I’ve read and heard about a lot of ripoff policies, but this is one that works.
It only worked because you bought an extremely unreliable vehicle. For MOST people it’s still a rip-off. If I bought one for the following vehicles we’ve owned (80 Datsun 510,87 Accord, 96 Accord, 07 Lexus, 90 Pathfinder, 98 Pathfinder, 05 4runner)…I would have wasted THOUSANDS of dollars if I bought one. I wouldn’t have collected one DIME on any of those vehicles.
There’s always somebody for whom a warranty is a good idea, but that comes down to pure luck, no way to predict it. If it pays off for 10% of the buyers, is that a good deal? Not to me.
If it pays off for 10% of the buyers, is that a good deal? Not to me.
Since these extended warranties only extend to 100k miles…It’s probably a LOT LESS then 10%.
The best warranty I ever had was on my 1978 Oldsmobile Cutlass that I sold in November. When the car was 22 years old and I had driven it 225,000 miles, the driver’s side door was sagging and hard to close. The door hinge was worn pretty badly. I went to a body shop and the shop technician told me that I would have to find a hinge, either at a wrecking yard or at the dealer. I went to the dealer where I had purchased the car new. The woman who managed the body shop came out and said that a new door hinge wasn’t available. I told her that I was disappointed because I had been assured when I bought the car that the dealership would always be able to provide parts and service as long as I owned the car. She then said that they didn’t expect me to keep the car this long, but she would see what she could do. She went back into the shop and came back with a big technician who was carrying a sledge hammer, large box wrench and a big drift pin. He loosened the bolts on the hinge, put the drift against the bottom of hinge and pounded on it with the sledge hammer. He then tightened the bolts and the door worked perfectly. When I asked about the charge, he said “There is no charge. We guarantee these babies for 25 years or 250,000 miles”.
About a week later, I received a call from a company wanting to sell me an extended warranty on a minivan we had purchased and the factory warranty was about to run out. I said that I didn’t want to extend the warranty on the minivan, but that my warranty was about to run out on my 1978 Oldsmobile and would they extend it to 30 years or 300,000 miles. The warranty representative promptly hung up the telephone.
Man, I always get a chuckle out of this topic.
)…I would have wasted THOUSANDS of dollars if I bought one. I wouldn’t have collected one DIME on any of those vehicles.
That’s why they call it INSURANCE. How much money have you WASTED on your homeowners insurance or car insurance if you’ve never suffered a loss? The answer is NONE. You buy it in case of an event where you might not be able to cover the loss yourself. There are many people in this situation on their cars. Consider yourself lucky you are not one of them.
The only way it can be a rip-off is if they do not properly disclose what is and isn’t covered. The onus is on the customer to read and understand what they’re buying.
Many dealers offer manufacturer backed policies that do cover a wide range of failures. However, nobody I know of covers wear items (worn tie rod ends) or consequential damages (like if your moonroof is leaking and you let it go for so long it damages other things)
My rule is to buy insurance for things I can’t afford if something goes wrong - health, life, home, liability, and (until it depreciates enough to drop the insurance) car collision insurance. Insuring thing I can afford to handle (even if it’s tough to do so) is, indeed, a waste of money. Like those ‘warranties’ they push at BestBuy and elsewhere.
If one’s finances are so tight that one can’t afford to repair a car, maybe that person should be buying a cheaper car.
There’s a HUGE difference between homeowners insurance and car repair insurance.
First off…The cost. The premiums on car repair insurance (when comparing what the vehicle is worth to what the home is worth)…is about 10,000% HIGHER for the car repair insurance. It’s a very very very high-profit insurance policy. So high in fact that insurance companies (AllState, State Farm, Travelers just to name a few) have started their own divisions for the car repair insurance.
Second…For home insurance…If I was someone like Bill Gates I wouldn’t have homeowners insurance. You buy insurance for what you can’t afford to loose. I can easily afford to loose a $500 repair bill. I however will have a very hard time paying for a $100,000 home repair bill. Where-as Bill Gates could pay a bill like that out of his weekly income paycheck.
To add to MikeInNH’s comments (all of which I agree with), the purchase of home insurance is generally a much more rational process. You know what your house and belongings cost, and you simply find a reputable, stable company offering a good price to cover that value. The insurer may care about some construction methods used to minimize damage under certain events (such as sprinker system, hurricane shutters, etc), but they are not going to subject you to higher premiums because you bought a home built by Ray’s Home Builders instead of Tom’s Home Builders.
On the other hand, these car repair insurance policies are far less rational, IMO. Try opening consumer reports, picking two vehicles with similar repair records, and just see if they offer you anywhere near the same premium. Worse yet, find two identical vehicles with different nameplates and see what they charge. I’ve seen some of these companies charge DOUBLE what they charge for a Toyota Matrix to cover a Pontiac Vibe. And I’m not talking a couple bucks - this is well over an additional $1000 to cover an identical vehicle. They prey on your fears of a big bill, and their cost has little connection with the expected payouts under such a policy.