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Compare Mechanical Breakdown Insurance - The Definitive Guide

Mechanical Breakdown Insurance can be an expensive and unnecessary add-on to car finance, but many New Zealanders buy a policy and there are insurers who offer value. Our guide outlines everything you need to know to make an informed decision about whether you need MBI.
Updated 3 November 2025

Summary:
  • As the name suggests, Mechanical Breakdown Insurance covers the costs of repairing your car that arises from a covered mechanical or electrical breakdown. The policy provides a guarantee for automotive machinery and electronic breakdown. As car insurance doesn't cover such breakdown, MBI is designed to protect drivers from unpredictable (and often unaffordable) mechanical repair bills.
  • The idea is that MBI protects you from the risk of having to pay for repairs should your car break down, which could otherwise affect your cash flow and ability to make loan repayments. Depending on the policy, a wide range of components are covered. 
  • However, there are a policy exclusions -so policies are not a "cover everything and all". For example, if your car has a cambelt issue, exhaust problem or "light bulb" issue (which could include sensor malfunctions), you won't be covered. There are many more exclusions on top of those. 
  • MBI isn't cheap - policies can cost around $1,000 to over $4,000, covering the car for 1-4 years. The amount usually added to a car loan, so you'll be charged interest while you make your standard car repayments. 

Know This: 
  • If you want to buy MBI, make sure you're not overpaying. While there's no recent New Zealand data on payouts (e.g. total insurance sold vs paid out), in 2020, per Consumer's report, $40m worth of claims were paid out, while consumers spent nearly $110m on premiums; this was slightly up on the previous year. As more industry data comes to market, we will publish it here because it's important to know what percentage of premiums are paid out in claims.
  • Please be aware that if you buy an MBI policy at a dealership, a portion of the money is given to car dealers as a commission, with the rest going to the insurer.
  • We believe MBI is sold as an add-on to car loans and have published this guide to raise awareness of the costs and give readers the power to gather quotes specific to a particular car. 
To help explain Mechanical Breakdown Insurance, our guide covers:

​November Alert: Are you looking for cost-effective car finance? Simplify Slashes Rates - now from 6.85% p.a.
For borrowers with decent credit and affordability (we believe if you're reading and comparing on MoneyHub, there's a greater chance that's you), Simplify just dropped its rates to the lowest we've seen in some time:
Many readers checking multiple lenders and reading guides already have the credit profile these rates require - you can confirm this in 1-2 minutes using Simplify.

Christopher Walsh shares his comments about MBI policies:

"Mechanical Breakdown Insurance (MBI) is often viewed as a mixed bag - both a safeguard and a potential expense. However, MBI does have its value, although it depends heavily on the type of car you own, how you drive it, and your tolerance for financial risk. For some, MBI is an unnecessary expense; for others, it's been a financial lifesaver where the cost of repairs claimed has far exceeded the policy cost.

For high-end vehicles, particularly European models like BMWs, Audis, or Volkswagens, MBI can be invaluable. These vehicles are renowned for advanced engineering and luxury features but infamous for high repair costs. A single major fault - a transmission rebuild, an electrical system failure, or issues with cooling systems - can easily cost thousands. In these cases, a robust MBI policy with high claim limits, such as Autosure's Extreme Plus, can pay for itself many times over. It's a tool to offset the financial risks inherent in owning complex and high-performance vehicles, ensuring owners can drive with confidence.

For everyday cars, such as Toyotas, Hondas, or Mazdas, MBI is arguably less valuable. These vehicles are designed for reliability and low maintenance costs, so the likelihood of frequent or catastrophic failures is lower. However, even the most reliable vehicles can experience unforeseen issues, especially as mileage increases. A gearbox failure, cooling system breakdown, or suspension issue can still result in repair bills exceeding $1,000 - well within the scope of most insurers' MBI policy coverage.

The value of MBI also depends on personal circumstances. For some, the cost of a 1, 2, 3 or 4-year policy (usually paid upfront) is worth it for the peace of mind that comes with knowing that MBI policies will take care of breakdowns (when covered by the policy). For others, committing to regular payments for a product they may never use feels like a waste of money. For this reason, it's essential to assess your vehicle's age, mileage, repair history and intended use when deciding whether MBI is worth it.

