MBI Warranty Basics
What Is MBI Coverage?
MBI stands for Mechanical Breakdown Insurance. It is a true insurance product that works much like a warranty, but cannot be strictly considered a warranty. MBI is an agreement between a car owner (you) and an insurance company (Warranty Direct's insurance partner) that offers repair or replacement of covered components.
In the State of California, MBI coverage is used instead of standard extended vehicle warranties so that the State can ensure fair pricing and service to customers. Because Mechanical Breakdown Insurance is truly an insurance product, it can be overseen and reviewed by the California Department of Insurance.
Obtaining MBI Coverage -
What Everyone Should Know
As with any insurance product, knowledge is your best asset for finding the coverage level that truly fits your needs. Many factors, including the age and mileage of your vehicle, are points to consider, as well as what you're willing to pay for coverage. Some issues you should always be aware of are:
Who's offering the coverage?
If it's your local dealership or manufacturer, you're likely to be getting an extended warranty plan (also called a vehicle service contract). In these contracts, the dealer or manufacturer agrees to pay for the cost of a covered repair or replacement. Unless sold and administered by a dealer or manufacturer, Mechanical Breakdown Insurance (MBI) plans are the only types of coverage allowed in the State of California. These plans function more like insurance coverage and offer either greatly reduced or no out-of-pocket costs on parts and systems identified in the contract.
Where is your extended vehicle warranty coverage valid?
Although MBI plans are the only non-dealer/manufacturer plans permitted by the State of California, it does not mean your MBI plan should offer coverage in the State of California alone. Just like automobile insurance, a strong, reliable MBI plan should provide nationwide service and support regardless of where in the country your vehicle may be at the time a problem occurs.
Quality and Quantity
Strictly speaking, the more parts and systems that are covered by an MBI plan, the more peace of mind you can expect to enjoy. Some MBI plans offer very similar coverage to bumper-to-bumper manufacturer warranties. Others offer named component coverage for a specific set of parts and systems. The one that's best for you will likely be determined by your budget, the age and condition of your vehicle, and whether or not it is currently under any other warranty such as the manufacturer warranty. For example, you may decide you want to continue the bumper-to-bumper type of coverage on your new car once the manufacturer warranty has expired. That would mean an exclusionary, or bumper-to-bumper MBI extended vehicle warranty plan would be best for you. Or, you may decide you're only worried about very expensive repairs or major breakdowns... If so, then named component coverage can be a much less costly way to provide the protection you desire. Make sure you consider both the level and the extent of coverage while shopping.
What Does the Law Say?
Because California has slightly different requirements than other States, it's always a good idea to familiarize yourself with State policies. The California Department of Insurance maintains a web site containing a wealth of information about MBI extended vehicle warranty policies and their regulation. You may access their site at http://www.insurance.ca.gov/0100-consumers/0100-insurance-guides/0100-automobile-series/guide-to-automobile-repair-agreements.cfm#mbi1. You may check on the insurance license status of your broker/agent at http://www.insurance.ca.gov/license-status.