Mechanical Breakdown Insurance

Forums › Transport (cars, bikes and boats) › Mechanical Breakdown Insurance - Outlander PHEV

Lizard1977

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#312350 9-Apr-2024 10:05

I'm currently working through the finance for purchasing a 2017 Outlander PHEV (see previous threads about this journey of mine - yes, I've considered the RUC situation; yes, I've considered the risks of PHEVs and battery degradation) and the question of mechanical breakdown insurance has arisen. I've gotten some details from the finance provider, and I wanted to get some feedback from the GZ community.

The additional cost (loaded into the loan repayments) is approximately $22/fn. For this, it includes Guaranteed Asset Protection, which provides up to $5000 payout if the car is written off and the car insurance payout is less than the loan value. I'm not too fussed on this - it's about $2-3/fn. The MBI includes an electric vehicle package, and is about $18-19/fn. It includes replacement of the drive battery, up to $10k if the car is less than 10 years old at the time of the claim (the car is currently 7 years old, and the MBI is for a max of 3 years). I asked about this, and they said they would repair by replacing damaged cells (est. $500/cell) or replace the entire battery. I asked what threshhold they would use to determine whether they accept a claim, and they said that if the vehicle failed to start and an error message indicated a fault with the battery, and if the dealer (i.e. Mitsubishi) then determined that the battery was faulty/damaged, then they would accept the claim and make it good (i.e. repair or replace).

My understanding is this won't cover degradation (which is arguably a subjective question - I've heard Mitsubishi have a very high threshhold for degradation of batteries). So the question is - is it worth it? I know there are strong views about MBI. I've bought it for the last two vehicles I've owned, but the cost was paid upfront rather than loaded into the loan (which then attracts interest, of course) and it was significantly less than the total cost (not including interest) of this option, which is around $2.3k. If the estimated cost to replace a cell is right - about $500, then I could "self-insure" and be able to replace half the cells over the life of the car for the same cost (without the added interest). However, if the battery completely fails, then it's a different situation.

Thoughts?

MikeAqua

7773 posts

Uber Geek

#3216080 9-Apr-2024 12:57

Does the insurer stipulate a servicing interval?

Some years ago when I looked at this, the insurer required an oil and filter change every 5,000km, while the manufacturer stipulated a 15,000km service interval. Every second service, the insurer required a detailed set of checks. Again, more than the manufacturer recommended. Again more costs. They also didn't recognise DIY oil changes (even with receipts for the filter and oil).

We decided we were better to forgo the insurance and take the risk, rather than massively increase our servicing costs.

The insurer you are looking at may be completely different, but it pays to check out all these detail before you take out a policy.

Also how diligent are you about getting your car serviced on time? An insurer will look for any excuse to deny cover. It's how they make money.

Mike

Lizard1977

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#3216086 9-Apr-2024 13:28

In this case, the requirement is every 12 months or 15,000kms, whichever comes first. Servicing must be done by a suitably qualified service centre. Here are the service requirements:

The servicing of your vehicle must be carried out by a suitably qualified service centre. As part of the service the following must be checked, replaced or attended to, if applicable, necessary or specified by your vehicle’s manufacturer:
• Change engine oil and oil filter;
• Check spark plugs and replace;
• Check fuel and air filter and replace;
• Check transmission oil and filter and service transmission;
• Service transmission by the mileage or time recommended by the manufacturer;
• Check turbo oil feed;
• Check all fluid levels and condition, replace or top up;
• Check braking system and brake fluid;
• Check all belts, including cambelt;
• Replace all belts, including cambelt by the mileage or time recommended by the manufacturer;
• Check cooling system, inhibitor and hoses;
• Check CV joints and boots;
• Check steering system;
• Check suspension system;
• Check air conditioning;
• Check electric vehicle battery report, condition and usage;
• Check computer systems have most recent software updates

I'm pretty strict on getting my vehicle serviced on time, so that's not a worry for me, and the time interval is lined up with when I would expect to get it serviced.

sen8or

1787 posts

Uber Geek

#3216204 9-Apr-2024 14:21

So for a 7 year old car, the cost of MBI is around $2300, you would easily spend considerably more than that if even 1 event happened that would be covered by the insurance, the question then boils down to the likelyhood of that happening and whether or not you are prepared to take that risk. Remember its not just the battery you are covering, its failure of any of the other aspects of the car.

I've only ever had mechanical insurance once, it was on a dog of a car and provided "free" as part of the purchase price of the car, it paid for aircon failure and blown head gasket (2 separate claims), so for that case, was a godsend, none of the other cars I have ever owned have needed any significant money on repairs, just usual servicing, wear and tear things.

At 7 years old with good service history, your odds of an expensive failure aren't high, but they aren't nil either.

Lizard1977

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#3216206 9-Apr-2024 14:27

You make good points, which I've been wrestling with since I posted this thread.

All the conventional advice around MBI says it's a waste of money. I'd be inclined to agree - until you have a major fault which is covered. But that last part is the real problem - whether it is actually covered. You're right that it's not just the battery - there are other things that can go wrong. But it seems like most MBI products have a lot of exclusions.

In this case, the seller is transferring the balance of the MBI he got when he bought the car. It's provided by Quest Insurance, and there's just over a year left. He's paying the transfer fee as well. So I will have some cover for the first year at the least.

The trouble is, the instant I decide not to go for the cover I almost guarantee that I'm going to have some kind of expensive failure - Murphy's Law

scuwp

3885 posts

Uber Geek

#3216246 9-Apr-2024 15:50

It's nothing short of legalised gambling. You are putting $2K on the table betting something will happen, they are covering your bet (and more) by betting it wont, and putting a huge amount of fine print in the bet to make sure their interests are covered. There is no clear answer here as I am sure you already know. There will be people who have great stories to tell about how they dodged a financial bullet because they had insurance, and even more (probably) that say it was a complete waste of money because nothing happened. Both are true and valid.

My only concern in your scenario would be putting it on finance.

The rest is flipping a coin.

Lazy is such an ugly word, I prefer to call it selective participation

Lizard1977

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#3216258 9-Apr-2024 16:18

I decided to not pay for the MBI, for all the reasons already listed. It is a gamble, but for the cost it doesn't really stack up. It seems like the probability of coming out ahead - especially on the drive battery question - is poor. Plus, the seller is transferring over the balance of their MBI, which offers a modicum of protection without adding to the cost.

Thanks for all the comments. As always, very helpful.

Zeon

3916 posts

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#3216416 9-Apr-2024 23:03

I've got that model outlander PHEV. Apart from the badges falling off I don't think there is much that can go wrong apart from the battery degrading. Probably good you didn't get anything additional

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Lizard1977

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#3216464 10-Apr-2024 09:05

Zeon:

I've got that model outlander PHEV. Apart from the badges falling off I don't think there is much that can go wrong apart from the battery degrading. Probably good you didn't get anything additional

Here's hoping. With all the people prophesying doom and gloom about the battery, it's giving me a gnawing feeling of anxiety. I'm trying to focus on the bigger picture, the knowledge that not every model will collapse, and there's every chance for reliable and comfortable motoring over the coming years. Plus, it's the first ever car I've owned with a sunroof! Perfect for the tropical oasis that is Palmerston North! ;)