What Is Mechanical Breakdown Insurance (MBI)?

Explore comprehensive MBI insights, including coverage details, costs, exclusions, comparisons with car warranties, practical buying tips, FAQs and more in our must-read guide.

Updated 2 March 2024

Summary

Mechanical Breakdown Insurance (MBI) is an insurance policy designed to cover the cost of mechanical and electronic component car repairs.
It's distinct from standard car insurance, which covers accidents and theft but not mechanical failures. MBI addresses the financial burden of unexpected mechanical issues, especially as repair costs rise in New Zealand.
MBI can be useful for individuals who heavily depend on their vehicles for daily commuting or business, lack financial flexibility for sudden repairs, and own older cars or cars without a manufacturer's warranty.
MBI typically includes significant car components like the engine, transmission, and electrical systems. It steps in where traditional car insurance doesn't, covering repairs due to mechanical breakdowns not caused by an accident.
Generally, MBI exists to fill the gap in traditional car insurance, offset the rising costs of car repairs, provide peace of mind to car owners, meet consumer demand, and support long-term vehicle ownership.
However, MBI has limitations - investigations by the Australian Securities and Investments Commission (ASIC) previously raised concerns about the value of add-on insurances, including MBI, when purchased through car finance. Their findings revealed that for every dollar collected in policy fees, only 9 cents were paid in claims.
Data released in 2022 and published in Stuff.co.nz showed similar issues in New Zealand, although around 30 cents in the dollar was paid out in claims. This suggests that MBI, particularly when bundled with car finance, may not always offer proportional value compared to the premiums paid.
From time to time, media stories will highlight the limitations of MBI - this April 2022 story from Stuff.co.nz is the most recent, while Car Loan Expert Founder Christopher Walsh shared his comments about the traps of MBI in June 2021 in a Stuff.co.nz column.

What is Mechanical Breakdown Insurance?

Mechanical Breakdown Insurance (MBI) is a type of insurance policy designed to help protect car owners from the financial burden of unexpected mechanical failures. Unlike standard car insurance, which covers accidents and theft, MBI focuses on the costs associated with the repair of mechanical and electronic components of a car. Given the costs of repairs continue to increase across New Zealand, many car lenders offer MBI as an optional insurance add-on.

Who Needs MBI?

MBI is particularly relevant for drivers who rely heavily on their cars for daily commuting or business purposes and might not have the financial flexibility to handle sudden, costly repairs. It's also a consideration for owners of older cars or those without a manufacturer's warranty.

What Does MBI Cover?

Typically, MBI covers the engine, transmission, electrical systems, fuel systems, and more, depending on the policy. It's designed to step in where traditional car insurance does not – paying for repairs due to mechanical breakdowns that aren't caused by an accident.

Why does MBI Exist?

There are several reasons, which we outline in detail:

1. The gap in traditional car insurance

Traditional car insurance policies cover damages due to accidents, theft, and natural disasters but do not typically include mechanical failures.
MBI exists to fill this gap, providing coverage for repairing or replacing key mechanical parts of a car that might fail due to wear and tear or other non-accident-related reasons.

2. Rising cost of car repairs

A shortage of mechanics, high import costs and a low NZD mean that the cost of repairing cars can be high, especially when it involves complex electronic systems or speciality parts.
MBI will cover the costs in such scenarios, especially for high-end or older vehicles where parts and labour can be particularly costly, assuming the mechanical issue is covered by the policy.

3. Peace of Mind for Car Owners

MBI offers peace of mind to car owners who buy cover to know that major repair costs can be covered.
Given car loan repayments can be stressful, MBI helps reduce the stress and financial strain associated with car ownership.
This is particularly valuable for anyone who doesn't have an emergency fund - an increasing number of New Zealanders.

4. Consumer Demand

There is growing awareness among consumers about the financial risks of car ownership, and the increasing cost of living means New Zealanders are looking to insure for essentials they can't afford.
As a result, there's an increasing demand for products like MBI that offer financial protection against unforeseen mechanical issues.