Finally, not everything with MBI is smooth sailing. Exclusions, claim limits, and excesses can vary significantly between providers. Policies that cover comprehensive mechanical failures, even in high-wear areas like suspension and cooling systems, offer the most value. Transparent terms, manageable exclusions, and a reputable underwriter are critical factors to look for.

Ultimately, MBI is neither a must-have policy nor a waste of money. It's a calculated tool for managing risk, and when it aligns with your vehicle and needs, it can deliver substantial benefits and peace of mind". 
Christopher Walsh
MoneyHub Founder
Know This: Do I need Mechanical Breakdown Insurance if I have fully comprehensive car insurance?
  • Car insurance pays out for damage or total loss - it does not pay out for the costs of repairing your car if it breaks down.
  • Mechanical Breakdown Insurance is designed to protect you from qualifying car repair costs.
  • Mechanical Breakdown Insurance and typical comprehensive car insurance have no crossover and address very different risks.
  • You may also be offered Guaranteed Asset Protection Insurance (GAP) when you finance a car - our guide explains what this is in detail.
Christopher Walsh
MoneyHub Founder
Are you looking for MBI alongside car finance? Avoid high interest rates and fees with our trusted lenders.
  • We focus on highlighting the top car finance options to help you avoid costly high interest rates and unnecessary fees that add up too quickly. Our extensive research has consistently highlighted two trusted lenders who offer fair, competitive interest rates for most borrowers.
  • Simplify – A dedicated car loan specialist, Simplify has built a strong reputation for offering some of the most competitive rates and terms in the market. We've named them our Favourite Car Loan Lender for their customer-focused approach and proven ability to get New Zealanders into cars with great finance deals. 
  • Harmoney – If you prefer a low-fee personal lender with an easy, fully online process, Harmoney is a great option for secured car loans. Their streamlined application can help you secure a loan quickly and efficiently.
  • Why Compare? Comparing car finance options can save you thousands. Even a 1% lower interest rate can significantly reduce your repayments. While dealership financing might seem convenient, it often comes with higher costs to boost their profits. By exploring different lenders and brokers (such as Simplify and Harmoney), you can secure a better deal, avoid unnecessary markups, and ensure you're not overpaying for your car.
  • Important: The interest rate you lock in now will impact your repayments for years to come, so choose wisely and compare before committing.
  • Advertising Disclosure: We may receive a commission if you proceed with a loan through our partners. However, this does not influence our recommendations, and all lenders are thoroughly vetted for fairness. Rates vary based on individual credit profiles.
​

Why does Mechanical Breakdown Insurance exist?

  • Car repairs are expensive. People who buy cars with finance often have significant loan repayments. If the car breaks down, fixing it can mean immediate financial hardship. 
  • Mechanical Breakdown Insurance is designed to reduce this risk by paying for repairs should your car break down. It means you'll be protected from expensive mechanic bills and can better manage your cashflows.
  • Standard policies cover breakdowns caused by faults with a car's engine, fuel system, turbo unit, automatic/manual transmission, electrical, clutch, transfer box, overdrive, prop shaft, suspension, front wheel drive assembly, air conditioning systems, cooling systems and steering etc. The more comprehensive the policy, the more conditions that are covered.

Car Warranties vs Mechanical Breakdown Insurance - Understanding the Difference

MBI, for the most part, is only purchased by a small number of drivers. When you buy a car from a dealer, there is no obligation to buy mechanical breakdown insurance. There may be sales pressure, but it's not compulsory to have even if you get a loan to buy the car.

Buying a new or used vehicle from a dealer (either online, at a car yard or at an auction) gives you more consumer rights than if you buy a car privately. All car dealers must:
  • Comply with the Consumer Guarantees Act (CGA)
  • Comply with the Fair Trading Act (FTA) – not mislead you and be clear they are a dealer
  • Be registered
  • Give you accurate information in the Consumer Information Notice (CIN) for each used vehicle – the vehicle's history, price, condition, odometer reading and any money owing.

