Breakdown insurance may sound a lot like the extended warranty offered by a car dealer, but it’s not quite the same thing. Here are three major differences.
- An extended warranty is typically purchased when you buy a new vehicle. Mechanical breakdown insurance doesn’t kick in until after the manufacturer warranty expires, so it can be purchased later.
- You pay for the extended warranty up front (or as part of your loan), so you’re stuck with the expense — there’s no going back. It’s paid in premiums over time and can be dropped.
- With an extended warranty, you’re required to bring your car to the dealership for repairs. This coverage typically lets you use your preferred repair shop.