurance?
One thing to keep in mind: Mechanical breakdown coverage isn’t designed as a replacement for collision and comprehensive insurance policies; they are two separate types of protection that each serve their own purpose well. Insurance only protects you financially in events such as an accident or theft. Meanwhile, mechanical breakdowns are not covered by insurance and can leave you paying $1,000’s for repairs necessary to operate your vehicle safely and efficiently.
Insurance is a requirement for vehicle owners and MBC is an optional layer of additional financial security. While you hope to never use either insurance or MBC, mechanical breakdowns are 50 times more likely to occur than automotive accidents.
Why do you need MBC?
No matter how well built your car or truck may be, issues will always arise that require some sort of repair work. For many people, their vehicle is essential to their everyday lives. With MBC, you can have peace of mind that a breakdown won’t break the bank. You may never need to use it—but if that time comes, you will be glad the policy is there. If you can’t afford to have your vehicle out of commission for a while, investing in a repair plan might be worthwhile.
Many car owners are keeping their vehicles for longer periods of time. In fact, in 2022 the average age of cars on the road was 12.2 years! Not only are cars becoming more dependable, but the rising costs of new vehicles is also deterring consumers from updating their ride more frequently.
But car prices aren’t the only expense that’s on the rise. The cost of vehicle repairs has skyrocketed as well. Supply chain shortages and inflation have caused vehicle parts, labour and equipment costs to rise exponentially. The Department of Labor in the United States has reported these costs are up nearly 15 percent more than they were last year.
As prices continue to climb, it can be difficult to maintain a budget while on a fixed income. Owning a car can be expensive, especially when costs of gasoline and maintenance continues to rise. But it’s not impossible to reduce the impact of car ownership on your wallet.
How to compare MBC plans:
The terms and conditions of mechanical breakdown coverage will vary widely between providers. Some may only cover the engine, while others will include all engine components. Some providers are able to define what they consider to be manufacturer defects, while others do not have this option. If you have a specific model in mind when purchasing your vehicle, it may be worth researching different companies and asking about their policies for that make/model, as it may be cheaper to buy from another provider who does not include this coverage in their policy at all.
The company that will pay your claim is not always the same one that sold you the warranty. The coverage administrator—the insurance or financial institution responsible for processing and paying claims as they come in from around the country—should be well-funded, established and financially sound. Be sure to check the company’s reputation with the Better Business Bureau and read plenty of reviews.
Other factors to keep in mind are limits on years and mileage. Some companies will cap the age and/or mileage of a covered vehicle by either not allowing it in the first place or removing coverage from a vehicle once limitations are met.
If you are shopping for coverage and looking for more in-depth information on how to choose the right company for you and the best policy for your vehicle, be sure to download our Buyer’s Guide!
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The average repair bill for an unexpected problem with a new car totals about $600—and that is just for minor issues like blown fuses or flat tires! If something more serious happens, the average cost rises to $1,400. Mechanical breakdown coverage is certainly worth considering if you want peace of mind when it comes to your vehicle.
If you choose olive.ca, you can rest assured that you’re covered by a reputable company that fits your budget, has no annual milage restrictions, no waiting period, has an open repair network, a simple claims process that is 100% online, is easily managed in monthly payments and can be cancelled at any time without penalty.