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Mechanical Breakdown Insurance in the Golden State: A Comprehensive Overview

Mechanical Breakdown Insurance in the Golden State: A Comprehensive OverviewMechanical Breakdown Insurance in the Golden State: A Comprehensive Overview
What are MBIs?

Published: November 9th, 2023

New cars come with a manufacturer’s warranty to cover repairs for around three years, or 36,000 miles. But what happens when that warranty expires? Dealerships offer extended auto warranties, such as Vehicle Service Contracts (VSCs) or Mechanical Breakdown Insurance (MBI).

Californians often rely on Mechanical Breakdown Insurance (MBI) to protect their vehicles from unexpected mechanical failures. While not as well-known as standard car insurance, MBI is the state's only regulated extended auto warranty and plays a crucial role in covering repair costs arising from mechanical issues. This specialized insurance offers added peace of mind to vehicle owners, ensuring that they are protected from the financial burden of unexpected breakdowns. 

In this comprehensive guide, we'll explore what MBI entails, its coverage points, the legal framework in California, cost aspects, the difference between MBIs and extended auto warranties, and the top providers to help you make an informed decision about protecting your vehicle.


Exploring Mechanical Breakdown Insurance

MBIs are an optional type of extended auto warranty specifically meant to cover the cost of car repairs or replacing major components in your vehicle that are damaged due to unexpected mechanical failure. They act as a safety net against unforeseen expenses resulting from such breakdowns and are typically not covered by standard auto insurance policies.

MBIs are only sold in the state of California and have strict policies compared to other extended car warranty agreements. They are either sold directly from a licensed insurance company or a licensed insurance agent and are subject to strict regulation by the California Department of Insurance (CDI). 

Unlike standard auto insurance, which primarily covers damages resulting from accidents, theft, or natural disasters, MBI focuses on mechanical breakdowns. It’s essential to understand that MBI is not a substitute for car insurance but rather a complementary policy to cover different aspects of your vehicle's well-being.

Comparing Mechanical Breakdown Insurance vs. an Extended Car Warranty

VSCs and MBIs are similar but not entirely the same. VSCs are usually offered by a provider or a dealer; they do not have to be licensed, and their prices are not regulated by the California Department of Insurance ( CDI), which means the seller or dealer can charge you whatever price they want. An MBI, on the other hand, is offered by a licensed insurance agent or a licensed insurance company in California.

Additionally, it's legal for MBIs to be sold through banks, credit unions, or the internet. The CDI heavily regulates MBI prices to prevent them from overcharging their clients. This means you can negotiate the price of the VSC you are considering, but can't do so with an MBI.

Coverage Aspects of Mechanical Breakdown Insurance

What does an MBI cover?

What an MBI typically covers

MBI usually covers the repair or replacement costs of major vehicle components such as the engine, transmission, suspension, steering, and electrical systems. It ensures that the expenses are handled when these components fail, sparing you from a hefty financial burden. The components covered depend on the level of coverage you opt for, the miles on the car, and the provider you decide to work with. 

MBIs typically consist of two main types of plans: exclusionary and inclusionary. In an exclusionary plan, the policy covers all components except those that are specifically excluded from a list. On the other hand, an inclusionary plan only covers components that are specifically named on the list. Another more basic type of coverage option is powertrain coverage, which is the most elemental coverage that only covers the vehicle's major components, such as engine failure, transmission, and drivetrain breakdown.

Some good car insurance companies might provide coverage for the towing and rental cars you need while your vehicle is at a repair shop. Others might cover lost or broken key fobs, damage to the windshield, oil changes, paintless dent repair (PDR), roadside assistance, or damage to the tires and wheels caused by road dangers.

What an MBI does not cover

It's crucial to note that MBI coverage might not extend to routine maintenance, wear and tear, brake pads, damages resulting from accidents, and breakdowns caused by improper maintenance. Understanding the limitations of your MBI policy can help manage expectations and prevent surprises when making a claim. 

Does an MBI cover used cars?

Yes, an MBI does cover used cars. Most of the time, it won't cover a used car with more than 15,000 miles on it, and some insurers won't cover used cars. Be sure to ask all the necessary questions before making a purchase.