5. Support for Long-Term Vehicle Ownership

MBI supports the trend towards longer-term vehicle ownership. As cars age, the likelihood of mechanical failure increases.
MBI allows owners to maintain their vehicles in good working condition without the fear of prohibitive repair costs.

How Much Does MBI Cost?

Understanding the cost of MBI is crucial for making an informed decision - many New Zealanders pay too much, don't understand what's covered and have claims denied or fail to appreciate how the car loan's interest rate makes the overall car loan cost more expensive.

Just like a car insurance policy, the costs for cover vary based on risk. Factors influencing MBI costs include:

Vehicle Type and Model: The make and model of your vehicle significantly influence the cost. For instance, luxury or high-performance vehicles often incur higher premiums due to the more expensive parts and labour costs involved in repairs.
Vehicle Age and Condition: Older vehicles or those with higher mileage generally attract higher premiums as the likelihood of mechanical failure increases with age and use.
Coverage Level: The extent of coverage chosen impacts the cost. Comprehensive policies that cover a wide range of components are more expensive than basic plans covering only major mechanical systems.
Policy Excess: The excess amount (the portion of the claim you pay) can affect the premium. Choosing a higher excess typically lowers the premium, but it means more out-of-pocket expenses when making a claim.
Additional Features: Special add-ons, like roadside assistance or cover for electric vehicle-specific components, can increase the premium.

Average Cost Estimates

MBI policies for standard vehicles might range from approximately $400 to $900 per year. The policy costs are usually paid upfront with the loan, so for three years of cover, you could find $1,200+ added to your loan, increasing your ongoing repayments and total interest costs.
Luxury or high-performance cars can see premiums exceeding $1,000 annually.
Important: These are indicative figures; actual costs can vary based on individual circumstances and policy specifics.

Understanding the Financial Impact of Adding MBI Premium to a Car Loan

This is best explained with an example. Imagine you're considering purchasing a vehicle with a car loan of $20,000. You're also considering adding an MBI policy to your loan to protect your investment. The MBI policy you're considering has a premium of $1,500, which covers three years. Your car loan also has a repayment period of three years at an annual interest rate of 15%. To help you understand the financial impact of this decision, let's break down the costs:

Loan Amount: Your initial car loan is $20,000.
MBI Premium: You add the MBI premium of $1,500 to the loan amount.
Total Loan Amount with MBI: The total amount you'll be financing is now $21,500.
Loan Term: You choose to repay this loan over 3 years.
Interest Rate: The loan has an annual interest rate of 15%.

Based on these details, here's how the financing would work out:

Monthly Payment: Your monthly payment would be approximately $745. By adding the $1,500 MBI premium to the loan, around $53 of the $745 covers the MBI repayment and interest.
Specific Interest Cost on the $1,500 MBI Premium: The total additional interest paid over three years, specifically for the $1,500 MBI premium, is approximately $371.93.

What if my MBI cover is for 3 years, but my car loan repayment term is 4, 5, 6 or 7 years?

Having a longer car term with MBI coverage for a shorter period results in a lower monthly payment but increases the total interest paid on both the car loan and the MBI policy. It leads to a situation where you're effectively paying for the MBI premium beyond its coverage period; this is why it's important to consider the loan term and MBI duration, given the costs involved.

Can I pay the MBI policy in cash and not have it added to the loan?

You can pay for the MBI policy upfront instead of adding it to your car loan. Here are the benefits of doing so:

Reduce the loan amount: Paying the MBI premium in cash keeps your loan amount lower, which can lead to lower monthly repayments and less interest paid over the loan term.
Interest savings: By not financing the MBI premium, you avoid paying interest on this amount, leading to overall savings.
Financial flexibility: Paying upfront provides financial flexibility, as it separates the cost of insurance from your car loan, making it easier to manage your finances.
Avoid overpaying on interest costs: When you add the MBI premium to your loan and pay interest over several years, you pay more for the insurance than its original cost.

Know This: While paying upfront requires immediate cash outlay, it can be more cost-effective in the long run, particularly if you want to minimise your loan burden and overall interest payments.