If you buy a car from a dealer, we suggest reading this government guide that outlines your rights and ways of complaining.

What's excluded from Mechanical Breakdown Insurance policies?

In a nutshell, a clear list of car faults and problems are excluded from standard MBI policies. Unfortunately, very few people read the fine print before getting a policy and find out the policy limits the hard way when their car breaks down. This Stuff.co.nz article outlines the limitations of a policy and outlines cases where policies haven't covered breakdowns.

Generally, Mechanical Breakdown Insurance excludes:
  1. All pre-existing conditions (this exclusion is contentious as 'pre-existing' may be unknown to you)
  2. Repairs related to a manufacturer’s recall or a design fault
  3. All repairs that relate to chassis, panel, paintwork, glass, upholstery and anything cosmetic
  4. All repairs that relate to a battery, exhaust systems, catalytic converters, tyres, entertainment system, heated sear elements, light bulbs, communication systems, fuel tanks, keys and remotes
  5. Cambelt failure
  6. Any costs such as servicing, maintenance, adjustment or tuning
  7. Rust, contamination, loss or damage and anything a comprehensive car insurance policy would cover (i.e. accident damage, fire damage, water damage, theft, full loss etc.)
  8. Using the wrong fuel and oil
  9. Repairs your Mechanical Breakdown Insurer doesn't approve​
​

How Much Does Mechanical Breakdown Insurance Cost?

  • What you'll pay depends on the model of your car and its age.
  • For example, MBI is cheaper for Japanese and American cars than European cars
  • For luxury cars, MBI costs the most. Even though they're less likely to break down, when they do, the parts are expensive and the insurer pays this cost.
  • MBI policies have limits on what cars they cover; for example, the maximum age of the covered vehicles is usually 10-20 years, and the maximum kilometres on the clock is anywhere between 100,000 to 250,000. The older the car and the more kilometres on the clock, the more expensive the MBI.
​

Mechanical Breakdown Insurance – Pros, Cons and Alternatives

Mechanical Breakdown Insurance policies may solve a problem at a cost. This cost can be expensive. We outline what's important when looking at taking out a policy:

Pros:
  • Safety net – If disaster strikes and your car breaks down, you may be covered and avoid the cost of repairs (assuming the repair is listed as an inclusion on the policy). ​
  • Cover for Roadside assistance – some MBI include the benefit or option that gives a policy holder access to roadside assistance and towing.

Cons:
  • High Cost – Mechanical Breakdown Insurance can be expensive, and even more so if it's rolled up into car lending, meaning you'll pay interest on it.
  • Exclusions - Not every repair is covered - you'll need to understand what's included (and excluded) in a policy before you buy it so you can decide if the cost is worth the cover.
  • Hard to compare - Mechanical Breakdown Insurance costs are different per policy, but the growth in online quotes makes it easier to compare. However, we don't like how it is sold as part of a car finance deal (often high pressure with very little explanation around the fine print). As such, how it's sold isn't transparent as it's difficult to get quotes and compare.

Mechanical Breakdown Insurance Alternatives

There are two cost-effective alternatives to MBI. The first is to self-insure. This means you put aside some money every month for an emergency fund for car repairs. It takes a lot of willpower to make regular contributions and not use the money for other expenses, but if you do keep on track, the result is likely to be more affordable than taking out an MBI policy. The second alternative is to pay for a pre-inspection before you buy the car to avoid surprises and then to get the car regularly serviced to keep it in good condition.
​

Mechanical Breakdown Insurance Policies - AA Insurance vs Autosure vs Fenda vs Autolife vs Quest vs Assurant Vehicle Care/Protecta vs Provident

Not all MBI policies are created equal. To help you make an informed decision, we’ve reviewed and compared the key features, claim limits, additional benefits, and eligibility criteria of the leading MBI providers in New Zealand, including AA Insurance (an Autosure policy), Autosure, Fenda, Autolife, Quest, Assurant Vehicle Care (previously known as Protecta) and Provident Insurance.

