A Different and Safer Type of Extended Auto Warranty

As I first described in this older post, there are two basic types of extended auto warranties. The first is the most common kind that is sold by dealerships and by aftermarket sellers on the web. The technical name for these are vehicle service contracts. The second type is much less advertised since it's not nearly as profitable. 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.

In that previous post I mentioned some places where you can find MBI policies. One place is at credit unions. In this post I list a couple credit unions which offer these. I've found a few more credit unions which also offer MBI policies:

• Provident Credit Union
• Digital Federal Credit Union
• MidSouth Federal Credit Union
• KeyPoint Credit Union

To join a credit union you have to meet its eligiblity requirements. You can be eligible to join both Provident and Digital by joining an association for a small membership fee. Refer to the credit union's eligibility page for these details.

Note, you'll see many more MBI's being offered in California since only car dealerships in California are allowed to sell vehicle service contracts. So if you're in California, the MBI is the only option other than a dealership's VSC. More info on this is described in California's Guide to Auto Repair Agreements. This also states that consumers may get most for their money with a MBI policy since the price of MBI policies is regulated by the state.

Another credit union that offers MBI is Pentagon Federal Credit Union. I first described their policy in this post. This is another credit union that's easy to join regardless of where you live in the US. Their policy is called Mechanical Breakdown Protection. However, it's only a MBI policy for those in California. I just confirmed this last week. Nevertheless, this MBP page can be a useful resource to get quick quotes for extended auto warranty coverage without having to provide your email address or other personal information.