Other Auto Extended Warranty Options

There are two types of extended warranties. The first is what is most commonly sold by dealerships or by aftermarket sellers on the web. These are known as service agreements or vehicle service contracts. The second type is not as well known. It's called mechanical breakdown insurance (MBI). Unlike the first type, this is an insurance product that is regulated by a state for both coverage and price. MBI contracts can only be sold by licensed agents. The advantage of MBI policies is that they're backed by large insurance companies.

There are several places where you can buy mechanical breakdown insurance:

• Geico - In addition to regular auto insurance, Geico also sells MBI policies. But you have to have Geico auto insurance to get their MBI coverage. One advantage is that MBI price can be included as part of your car insurance premiums. It's intended for cars less than 15 months old. The coverage can last for up to 7 years or 100K miles.
• Credit Unions - Your local credit unions may offer MBI. If you're not a member of a credit union, you may be able to join one just based on where you live. The National Credit Union Administration can be used to find a credit union in your city. Here's one example of a credit union's MBI policy, and here's more background on credit unions and MBIs.
• MBA Direct sells MBIs directly to consumers on their website. Since they sell MBIs and not vehicle service contracts they can even sell on the web to people in California (California had passed a law banning the sell of vehicle service contracts from the internet.) Their policy can last up to 10 years or 100K miles. Many of the details are available at their FAQ.