Other options:
  • Mechanical Breakdown Insurance is mainly sold by many car finance lenders, brokers and car yards (acting as a broker). Brands behind the policies include (but are not limited to) Stadium Finance, Avanti Finance, Marac and NZVF, all of who use third-party insurers reviewed in our table below.
  • Furthermore, ​State Insurance offers business-vehicle-only MBI policies, and Turners sells an Autosure policy. 

Our comparison covers:
  • Coverage highlights: What components are covered, including provisions for electric vehicles (EVs).
  • Claim limits: Maximum amounts covered for repairs and replacements.
  • Additional benefits: Value-added features such as towing, roadside assistance, and accommodation.
  • Eligibility criteria: Requirements based on vehicle age, odometer limits, and servicing.

Know This: Whether you own a petrol, diesel, hybrid, or EV, the right policy can make a significant difference in managing unexpected repair costs - our table below makes it easy to understand the difference in policies and benefits.

MBI Policy Coverage, Claim, Benefits and Eligibility Comparison Table

Insurer Coverage Highlights Claim Limits Additional Benefits Eligibility
AA (Assist & Assist Plus) Covers unforeseen mechanical/electrical breakdowns; includes EV package with battery cover ($5,000-$10,000); factory-fitted components covered. Up to $5,000-$10,000 for EV battery claims; total claim limited to market value of the vehicle. Roadside assistance, repatriation ($250-$500), accommodation, travel cover ($500-$1,500). Up to 20 years old, max 300,000 km odometer; stricter limits for EV components.
Autosure (Extreme Plus) Covers sudden breakdowns; EV battery up to $5,000-$10,000; towing, accommodation, and repatriation benefits included. Up to market value; $5,000-$10,000 for EV battery claims; max $750 for consumables. Roadside assistance, towing up to $200, accommodation up to $1,500; consumables covered ($750). Up to 20 years old, max 150,000 km for EVs; stricter limits for performance vehicles.
Autosure (Smart Cover) Wide range of vehicle components covered; EV battery ($2,500-$5,000); towing, accommodation, and repatriation benefits. Up to market value; $2,500-$5,000 for EV battery claims; max $500 for consumables. Roadside assistance, towing, accommodation up to $500; consumables covered ($500). Up to 15 years old, max 150,000 km for EVs; not for heavily modified vehicles.
Fenda Covers mechanical wear and tear; roadside assistance, towing, and vehicle recovery included; limited exclusions. Varies by plan; reasonable repair and replacement costs covered within policy terms. Roadside assistance, towing, vehicle hire, accommodation; repatriation options included. Covers private and dealer sales; servicing compliance required.
Autolife Replacement parts and repairs for mechanical failures; includes roadside assistance and vehicle hire options. Claim limit varies by component; vehicle hire up to $500, accommodation up to $1,000. Vehicle recovery and towing, optional roadside assist, flat battery, fuel delivery. Servicing records required; conditions for vehicles over 150,000 km.
Quest Covers sudden breakdowns; accommodation, travel, and vehicle repatriation benefits; limited EV options. Max $500 for special allowances; emergency towing up to $200 per claim. Accommodation and travel expenses for breakdowns 120+ km from home; towing covered. Standard servicing compliance; excludes pre-existing conditions.
Assurant Vehicle Care Maxi and Optimum cover; claim limit options ($6,000-$15,000); additional benefits for consumables and diagnostics. Max $6,000-$15,000 depending on plan; total liability limited to vehicle's market value. Roadside assistance, diagnostic and consumable cover, optional Uber/Taxi for EVs. Different plans for petrol, diesel, EVs; odometer limits apply.
Provident (Classic & Pinnacle Cover) Classic: Entry-level cover. Pinnacle: Superior cover with additional components and benefits. Classic: $500 for special allowances; Pinnacle: $1,000. Repairs capped to the vehicle’s market value. Roadside assistance (optional), towing ($200), travel allowances, accommodation, and repatriation if breakdown occurs >120 km from home. Requires servicing every 10,000 km (diesel) or 15,000 km (petrol). Excludes electric and certain performance-modified vehicles.