Pros and Cons of MBI

When considering MBI, it's important to weigh its advantages and disadvantages given the costs and risks that you won't be covered for a mechanical issue. We outline these in detail:

Pros

Financial Protection: MBI shields you from the high cost of unexpected repairs, which can be particularly burdensome for those without an emergency fund.
Peace of Mind: Knowing that mechanical failures (covered by an MBI policy) won't lead to significant out-of-pocket expenses can offer considerable peace of mind.
Increased Resale Value: Some MBI policies are transferable to new owners, potentially increasing the resale value of your vehicle. However, checking the policy's fine print before advertising the car for sale is essential.
Support for Older Vehicles: For cars outside their warranty period, MBI can be a safeguard against the higher risks of mechanical failure.
Complement to Standard Insurance: MBI fills gaps in standard car insurance policies, which usually don't cover mechanical breakdowns unless they result from an accident.

Cons

Exclusions and Limitations: Policies often have numerous exclusions, such as pre-existing conditions, routine maintenance costs, and certain components. Understanding these is crucial to avoid surprises during claims.
Cost vs Benefit: The premiums can be substantial, and there's no guarantee you'll need to use the policy, making it a potential financial burden for some.
Questionable Value for Money: Investigations by the Australian Securities and Investments Commission (ASIC) have raised concerns about the value of add-on insurances, including MBI, when purchased through car finance. Their findings revealed that for every dollar collected in policy fees, only 9 cents were paid out in claims. While there is no specific data for New Zealand, it's reasonable to suspect that NZ MBI policies could exhibit similar patterns of low payout ratios. This suggests that MBI, particularly when bundled with car finance, may not always offer proportional value compared to the premiums paid.
Overlap with Existing Warranties: For new vehicles still under the manufacturer's warranty, MBI may not be necessary, leading to overinsuring coverage. It's crucial to assess the extent of the manufacturer's warranty and compare it with what the MBI offers.
Onerous Maintenance Requirements: MBI policies often have strict vehicle maintenance and servicing guidelines. Failure to follow these can lead to claims being denied. Any lapse, whether delayed servicing or ignoring minor issues, can invalidate a claim. This means you'll have to pay the repair cost, having already sunk money into the MBI policy.

Alternatives to MBI

While MBI provides a specific form of financial protection for car owners, there are alternative strategies to manage the risk of costly repairs, meaning buying MBI isn't your only choice. Alternatives include:

Self-Insurance (Emergency Fund): Sending a regular amount to a savings account specifically for car repairs is a popular way to budget. It means you have direct control over the money and have flexibility in its use. While building up an emergency fund requires financial discipline to build and maintain, and it may not be large enough to cover early, unexpected repairs, you have full control of the repairs process and avoid the significant risk of an MBI claim being denied for being outside the policy.
Regular Maintenance and Servicing: Regularly servicing your vehicle can prevent some mechanical issues, potentially avoiding major breakdowns. However, the costs can add up, and you'll still need to pay for unexpected major failures.
Extended Manufacturer Warranties (sold by the dealership): If you're buying a new car or a used car from the manufacturer's dealer, you may be offered an extended warranty beyond the standard period. While these warranties can be more comprehensive for certain parts, they are more expensive than MBI and may have stringent servicing requirements.

Our View:

While MBI offers a structured approach to managing the financial risks of car repairs, these alternatives provide varying degrees of control, cost, and coverage.
Your decision should be based on carefully assessing your vehicle's condition, your financial readiness to handle unexpected repairs, and your comfort level with the associated risks and costs.
The best choice aligns with your individual needs, offers peace of mind, and fits within your overall financial plan for vehicle ownership. Many New Zealanders underestimate the costs of car ownership - car loan repayments are expensive and go on for years; MBI is popular with those who want to outsource the risks (even if there are concerns around policy exclusions and uncovered mechanical breakdowns leaving policyholders to pay costly repairs).

MBI vs Car Warranties - What's the Difference?

Safeguarding your car against mechanical breakdowns and unexpected repair costs is important. Two primary forms of protection are usually on offer - MBI and Car Warranties. While both aim to eliminate the cost associated with car repairs, they differ significantly in their coverage, cost, and application.

