Car repair insurance


#1

Just wondered if it’s cost effective to get it.


#2

Companies that sell insurance are in the business to make a profit. It makes far more sense to me to put the money you would pay for the insurance premium in an interest bearing account. You draw on the account when you need a repair and I would bet that you will be money ahead.


#3

I don’t think so. If you are average to lucky, you will lose money on the deal. The seller makes money on the insurance. That means that most people get out less than they pay in. Also, read the policy carefully. I’m sure they don’t cover all repairs. There are probably some weasel words that let them off if you maintain your car poorly. Who defines “poorly”? They do, of course. If your money situation means that you can’t fork over money for repairs and you have enough or the policy now, do as Tridaq suggests. Otherwise, just drive on and keep changing fluids and filters as required.


#4

If it were cost-effective for you, that would mean the company would pay out more than they take in. Do you think that’s what happens?


#5

In event of a major failure yes. However these only happen maybe 0-10% in majority of vehicles while under one of these policies.

I would avoid any policy not backed by the automaker. Those aftermarket ones are difficult to collect on and have very specific language giving the insurer an out.


#6

No. I don’t think it’s cost effective to ever get insurance on anything of any kind, save for health insurance in certain occasions.

Speaking about cars, it’s more cost effective to buy a reliable make of car suited to your daily use and maintain it properly.


#7

Well any car can have major expensive repairs.

The profit to the salesman and company is usually over 50%. So for every $1,000 you spend the insurance company has less than $500 to pay for repairs or they will loose money, something insurance companies do not do. Some people will get nothing back and some will get a lot more than they pay.  Most will get far less. In addition you need to keep in mind that the insurer has worded it to eliminate as many expensive things as they can.

Remember that the seller is out to make money and they get to write the rules and set the price.  They are not going to sell them at a loss so one way or another they are going to have you pay more than they will pay out.  

Would you gamble with a car dealer who gets to set all the rules and knows all the odds?   

Your decision has to do with the value of the piece of mind it gives you. If that is worth the cost then buy it. Don't expect it to cover everything however, most are written to keep cost down and exempt what they know will cost them money. 

Good Luck