The Cost of Mechanical Breakdown Insurance

The price of MBIs varies based on factors such as the vehicle's make, model, age, mileage, coverage level, and the provider. It's crucial to shop around and compare quotes to find the best deal for your specific situation. Generally speaking, MBIs are more affordable than any other kind of extended auto warranty and can cost as little as $30 to as much as $100 per year.

While MBI might have upfront costs, it can potentially save you money in the long run by covering expensive repairs. Considering the average expenses for major repairs, this protection option could be a financially prudent choice.

Comparing the premiums of an MBI policy to potential out-of-pocket repair costs can help assess the value of the insurance. Calculating the potential savings over time can help in making an informed decision.

What are the steps to take when purchasing an MBI?

If you want to purchase an MBI, it's important to confirm that the company providing the insurance coverage or the insurance agent is licensed by the CDI. Check out the California government website's license page to ensure the MBI you are considering is in their records. You can also contact the CDI's consumer hotline at (800) 927- 4357.

When considering an MBI provider, it's important to read the agreement's fine print to understand what is covered under the desired coverage.

California Mechanical Breakdown Insurance Laws

The California Department of Insurance (CDI) oversees Mechanical Breakdown Insurance regulations to protect consumers and prevent fraudulent companies from operating in California. All sellers of MBI are required to obtain a license, with both the regulations and pricing needing approval from the CDI. Moreover, any entity intending to sell MBI plans within the state must either possess a value of at least $100 million or secure additional insurance, ensuring their ability to meet all claims made by the client. 

What are MBI's regulations?

Several other crucial aspects of California's MBI regulations include:

California Business and Professions Code Section 17500

This broad legislation makes engaging in unfair, misleading, or fraudulent commercial activities illegal. While this statute can be utilized against any corporation doing business in California, the CDI applies it to MBI enterprises that overpromise or are unclear in their marketing, disclaimers, or policy disclosures.

California Insurance Code Section 116.6

This legislation section defines MBI as a "vehicle protection product," a type of insurance covering motor vehicle warranty repairs. Additional requirements include mandating the font size of policy papers.

California Insurance Code Sections 1794.41-43

Among the various requirements of California insurance law are the following:

  • All contracts are straightforward to comprehend. Such agreements must also include the seller's name and address, the length of the coverage term, and any deductible
  • Prior to signing, the contract must be available for review by the customer. Within 60 days after purchase, a copy of the ratified agreement must be delivered to the customer
  • If no claims are filed, consumers can terminate their MBI coverage within 60 days

The Top 3 Best MBI Providers

What are the top MBI providers?


  • Endurance: Endurance is a direct provider, which means they take customer claims and run their service contracts for vehicles. Vehicle service plans from the company come in five levels of coverage. For example, the Supreme Plan covers everything from bumper to bumper. Also, their plans cover things like your car's air conditioning that other companies don't. The best part is that customers can easily quit because they have 30 days to get their money back
  • Olive: Olive makes it easier to get longer car warranties by letting you fill out their application entirely online. They don't have waiting periods or require pre-existing repair checks like other companies. Their Complete Care plan gives you the most safety, even covering parts like the brakes, steering, and suspension
  • CARCHEX: Since 2004, CARCHEX has been a major player in the extended car warranty business. This makes them one of the most experienced companies in the field. It's important to note that CARCHEX is at least five years older than most of their rivals. This shows that the company has been around for a long time and can be trusted. CARCHEX works with trustworthy businesses like American Auto Shield and Royal Administration Services to ensure they offer good service contracts


In conclusion, Mechanical Breakdown Insurance in California provides optional but important protection for vehicle owners, particularly those without access to extended warranties. It's essential to understand its coverage, costs, legal implications, and provider options to make an informed decision. By securing MBI, California drivers can ensure their vehicles are well protected against unexpected mechanical failures, providing peace of mind on the road.

MBI serves as an additional layer of security, offering peace of mind by covering mechanical failures that might not be included in standard insurance. It's a proactive approach to ensuring your vehicle remains in good shape without bearing the entire financial burden of unexpected repairs.

Research and compare quotes from different MBI providers to find the best coverage for your vehicle. Review the terms and conditions of the policy to ensure it aligns with your needs and complies with California regulations. Make an informed decision and secure your vehicle’s protection with MBI. Check our auto warranty reviews, blog, and comparison pages for better insight into the different providers and their reputations before you make your final decision.

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