MBI is an insurance product with an annual cost bound by insurance policy terms (e.g. exclusions and claim processes).

Car Warranties are often included in the purchase price of new vehicles; these are commitments by manufacturers or dealers to repair or replace certain components of the vehicle that fail due to manufacturing defects or wear and tear. Warranties can also be extended for additional cost, offering prolonged protection.

Key Differences to Consider: The decision between buying an MBI policy or a car warranty hinges on multiple factors, such as the age of the vehicle, your financial planning for repairs, the extent of coverage you want to have, and the length of time you plan to keep the vehicle. Each option carries unique benefits and trade-offs, vital for making an informed choice.

MBI in detail:

Coverage Scope: MBI policies are designed to cover significant costs associated with repairing or replacing major mechanical components such as the engine, transmission, and electrical systems. This can include parts that are often expensive to repair, ensuring financial protection against substantial repair bills.
Flexibility and Availability: One of the key strengths of MBI is its versatility. It offers a range of coverage levels to suit different needs and budgets. While usually sold at the car finance stage, policies can be purchased at any stage of vehicle ownership, providing an option for continued protection as the vehicle ages.
Exclusions to Note: It's important to be aware that MBIs typically do not cover routine maintenance and items that wear out over time, like brake pads and tyres. Understanding these exclusions is crucial to avoid surprises when it comes time to make a claim.
Cost Considerations: MBI policies can be a more expensive option, particularly if financed as part of a vehicle loan, due to the added interest over time. This cost needs to be weighed against the potential benefits of comprehensive coverage.

Car Warranties in detail:

Manufacturer's Warranties are offered directly by vehicle manufacturers; these warranties cover defects and failures attributable to manufacturing issues, usually for a set period or mileage.
Typically, manufacturer warranties are more limited in duration and scope than MBI. They are best suited for new car buyers who want protection against manufacturing defects.
The costs vary and are generally included in the vehicle's purchase price, making it a cost-effective option for new car buyers.

Extended Warranties extend the coverage provided by the original manufacturer's warranty, often adding additional protection. While they offer an opportunity to tailor coverage, extended warranties often have more stringent terms and limitations. The cost of extended warranties varies and can be substantial, depending on the level of coverage and the type of vehicle.

Key differences to consider:

Term and Timing Flexibility: MBI's advantage lies in its availability for purchase at any time and the option for longer coverage terms (up to three years in most cases), unlike warranties, which are usually restricted by time or mileage.
Coverage: MBIs typically offer broader coverage, allowing older or high-mileage vehicles to be protected (where warranties usually fall short).
Long-Term Cost vs Benefit: While warranties are perceived as more cost-effective, especially for new vehicles, MBIs can provide more comprehensive and flexible coverage, which might be more beneficial in the long term despite the higher upfront cost.

Making the Right Choice: MBI vs Car Warranties

Generally, there are two ways to choose - your car's age and your finances.

Choosing Based on Your Car's Age

New Cars: If your car is brand new, the warranty that comes with it (given by the car's maker) is usually enough. This warranty covers most problems that are not your fault.
Older or Used Cars: If your car isn't new, it's reasonable to consider MBI as an option. It's arguably better for older cars because it covers more problems that happen as cars get older.

Deciding Based on Your Money Situation

If You Like Knowing Exactly What You'll Pay: MBI is good if you want to know exactly how much you'll spend on car problems. It covers more things, so you won't have surprises.
If You Want to Spend Less Now: If saving money right now is important and you're okay with paying for repairs later, you may want to stick with the warranty from the car maker or get an extended warranty. These options are cheaper at first but might not cover everything later on.

Understanding MBI Exclusions: Marac, Autosure, Quest Insurance, AA, and Provident Insurance

When considering MBI, paying close attention to what each policy does not cover is crucial. Exclusions can significantly impact the effectiveness and value of your policy.

Our comprehensive review delves into the exclusions of Marac, Autosure, Quest Insurance, AA, and Provident Insurance, providing key insights to help you understand the numerous policy differences.

