Mechanical breakdown insurance (MBI) covers costly mechanical and electrical failures that your car insurance does not. Compare MBI providers, coverage levels and costs for Australian vehicles.
AAMI is one of Australia's most recognised insurance brands and offers mechanical breakdown cover as an extended warranty alternative for used vehicles. Get an estimate below to see what cover is available for your car.
Understanding MBI and why it matters for Australian vehicle owners.
Mechanical breakdown insurance (MBI) is a policy that pays for the repair or replacement of mechanical and electrical components in your vehicle when they fail through breakdown or defect. It is also referred to as an extended warranty, mechanical warranty or vehicle protection plan.
MBI fills a gap that standard car insurance leaves open. Your comprehensive car insurance protects against accidents, theft, fire and weather damage. MBI protects against the vehicle itself breaking down, covering engine failures, transmission problems, electrical faults and other mechanical issues that arise through normal use.
MBI is particularly relevant for used vehicles in Australia, especially those that have passed beyond the manufacturer's warranty period. With repair costs for modern vehicles climbing steadily due to complex electronics and turbo systems, a single major failure can cost thousands of dollars to fix.
For general information about insurance products in Australia, see ASIC's MoneySmart website. Insurance products are regulated by ASIC and APRA.
Key fact: A single major mechanical repair in Australia can cost $3,000 to $15,000 or more. Automatic transmission rebuilds typically run $3,000 to $7,000, engine replacements $5,000 to $15,000 or more, and turbocharger replacements $2,500 to $6,000. MBI helps protect against these unexpected costs.
These two products cover entirely different risks and work best together.
| Feature | Mechanical Breakdown Insurance | Car Insurance |
|---|---|---|
| Engine failure | ✓ Covered | ✗ Not covered |
| Transmission breakdown | ✓ Covered | ✗ Not covered |
| Electrical faults | ✓ Covered | ✗ Not covered |
| Accident damage | ✗ Not covered | ✓ Covered |
| Theft | ✗ Not covered | ✓ Covered |
| Weather / natural disaster | ✗ Not covered | ✓ Covered |
| Turbocharger failure | ✓ Covered | ✗ Not covered |
| Air conditioning system | ✓ Most plans | ✗ Not covered |
| Third-party liability | ✗ Not covered | ✓ Covered |
| Windscreen / glass | ✗ Not covered | ✓ Covered (comp) |
| Brake pads / tyres | ✗ Wear-and-tear excluded | ✗ Not covered |
Note: MBI and car insurance complement each other. Neither product replaces the other. Most vehicle owners in Australia carry both.
The MBI claims process from breakdown to repair.
Your vehicle experiences a mechanical or electrical failure during normal use on Australian roads.
Call your MBI provider's claims line. Most providers require you to call before authorising any repairs.
Take your vehicle to an approved repairer or licensed mechanic for a professional diagnosis of the fault.
The MBI provider assesses the claim against your policy terms and authorises the repair if the component is covered.
The repairer completes the work. The provider pays the repairer directly or reimburses you, minus any applicable excess.
Age and kilometre limits that determine whether your vehicle qualifies for MBI in Australia.
Most MBI providers cover vehicles up to 10 to 12 years old at the policy start date. Some providers may extend this for certain makes. Vehicles over 12 years old are generally ineligible for new MBI policies in Australia.
Typical entry limits are 160,000 to 200,000 km at the time of policy purchase. Some providers accept vehicles with higher kilometres at increased premiums. Policies may also cap total kilometres driven during the cover period.
A documented service history following the manufacturer's schedule is usually required. Some providers require a pre-purchase mechanical inspection. Vehicles without adequate service records may be declined.
The vehicle must be in good mechanical condition at the policy start date. Pre-existing faults and known issues are excluded. Some providers require a roadworthy inspection before cover begins.
Both Australian-delivered and imported vehicles are eligible. However, some grey-import models with limited parts availability may attract higher premiums or restricted cover options.
Significantly modified vehicles, including engine swaps, performance chips, aftermarket turbo kits and lowered suspension, may be excluded or subject to special conditions.
Coverage varies by plan level. Here is what is typically included at each tier.
Covers the core drivetrain components including engine, transmission and differential. The most affordable MBI option for basic mechanical protection.
Covers virtually all mechanical and electrical components. Often includes towing, rental car allowance and consequential damage. The most complete MBI protection available.
Covers a defined list of mechanical and electrical components. Broader than powertrain but not as extensive as comprehensive. A balance of cost and protection.
The most frequently claimed components and typical repair costs.
| Component | Typical Repair Cost | Common Causes |
|---|---|---|
| Automatic transmission | $3,000 - $7,000 | Wear, overheating, fluid degradation |
| Engine (major) | $5,000 - $15,000+ | Timing chain/belt failure, oil starvation, head gasket |
| Turbocharger | $2,500 - $6,000 | Oil feed issues, bearing wear, carbon buildup |
| ECU / engine computer | $1,500 - $4,000 | Water ingress, electrical failure, age |
| Air conditioning compressor | $1,000 - $2,500 | Compressor failure, refrigerant leak |
| Power steering | $800 - $2,500 | Pump failure, rack wear, fluid leak |
| Fuel injection system | $1,000 - $3,000 | Injector failure, pump failure |
| CVT transmission | $4,000 - $8,000 | Belt/chain wear, overheating |
| Differential | $1,500 - $4,000 | Bearing failure, seal leak, gear wear |
| Hybrid battery pack | $3,000 - $8,000 | Cell degradation, age (select MBI plans only) |
Disclaimer: Repair costs are indicative estimates based on Australian market rates as at April 2026. Actual costs depend on vehicle make, model, parts availability and workshop rates.
