I have a 2000 Dodge Grand Caravan with 108k miles. It’s in good condition and I change the oil every 3k miles. I’m planning to keep this car for another 100k miles or as long as it’s running. Should I buy an extended auto warranty? I rcvd a quote on 5yr/100k mile for $1,500. This covers Transmission, Engine, Cooling, Labor, Rental and Towing. Zero deductible. Where can I get reviews on warranty companies?
I am just about the only person who writes on the Forum who is even the least pro-extended warranty. Truthfully your plan initally sounds pretty good but the devil is in the details 1500 for another 100k and 5 years. I would have to read the policy to give it my blessing,this is something you will have to do and do it well.
But like I said initaly it sounds pretty good. These companies can get problematic with diagnosis time and repairs due to wear can be denied as opposed to repairs due to a part failure. You can get in a lot of trouble when the company says you must pay for the teardown to determine what the cause of the failure is. These companies are a real mine field.
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.
Put the $1,500 in the bank instead. Open a separate account if necessary, but don’t touch the money for ANYTHING except a major car repair (maintenance is not repair). You’ll earn a small amount of interest if you never spend the money. If you need the money it will be there.
The warranty company will earn interest if you give the money to them. It’s your money. Give it away if you want to.
The warranty company will fight with carefully written language or stalling to not play out claims. Your shop will really be frustrated. Are you sure the 5yr/100k is not the warranty period and an error for your vehicle. Most warranty’s wander beyond 100k miles especially at that low of a rate.
If the car company backs it then usually service is much better. They do not fight you too much as they have an interest in keeping you as a car buyer.
Some items to check in the written warranty policy, not salesman’s opinion:
- Does this work have to be done in a single shop approved by the warranty company?
- Does the warranty cover 100% of all costs associated with the failed item?
- Demand a list of items NOT covered.
I say this because my son had an extended warranty that could only be used in one shop in town; took one month to get a diagnosis, and amazingly enough, the final estimate was twice (50/50 cost share warranty, not full cost) of what it cost to get the work done at my independent mechanic. To me, it sounded like the shop owner was “double-dipping” warranty company and car owner. It also took six weeks to get the work done when all was said and done, and he could have been on the road in one, if we had not had to go thru the warranty process and reject it as a solution first. Last time any of us bought an extended warranty. Your call.
Here is an interesting link about a US Fidelis class action suit. Note the issues about fine print exceptions.
Extended warranties are underwritten by ALL the major insurance companies.
It is a VERY VERY VERY expensive insurance policy. I also have to question the extended warranty for ANOTHER 100k miles. That’s the first one I’ve ever heard of. Are you sure it’s not for UP-TO 100k miles.
It’s so lucrative for insurance companies that some have started separate divisions just for extended warranties.
There are also very unscrupulous companies out there selling these warranties. Father of a one of my sons friend had one through one of these companies…They denied coverage for everything…even though it was spelled out clearly in the contract that it WAS covered. The company was in Arizona and was IMPOSSIBLE to get any justification. They basically ignored him until he went away.
There is probably a clause that excludes normal wear and tear. Almost anything that goes wrong with your Caravan after 108,000 miles could be written off as wear and tear. Do a web search for the issuing company and see if there are any complaints about the policies. This sounds like fishing in a barrel and you are the quarry.