Why Exclusions Matter: The fine print in an MBI policy can make a substantial difference in what you can expect regarding coverage. Understanding these exclusions helps you gauge how well the policy aligns with your vehicle's needs and circumstances.

Whether pre-existing conditions, routine maintenance, or specific types of damage, each insurer has distinct exclusions that could be deal-breakers depending on your situation.

Tailoring Your Choice: Our research and analysis aim to list the exclusions and offer guidance on how they might impact you based on your vehicle type, usage, and maintenance habits. Knowing what's on offer and the differences in policy cover helps you select a policy that offers the most comprehensive protection for your car. Choosing the best policy reduces the key risk of being caught off guard by unexpected repair costs that aren't covered.

Marac MBI Policy Exclusions:

Pre-existing Conditions: Issues already present before the policy starts are not covered.
Routine Maintenance: Regular upkeep costs are excluded.
Neglect or Misuse: Damage from improper vehicle use is not covered.
Modifications: Alterations from the manufacturer's specifications can lead to exclusion.

Autosure MBI Policy Exclusions:

Wear and Tear: Standard deterioration over time is not covered.
Unauthorised Repairs: Repairs not approved by Autosure are excluded.
Overheating Damage: Issues arising from overheating are not covered.
Indirect Damage: Consequential damages that are not the direct result of a covered breakdown are excluded.

Quest Insurance MBI Policy Exclusions:

Accidental Damage: Loss or damage from accidents is not covered.
Service and Maintenance Failure: Neglecting regular maintenance can void the policy.
Fire and Natural Disasters: Damages from these events are excluded.
Design Faults: Issues arising from the vehicle's design are not covered.

AA MBI Policy Exclusions:

Regular Wear and Tear: Not covered, common in MBI policies.
Unauthorised Repairs: Any repair work not approved by AA is excluded.
Vehicle Misuse: Damage due to misuse or improper handling is not covered.
Neglect: Lack of proper vehicle maintenance leading to breakdowns is excluded.

Provident Insurance MBI Policy Exclusions:

Excluded Vehicles: Certain high-performance and luxury vehicles are not covered.
Routine Maintenance: Standard servicing and maintenance costs are excluded.
Design Faults: Issues due to the vehicle's inherent design are not covered.
Accidental Damage: Damages resulting from accidents are excluded.

More details: Please visit the MBI-specific guidance provided by each insurer. Please visit the respective websites of Marac, Autosure, Quest Insurance, AA, and Provident Insurance.

Comparing MBI Exclusions: Marac vs Autosure vs Quest Insurance vs AA vs Provident Insurance

The policies vary, as our research highlights. Common themes in exclusions include:

Routine Maintenance: None of these policies cover your vehicle's regular, scheduled upkeep. This means you'll always be responsible for standard maintenance tasks like oil changes and tyre rotations.
Neglect or Misuse: Damages resulting from improper use or a lack of regular maintenance are generally not covered. This emphasises the need for responsible vehicle care.

Our review of each insurer's MBI policy revealed unique exclusion points:

Marac - Focus on Modifications: This exclusion is particularly relevant if you've customised your vehicle. Modifications can range from engine tweaks to aesthetic changes, and Marac's policy might not cover these altered vehicles.
Autosure - Overheating and Indirect Damages: If your vehicle has a history or risk of overheating, Autosure's policy specifically excludes such issues. These issues won't be covered if a breakdown leads to further indirect problems not directly linked to the initial failure.
Quest Insurance - Accidental Damage Exclusion: While natural disasters are typically not covered in any MBI policy, Quest's specific exclusion of accidental damage is notable. This means any damage from accidents, irrespective of your driving or vehicle condition, wouldn't be covered.
AA - Unauthorised Repairs and Misuse: Using service providers not approved by AA or misusing the vehicle (like using a standard car for off-road driving) could result in denied claims. This underlines the need to adhere to AA's vehicle care and repair guidelines.
Provident Insurance - Excludes Certain Vehicle Types and Design Faults: Owners of high-performance or luxury cars need to be cautious, as these vehicles are often excluded. Additionally, issues stemming from the vehicle's design are not covered, making it crucial for owners to understand their vehicle's design integrity.

