But the cost difference is HUGE. Extended warranties are far more expensive then home owners insurance.
But the risk is small. Extended warranties cover the vehicle when it’s most reliable. In the past 30 years I don’t know a single person who’s ever had a failure that would have been covered by an extended warranty. I’m sure they exist, but the number is extremely low. Far below my threshold of spending the money to buy one.
What? I guess you don’t have much coverage on your home then. Plus my home coverage doesn’t cover the mechanicals of the home. My homeowners is also every year. Extended warranty is one time expense.
Maybe to you it is. Risk has at least two contributors; probability of occurrence and severity. It’s the last one that is variable based on particular circumstances. Again, for some people the severity of the loss is huge and one they may not recover from so easily as you might.
Again, it’s not about you. You are not the measuring stick for the mean, let alone the lower part of the curve…
My house is valued at a little over $600,000. My insurance coverage is less then $600 which is full replacement. When I bought my 2014 Highlander they tried to sell me the extended warranty for $2,200. That’s almost 4 years of house insurance payments - which is about the average lifetime of an extended warranty. So $2,200 to cover a $29,000 vehicle for 4 years vs $2,400 to cover my $600,000 house for the same time period.
Of course it’s about ME. Since I’d be the one paying for it. Each person has to make their own choices. I never said you had to follow what I did.
600.00 a year . That is 1/3 of what we pay here in Tornado Alley for a home worth a lot less than 600,000. And yes I have tried to find lower rates .
I suspect other parts of the country will be different. All we have to worry about here is snow damage, and that is extremely rare.
Wow MikeinNH. You’re getting off cheap on the homeowner’s insurance. I pay double that on a home worth far less and even that has a few hoops to jump through.
And like Volvo-V70 I’ve checked around and found nothing better.
Must be the tornado factor…
It must be. But believe it or not NH averages about 2 tornado’s a year (which is an insignificant number compared to OK). But most are near the VT border as storms come down the VT mountains into the valley. Mainly F0 or F1. We did have one F3 a few years ago that touched down less then 10 miles of my house. One person killed and a few homes destroyed. But that’s it. We don’t have earthquakes (or extremely rare and maybe a 3.0). Sometimes Hurricanes, but we’re far enough inland that it’s no longer a hurricane when it reaches us. Not in an area that floods. So the only thing we have to worry about is snow which isn’t a factor unless you have an old flat roof (which we don’t).
I am finding this very difficult to believe, unless you live in an area where the land is worth $500k, and the house is a little 2-bedroom, 1-bath shack. My homeowner’s insurance, also based on replacement value of about $200k for a house that has a real estate value of less than $150k is about $1300 per year. This is for an 1180 sf house, which is all brick with a shingle roof and hardwood floors in every room except the kitchen and bathroom.
Unless this is a genuine Toyota extended warranty, I wouldn’t even entertain it. The likelihood that the vehicle would need more than $2k worth of repairs and that a third-party warranty company would pay for those repairs is infintismally small. Usually, they will demand documentation that you do not have, and cannot get, such as proof of oil changes and other maintenance since the vehicle was new.
If this was the genuine Toyota CPO warranty, I might consider it, but I agree that the price is high for what you get.
boy was this a timely conversation. my parents live in Iowa and their entire neighborhood was practically destroyed yesterday by a derecho. 100+ mph sustained winds…more damage than an F1 tornado, over an area the size of a hurricane
I grew up with the threat of tornados my entire life, we were never directly hit. then this happens without any sort of warning…
i’m not reading through the full thread, but i’ll just add my two cents: house vs. car, you’re talking about “repair insurance” on an appreciating vs. a depreciating asset. In almost no cases does it make sense to consider the latter…
As far as Homeowner’s Insurance, in vast majority of cases, if the house would bring say $600k on the open market, in most of the USA (California & such excluded), the cost to replace the structure is typically 75% - 80% of the purchase price. Or, to put it another way, the Land is worth 20-25% of the purchase price.
So if market is $600k, and you’re insured for $600k, you’re over-insured; your insurance company knows full well the replacement cost of the structure is “only” about $480,000.
.
Home prices are so low in most of Western NY that replacement cost of the house is often 2 and 1/2 times market value.
How did the thread go from car warranty to home insurance?
It was… Progressive…
I don’t care if it’s from Toyota or third party…extended warranties not worth it for the vast majority of people who buy them.
Replacement value of a home is NOT the same as it’s net worth. Only the cost to replace it as it was. which is usually far less then accessed value. And believe it or not…those are the prices. We just paid the bill last week.
$600, I hope you don’t experience a real loss. I live maybe what, 30 miles east of your area? My homeowners policy is ~$1760/yr. I’m not going to get into measuring personal appendages but it is higher than your structure valuation. BUT, more significantly, it also includes personal liability and personal property losses. It’s not just the structure. It’s not HOME insurance, it’s HOMEOWNER’S insurance.
And Mike, despite what you say, this conversation IS NOT about you. You don’t need extended car warranty insurance. That’s been established in every discussion on this topic. That does not mean people that do need it are foolish…
“The vast majority of people who buy it don’t need it” Refer back to prior statements describing the nature of insurance…
I’ve said it before, but the first problem with extended warranties is that they’re called extended warranties. They are not warranties. They are service contracts. Under a warranty the customer does not have to pay when something breaks. Under a service contract the customer must pay at minimum a set amount no matter what breaks. If the repair costs $50 but the co-pay is $100, then the customer just paid double for the repair thanks to the warranty. And as noted above, some “warranty” companies are really good at finding ways for the customer to have to pay even more than that.
IMO calling a service contract a warranty is fraud. Especially since it’s very common for the dealership to sell it as a warranty without mentioning that co-pay. Unless the customer carefully reads through 30 miles of fine print, they might just spend thousands on an essentially useless warranty. The only time I ever recommend getting one is if you can get them to bundle something of equivalent price to the warranty for free. I.e., “I’ll buy your warranty if you throw in a clear bra.”
Maybe its because we have all our cars and house’s through the same company and get a bundle discount. 30 miles east is very close to the Coast, so that will definitely make a difference.
Interrupting what you just said - it IS about me. I never said your decision may be different. I said it’s foolish for me…and based on statistics - also the vast majority of people who buy them. Extended warranties are the largest profit maker for insurance companies in the history of insurance companies. If you live near Portsmouth then find someone who works for Liberty Mutual Ins. Their IT center is right on Borthwick drive. A few decades ago I was a software consultant to them. It was right during the time extended warranties were really taking off. That division was growing leaps and bounds.
If extended warranties were not so overpriced you would not be able to haggle them down to half price.
Personal ethics come into play with this scenario, if the repair is less than the deductible then there would be no reason to file a claim with the service contract, why are you collecting the full deductible amount for a minimal repair?
As you know, not all service contract have a deductible but a deductible cuts down on the frivolous squeaks and rattle complaints that are time consuming and are of little value.