Best Mechanical Breakdown Insurance (MBI) Policies

To avoid overpaying, the best approach is to obtain quotes directly from insurers that provide online MBI pricing tools, including Autosure, Autolife and the AA. Every car will generate a specific quote, so it's important to compare.

Common Mechanical Issues Covered by MBI

MBI policies are primarily designed to address common mechanical failures, including:
  • Engine and Transmission: Repairs for engine or gearbox issues caused by unexpected breakdowns.
  • Cooling Systems: Coverage for radiator or coolant system failures is crucial for preventing overheating.
  • Suspension and Steering: Repairs for components like shock absorbers or steering racks that wear over time.
  • Brakes and Clutches: Coverage for sudden failures, excluding regular wear and tear.
  • Electrical Components: Repairs for alternators, starters, and other key electrical systems.​

Important: Coverage details provided are general examples and will vary depending on the specific MBI policy. Not all policies cover all components listed, and exclusions, limits, and conditions apply. For this reason, it's essential to confirm coverage before purchasing. Regular wear and tear is typically excluded unless explicitly stated.

Comparing the Top MBI Policies for Everyday Use:

Selecting the right MBI policy requires addressing specific risks unique to your vehicle and driving habits. We've identified and shortlisted what we consider the top policies to meet a variety of needs and coverage priorities:

1. Best for Comprehensive Mechanical Coverage: Autosure Extreme Plus
  • Autosure's Extreme Plus stands out for its robust inclusion of key mechanical components and high claim limits.
  • The Extreme Plus policy covers a wide range of components, including engine, transmission, suspension, and electrical systems, along with additional benefits like roadside assistance and accommodation allowances.

2. Best for High Claim Limits: Assurant Vehicle Care and Autosure
  • Assurant offers one of the highest claim limits (up to $15,000) across its plans, making it worth considering for anyone owning high-value vehicles or those seeking broad financial protection.
  • Autosure stands out with generous per-claim limits that rival or exceed most competitors. Their coverage extends up to the vehicle's value per claim (capped at $15,000 on most plans, or $10,000 on Extreme Plus for certain vehicles). This makes Autosure particularly valuable for owners of higher-value vehicles who want substantial financial protection against major mechanical failures.
  • Our View: While other providers typically cap individual claims at lower amounts, Assurant and Autosure's approach means a single significant repair won't leave you facing massive out-of-pocket costs.

3. Best for Flexibility Across Vehicle Types and Component Replacement Options: Autosure
  • Autosure's policies cater to various vehicle types, including petrol, diesel, hybrid, and electric vehicles.
  • The inclusion of tailored coverage options for different categories makes Autosure particularly versatile.
  • Autosure allows for using new, used, or reconditioned components during repairs.

4. ​Best for High-Value Vehicles: Autosure
  • With claim limits tied to the vehicle's market value, Autosure's policies are well-suited for high-value vehicles.
  • The Extreme Plus plan, in particular, offers coverage that aligns with the financial needs of luxury or newer vehicles.

Our view: Autosure's extensive benefits, and collaboration with AA and Turners (who offer MBI via Autosure's owner DPL) arguably underscores its reputation and trustworthiness and arguably makes Autosure a reliable choice for car buyers and owners seeking dependable coverage. However, it's critical to be fully comfortable with the policy before buying any policy.
​

Frequently Asked Questions

Is Mechanical Breakdown Insurance suitable for my car loan?

It depends - many New Zealanders benefit from the coverage and are happy to invest in a policy. However, depending on the policy, the exclusions can be extensive and that means there's no guarantee you'll be able to claim on a policy. If you're determined to buy a Mechanical Breakdown Insurance policy, we strongly suggest making sure you are aware of the fine print - i.e. what's covered and what's not covered, as well as the total cost of the policy.

Should I buy Mechanical Breakdown Insurance from a car dealer?

Many car dealers don't like customers with pre-approved finance as it lowers their overall profit on selling a car. For this reason, we suggest comparing options before signing up for any car loan, Mechanical Breakdown Insurance policy and/or any other add-on. While there may be aggressive sales tactics, you should never rush a decision. Car finance and MBI are both expensive, but many companies offer finance and cover, which means it's competitive and there are plenty of options.