Know This: Each exclusion point highlights specific scenarios where the coverage might not apply. For example, Provident's policy might not be ideal if you have a luxury car. Similarly, if you want to modify your car, Marac's policy will likely pose challenges.

The key is to align the policy's exclusions with your car's model, age, usage, and maintenance habits. Doing so lets you choose a policy that minimises the chances of unexpected expenses that aren't covered, ensuring you get the most out of your MBI investment.

The crucial aspect is to tailor the policy to match your car's model, age, usage patterns, and maintenance habits. This approach helps find a policy that reduces the risk of incurring unexpected costs not covered by the insurance, maximising the benefits of your MBI investment.

How does this work in practice? How should I approach buying MBI?

This is best explained with an example. Imagine you own a 5-year-old Toyota that you use primarily for commuting to work and occasional long-distance trips. You maintain your car regularly but know that older cars are more prone to mechanical failures. In this case, when choosing an MBI policy, you would look for one that:

Covers Older Vehicles: Since your car is five years old, ensure the policy doesn't have age restrictions that might exclude your vehicle.
Includes High-Mileage Coverage: If your car has high mileage due to your commute and long trips, find a policy that doesn't limit coverage based on mileage.
Covers a Wide Range of Parts and Systems: Given the potential for various parts to fail in an older car, a policy that covers a comprehensive list of components, including the engine, transmission, and electrical systems, would be ideal.
Allows for Regular Maintenance: Since you maintain your car regularly, ensure the policy doesn't nullify coverage due to maintenance performed outside of a dealership.

By considering these specific aspects of your vehicle and usage, you can choose an MBI policy more likely to cover potential issues, thereby providing better financial protection and value.

Which MBI policy is best?

There is no simple answer. Each policy caters to different needs and risks. The best MBI policy depends on a blend of factors, including your vehicle's specifics, driving habits, maintenance practices, and financial priorities.
Regular maintenance is a key factor in all policies, so there is no escaping that responsibility. Consider how each policy's exclusions and coverage align with your vehicle's age, condition, and personal preferences.
Before signing up for any MBI policy, review the details carefully, focusing on the most relevant aspects of your situation.

Understanding MBI Inclusions and Exclusions with Example Scenarios

The scenarios below illustrate situations where MBI coverage may apply (inclusions) and instances where it might not (exclusions).

Important - These are hypothetical examples, and actual coverage can vary significantly between policies. Always refer to your specific policy's terms and conditions for accurate information.

Inclusion Cases:

Sarah's Honda Civic Breakdown: Sarah owns a 2016 Honda Civic. Her MBI covers major engine and transmission issues. When her transmission unexpectedly failed, her MBI policy covered the repair costs of several thousand dollars, saving her from a hefty financial burden.
Tom's New Electric Vehicle: Tom recently purchased a new electric vehicle and got an MBI policy that includes electric vehicle-specific components. When he faced issues with his electric motor, the policy covered the expensive repair costs, which would have been a significant expense without MBI.
Liam's Steering System Failure: Liam encounters a steering system failure in his 2018 Subaru Forester. His comprehensive MBI policy covers the repair cost, which otherwise would have been a financial strain.
Grace's Fuel System Malfunction: Grace's 2017 Toyota RAV4 has a sudden fuel system malfunction. Her MBI policy includes coverage for fuel system repairs and handling the otherwise expensive fix.

Exclusion examples:

Jack's Modified Toyota Supra: Jack drives a modified 2012 Toyota Supra. He purchased an MBI policy, not realising that modifications were excluded. When his modified engine faced issues, his claim was denied due to the policy's strict stance on modifications.
Emily's Routine Maintenance Issue: Emily skipped regular maintenance on her 2015 Mazda 3. When her car later broke down due to an issue typically preventable by routine servicing, her MBI claim was denied, highlighting the importance of adhering to maintenance schedules.
Ben's Accident-Related Breakdown: Ben's 2015 Nissan Navara suffers mechanical damage due to an accident. His MBI policy does not cover accident-related damages, and his claim is denied.
Olivia's Worn-Out Clutch: Olivia's 2014 Ford Focus has a worn-out clutch, which is considered regular wear and tear. Her MBI policy does not cover such issues, and she has to bear the repair cost.