Different vehicles and ownership stages call for different MBI approaches.
Where you buy your MBI can affect price, coverage and your rights.
| Feature | Dealer-Offered MBI | Standalone MBI |
|---|---|---|
| When purchased | At the point of vehicle sale | Any time (subject to eligibility) |
| Pricing | Often marked up and may be bundled into finance | Generally more competitive |
| Cooling-off period | Varies depending on the product | Typically 14 to 21 days |
| Choice of repairer | May require the dealer's own workshop | Usually any licensed mechanic |
| Finance add-on | Can be rolled into vehicle finance, adding interest | Paid separately |
| Comparison shopping | Limited, with pressure to decide on the spot | Full ability to compare options |
| Cover terms | Varies widely between dealers | Standardised product terms |
Tip: If a dealer offers MBI at the point of sale, you are not obligated to accept it immediately. Take the policy wording home, compare it with standalone options, and make a decision within the cooling-off period. The ACCC provides guidance on your rights when purchasing dealer add-on products. MoneySmart also has information about extended warranties.
Compare MBI providers operating in Australia.
AAMI is one of Australia's best-known insurance brands and offers mechanical breakdown cover as an extended warranty alternative. Their MBI covers engine, transmission, electrical and air conditioning components for vehicles within eligibility limits. Available directly online and by phone.
Allianz offers mechanical warranty products through its dealer and direct channels. Cover ranges from basic powertrain to comprehensive plans with flexible terms and excess options.
Budget Direct provides mechanical breakdown insurance with a focus on competitive pricing. Their straightforward online process makes it simple to get cover for eligible vehicles.
Integrity Insurance specialises in extended warranty and mechanical breakdown products in the Australian market. They offer tiered cover levels through both dealer networks and direct channels.
Many Australian car dealers offer MBI through partnerships with warranty underwriters at the point of vehicle purchase. These products are typically presented alongside the vehicle sale and may be bundled into finance arrangements.
How MBI is regulated and what protections exist for Australian consumers.
Indicative costs by vehicle type and cover level in Australia.
Disclaimer: These figures are indicative estimates based on publicly available pricing as at April 2026. Actual premiums depend on vehicle make, model, age, kilometres, condition and provider. European and turbocharged vehicles typically attract higher premiums due to more expensive parts and repair costs.
What to look for and watch out for when purchasing MBI in Australia.
Do not rely on a summary or sales brochure. Read the complete PDS to understand exactly which components are covered and which are excluded. Pay particular attention to the exclusions list.
Some MBI policies cap individual claims at the vehicle's market value or a fixed dollar amount. Others have per-component limits. Make sure the limits are high enough to cover a major repair on your specific vehicle.
MBI excess amounts vary from $100 to $500 or more. A higher excess lowers the premium but means you pay more out of pocket per claim. Consider what you can comfortably afford.
Dealer-offered MBI may be convenient but can be more expensive, especially when rolled into vehicle finance. Always compare with standalone providers before deciding.
Most MBI providers require proof of regular servicing per the manufacturer's schedule. Missing service records can void your coverage. Keep all receipts and logbooks.
Some MBI policies restrict you to specific repair networks. Others allow any licensed mechanic. Understand where you can get repairs done before you need them.
Clutch plates, brake pads, tyres, batteries and wiper blades are almost always excluded as wear-and-tear items. Some policies also exclude seals and gaskets unless they fail as a result of a covered component failure.
MBI policies typically have a cooling-off period of 14 to 21 days. Use this time to review the policy wording carefully. If it does not meet your expectations, cancel within this period for a full refund.
Items and situations that MBI typically does not cover.
Brake pads, clutch plates, tyres, wiper blades, batteries, light bulbs, filters and drive belts. These are considered consumable items that wear out through normal use.
Any mechanical or electrical fault that existed or was developing before the policy start date. Some providers require a pre-purchase inspection to establish baseline condition.
Failures caused by neglected servicing, incorrect fluids, or not following the manufacturer's maintenance schedule. Keeping complete service records is essential for claims.
Failures related to non-standard modifications including engine chips, aftermarket turbo kits, suspension modifications and non-approved accessories.
Damage from accidents, flooding, overheating due to continued driving after a warning, racing or off-road use. These scenarios fall under car insurance, not MBI.
Oil changes, filter replacements, spark plugs, fluid top-ups and scheduled maintenance items. MBI covers breakdowns, not regular upkeep.
Paint, panels, trim, upholstery, glass and body rust. MBI covers mechanical and electrical components only.
Some basic MBI plans exclude consequential damage, for example engine damage caused by a failed water pump. Comprehensive plans are more likely to include consequential damage cover.
Use the provider comparison above to find the right MBI cover for your vehicle. Compare multiple Australian providers on coverage, eligibility and cost.