View Full Version : Insurance question
02-28-2007, 07:21 PM
I have an insurance question for you all, and I trust the responses here (much more than the Star Chiefs board which is comprised of a lot of people without common sense - oh burn).
I just bought a new vehicle. The warranty is good, but they want to sell an extended warranty to cover years 4, 5 and maybe even 6 (I can purchase the insurance anytime in the first year at a certain cost, and every year thereafter, the cost goes up a lot).
I plan to keep the vehicle a long time, and I know what it costs to have a vehicle fixed.
What are your experiences with such warranties?
Please, no comments that if I can afford a new vehicle, that I can afford the insurance, or trade off the vehicle at the end of three years.
02-28-2007, 07:23 PM
Scam. Do not buy.
02-28-2007, 07:49 PM
I bought an extended warranty on my BMW after hearing that repair costs are high, and my biggest maintenance expense in four years has been removing a nail from a tire.
My wife got an extended warranty on her Ford Taurus, and she's had one breakdown in seven years, which was covered, but was less than the cost of the warranty. However, she took it in for a checkup at 60,000 miles, and the car repair shop saw the warranty as a gift from God, and they did about $2,500 in repairs that I questioned were necessary, but I wasn't involved. My take on that is that, if I was a garage owner, I'd give out free warranties to car owners as long as I could do the repairs.
My working theory now is that the quality of vehicles is high enough that going without a warranty is a good risk.
02-28-2007, 07:53 PM
My last vehicle started having numerous breakdowns at 105,000 to 110,000 miles.
This warranty goes up to 100,000 miles.
I am thinking of not getting it for that reason.
02-28-2007, 08:03 PM
You have to keep in mind that these companies set the rates at a level where the average guy will either not get paid back the cost of the insurance, or even if you break even or come out ahead, the fact that the company had the use of your money for a few years (keeping all the interest that money earned in safe investments) may still cause the company to win in the long run.
Theres nothing inherently evil about that. If you buy any insurance, the expected value of the policy will be less than the premium, but you are buying peace of mind. When I evaluate an insurance need for myself, I look at the worst case scenario that could plausibly happen (I wont buy "getting struck by lightning" insurance, even though the loss would be catastrophic if I'm hit).
If your looking at thousands of dollars that could plausibly happen if you have rotten luck in the next few years, it may be worth a few hundred bucks. If the warranty is very expensive where in my mind it begins to make sense to self-insure, then I may put away the money I would have paid per month in a money market account or something until I have enough saved to cover it myself.
Warranties are where it makes a lot more sense sometimes to self-insure than some of the more traditional lines. On the other extreme, the odds of your house burning down or getting hit with a $500,000 automobile liability judgement are extremely low, but if it happens, most people are flat-out ruined, so insuring for a few hundred bucks is a no-brainer in those cases.
02-28-2007, 08:18 PM
Research your vehicle. My wifes Dodge Dakota had a positrac axle fail at 40k and a powerseat motor at 75k. As far as I'm concerned the extended warranty has been great for us.
02-28-2007, 08:25 PM
If you're that worried about the dependability of the vehicle, you shouldn't have bought it in the first place.
02-28-2007, 08:27 PM
Scam. Do not buy.
Brock generally knows what he's talking about with autos, even if he can be abrasive with his advice (I'm still reeling from his comments about my wife's Volvo back in the day). Anyway, my understanding on a lot of these extended warranties is that they don't actually cover a ton of things that are the most likely to go wrong in that period of time.
02-28-2007, 08:32 PM
The only way it's worth it is if you buy a lemon. Those extended warranties are BIG business. They aren't making big money because it's a great deal.
What kind of car did you buy? That might help us advise you further.
02-28-2007, 08:34 PM
To add on my earlier thought, if you do make the decision to buy (or shop for and consider) an extended warranty, you may want to consider going direct with the insurance company. Ford, Chevy, etc arent in the insurance business, they sell cars and financing. The dealer gets the insurance from an insurance company, and will then sometimes mark up the living hell out of it before selling to you for a fat profit.
Do not buy insurance from any company that is not at least rated about B+ or so by A.M. Best (Any insurance company who has a good rating will brag about it on their web site somewhere). The one and only time I ever bought an extended warranty was from www.warrantydirect.com, rated A-, been in business for 26 years with millions of policies, so they arent going out of business anytime soon. Going direct is usually cheaper with better coverage than the dealer.
02-28-2007, 11:02 PM
02-28-2007, 11:05 PM
If its an American car-buy the warranty.
I would never buy new.
03-01-2007, 12:04 AM
Doesn't that have a 100k warranty anyway? I don't think I'd buy an extended warranty on that. In fact, I'm sure I wouldn't. You can get a lot of stuff fixed for the $2500 they're probably asking too.
03-01-2007, 06:52 AM
I would never buy an extended warranty, but that's just me. Wait until the manufacturers warranty is about to expire and if the vehicle has had lots of problems, then consider buying one. There are several companies that sell these policies and you'll probably get a better deal than the one company the dealer uses. Just google "extended auto warranties" or something similar and I'm sure you'll get a ton of hits.
03-01-2007, 07:02 AM
We bought one with our Nissan Altima, but it was only $700 for bumper to bumper (excluding wearable items) out through 100K. That was the only time I ever bought an extended warranty in my life.
03-01-2007, 07:14 AM
Fricken insurance people are always out to rip you...arghhhhh!!!
03-01-2007, 07:20 AM
When you buy an extended warranty, they just program the cars computer to not break down until the extended warranty expires.
03-01-2007, 07:32 AM
You also have to consider your financial situation. For a person working for themselves, the money for the extended warranty means that I can be assured my car won't cost more than the payment for X number of years/miles. That was worth the price of admission when I didn't have a W2 job. Both times I've gotten them I negotiated them out of the dealer for free, though.
Oh, a GM? You better buy the warranty.
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