Our Conclusion on MBI

MBI, though extensively marketed, often remains shrouded in complexity. This guide, which we diligently update, is designed to demystify every critical aspect, enabling you to make a well-informed decision about its suitability for you. In conclusion, our key takeaways are as follows:

The cost of MBI varies based on factors like vehicle type, age, coverage level, and policy excess. MBI can range from $400 to $900 annually for standard vehicles, with higher premiums for luxury or high-performance cars. Adding MBI to a car loan increases the total loan amount and interest, affecting overall repayments.
Overall, MBI offers financial protection and peace of mind, potentially increasing a vehicle's resale value and supporting older vehicles. However, each policy has limitations, such as exclusions, potential cost inefficiency, and overlap with existing warranties, which at best mean you're paying too much and, at worst, exclude coverage for a mechanical failure. This is important to understand to ensure you're not exposed or ripped off.
Alternatives to MBI include self-insurance through an emergency fund, regular maintenance and servicing, and extended manufacturer warranties. Each has its advantages and trade-offs and needs to be carefully considered.
MBI and car warranties offer protection against repair costs but differ in coverage, cost, and application. MBI is more flexible and available anytime, whereas warranties are typically included in the purchase price of new vehicles or can be extended for an additional cost.
Exclusions are the biggest limitation of MBI policies and significantly impact their value. These may include pre-existing conditions, routine maintenance, misuse, and specific types of damage. Policies from different providers like Marac, Autosure, Quest Insurance, AA, and Provident Insurance vary in their exclusions, and we know this is the same among other insurers offering MBI.
MBI is available for used cars, but costs may be higher and coverage more limited. MBI doesn't typically cover normal wear and tear or maintenance-related issues, and it's possible to cancel an MBI policy under certain conditions.

Final thoughts: Overall, MBI has merit for many car owners, offering financial protection against unexpected mechanical failures. However, it's important to understand the costs, coverage details, exclusions, and alternatives before deciding - exclusions arguably deem an MBI policy worthless.

Frequently Asked Questions

The questions below are general - every MBI policy is different and your claim will either be accepted or denied. If you have specific questions about a policy, talk to your car lender or broker, and/or the insurer.

Can I get MBI for a used car?

Yes, MBI is available for used cars. However, the cost may be higher than newer vehicles due to the increased risk of mechanical issues with age. The coverage might also be limited, excluding certain parts more likely to fail in older cars. It's important to read the policy details carefully to understand what is covered.

Does MBI cover breakdowns due to normal wear and tear?

MBI policies typically do not cover breakdowns that result from normal wear and tear. These policies are designed to protect against unexpected mechanical failures, not the gradual deterioration that occurs through regular use. Maintenance-related issues are also usually excluded, emphasising the importance of regular vehicle upkeep.

Can I cancel my MBI policy?

Yes, you can cancel your MBI policy. Most policies allow for cancellation, but the terms vary. Some policies may offer a full refund if cancelled within a certain period after purchase, typically a 'cooling-off' period. After this period, cancellation might incur fees or provide only a prorated refund. Always check the cancellation terms before purchasing.

Is it worth getting MBI for a new car still under the manufacturer's warranty?

The decision depends on what the manufacturer's warranty covers versus what the MBI policy offers. While new cars come with a warranty that covers most manufacturing defects, MBI can provide broader coverage (if the event is covered by the policy), including parts and issues not covered by the warranty. However, if the warranty is comprehensive, you might choose to wait until it expires before investing in MBI.

How does MBI work with my car insurance?

MBI complements your standard car insurance by covering areas that typical car insurance does not. While car insurance generally covers damages from accidents, theft, and natural disasters, it doesn't cover the cost of mechanical breakdowns unrelated to an accident. MBI fills this gap, covering the repair costs of mechanical and electronic failures, thus providing comprehensive protection for your vehicle.