Mechanical Breakdown Insurance vs. a Warranty

For those who are looking at options on keeping their vehicles on the road, some may want to know about the standard differences between mechanical breakdown insurance and a traditional warranty. Some of these agreements can seem very similar, depending on the specific terms of each individual type of warranty or agreement, but because mechanical breakdown insurance is really more of an insurance product than a warranty, there are some standard differences.

Covering Parts and Labor

In a warranty, the idea is that the manufacturer is guaranteeing durability on something that comes out of a factory. That's why original warranties were manufacturer direct. Some car dealers also offer warranties based on their assessment of used vehicles. On the other hand, with any mechanical breakdown insurance policy, the focus is on keeping a car on the road. There's not necessarily a focus on guaranteeing specific engineering. Instead, policy writers focus on risk assessment and likely cost for fixing a vehicle.

Variables

Another big difference between a warranty or extended warranty and mechanical breakdown insurance is that with the insurance product, buyers can get a lot more flexibility. You're not likely to find manufacturer-direct warranties with things like deductibles. You are either covered or you're not. But with mechanical breakdown insurance, according to some insurance reviews, you may be able to get a deductible, partial coverage for certain auto systems, or other "customization" that you feel may work out in your favor.

Warranty Offers 

As mentioned above, in the case of a manufacturer direct warranty, the guarantee is offered from a specific party, the manufacturer, directly to the buyer. You could say the warranty is offered "in the course of" the deal. That is, as a natural part of buying the vehicle, the buyer gets some security through the warranty. This works in a similar way to a used car lot. On the other hand, with mechanical breakdown insurance, it's really not like that at all. A car owner will approach an insurer to get a policy, not in the course of buying a car, but in a completely different agreement. This is one big difference between taking a warranty and taking out a mechanical breakdown policy.

In-house Requirements

With the manufacturer direct warranty, the buyer may be required to bring the car back to the dealership, or to a certified mechanic registered with that specific auto maker. In a dealer's warranty, it's almost a sure bet that the buyer will have to go back to the dealer to get work done. With some of the best mechanical breakdown insurance out there, this is not the case. In some auto repair insurance policies, car owners can go anywhere they want to get work, and get reimbursed according to reasonable market prices.

These are some of the major differences between the warranty situation, which is a traditional contract offered to car buyers, and mechanical breakdown insurance, which is something that car owners can get on there own. Find out more from auto experts like AAA and other resources for figuring out what kind of agreement is best for you.