High Milager, Extended Warranty?

Dear Click and Clack,

I own a 2008, Subaru Impreza WRX hatchback. I use it for my work as an on-site computer technition. I cover about an 80 mile radius around Rochester, MN on my calls. I drive in all weather to any home or business in this area. I looks like I will be averaging abotu 50,000 miles a year on this car.

My question is: Is it worth even bothering to buy an extended warranty, if it only earns me another year of coverage. The base warranty is 36k miles and for $1135 Subaru will increase it up to 80k miles.

I simply can not decide which way to go on this! Please help.

If you maintain the car as per the manual, your chances of having a breakdown that is actually covered by this extra year’s warranty are extremely small.

The math works this way. The cost of a major item could be $2500, while the chance of having it is no more than 3%, the historical average for a Subaru. Therefore your benefit is 3/100x2500=$75.00. Yes, a whole $75! Your cost is $1135! This is how insurance companies do risk analysis.

On the other hand if you were doing this work in an Audi or a Jaguar, the chance of a nasty breakdown would be about 30%, and the amount much more, say $4000. the benefit then is 30/100x4000=$1200! So you would come out ahead, except that for those cars the extended warranty would be more expensive.

In short, as others will tell you, your best insurance is maintaining the car by the book, and putting the $1135 in a high interest account.

Consider it an optional insurance policy. I buy them with a new vehicle because our mileage is about 10k per year and for 700 bucks knowing there will be no out of routine costs for bumper to bumper coverage for 2 years after the car is paid off (7-70)brings me peace of mind. In your situation I would probably skip the warranty because as you say it is a bet of $1135 for coverage for one year. If I am wrong, I’m sorry.

Before you buy the extended warranty, see if it implies a “per incident” deductable. This could be as much as the repair. You could also throw an extra $50-$100 in your safe each time you have it to spare and let it build up for future repairs. You could use some of your income tax refund to prime this.

Don’t bother just maintain your car. WRX’s are well built cars.