Is Mechanical Breakdown Insurance worth the cost?

It depends. This Reddit post from early 2024 suggests there is value depending on the car insured.

Can I buy Mechanical Breakdown Insurance separately from my car loan?

Yes - while Mechanical Breakdown Insurance is also an 'upsell' on typical car finance, you can buy a policy online or directly from an insurer.

Do I pay Mechanical Breakdown Insurance upfront or weekly?

You can do both. The policy is usually sold upfront, i.e. $50/month for 6, 12, 24, 36, 48 or 60 months etc. This ongoing cost can be "rolled up" into the car loan cost, meaning you'll pay for your MBI policy as you make repayments. Be very careful - when MBI is rolled up into the loan, you'll pay interest on the balance as the money is lent to you.

Can I cancel Mechanical Breakdown Insurance?

Yes, but only during a "cooling-off period". This is usually within five working days of agreeing to a policy. If you don't cancel within the cooling-off period, there are very few options for refunds later. Some Mechanical Breakdown Insurance policies talk about "transferring" the benefit to a new car owner if and when you sell your car, but don't think that "benefit" is worth much and won't increase the value of your car.
​

Mechanical Breakdown Insurance - Our View and Conclusion

  • MBI needs to be carefully assessed; if you're buying a policy as part of your car finance, adding the policy cost to the loan balance makes the overall loan more expensive.
  • We are well aware that many car yards across New Zealand offer Mechanical Breakdown Insurance (MBI) alongside car loans, as it provides them with a significant opportunity for profit. However, purchasing MBI in this setting often means paying a premium when you are, in most cases, better to compare online first.
  • To secure the best value, you'll likely want a policy that minimises exclusions while maximising benefits. This means choosing coverage that includes essential repairs and services without excessive limitations.
  • It's critical to be prepared (and avoid) the pressure commonly experienced in a car yard's sales office. This includes rushing buyers into decisions to 'drive the car away today' but don't offer value.
  • The best approach is to compare insurance quotes and consider whether MBI is necessary based on your car's age, warranty status, and condition.

November Alert: Are you looking for cost-effective car finance? Simplify Slashes Rates - now from 6.85% p.a.
For borrowers with decent credit and affordability (we believe if you're reading and comparing on MoneyHub, there's a greater chance that's you), Simplify just dropped its rates to the lowest we've seen in some time:
Many readers checking multiple lenders and reading guides already have the credit profile these rates require - you can confirm this in 1-2 minutes using Simplify.
Christopher Walsh
MoneyHub Founder
Are you looking for MBI alongside car finance? Avoid high interest rates and fees with our trusted lenders.
  • We focus on highlighting the top car finance options to help you avoid costly high interest rates and unnecessary fees that add up too quickly. Our extensive research has consistently highlighted two trusted lenders who offer fair, competitive interest rates for most borrowers.
  • Simplify – A dedicated car loan specialist, Simplify has built a strong reputation for offering some of the most competitive rates and terms in the market. We've named them our Favourite Car Loan Lender for their customer-focused approach and proven ability to get New Zealanders into cars with great finance deals. 
  • Harmoney – If you prefer a low-fee personal lender with an easy, fully online process, Harmoney is a great option for secured car loans. Their streamlined application can help you secure a loan quickly and efficiently.
  • Why Compare? Comparing car finance options can save you thousands. Even a 1% lower interest rate can significantly reduce your repayments. While dealership financing might seem convenient, it often comes with higher costs to boost their profits. By exploring different lenders and brokers (such as Simplify and Harmoney), you can secure a better deal, avoid unnecessary markups, and ensure you're not overpaying for your car.
  • Important: The interest rate you lock in now will impact your repayments for years to come, so choose wisely and compare before committing.
  • Advertising Disclosure: We may receive a commission if you proceed with a loan through our partners. However, this does not influence our recommendations, and all lenders are thoroughly vetted for fairness. Rates vary based on individual credit profiles.
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