Are Extended Service Agreements Worth It?

[Crasher]

Ever wonder why the extended policies are one of the biggest money makers for the dealer and company offering it? They don't do it just to be nice. In 55 years of vehicle ownership, I have never purchased an EW contract and have tens of thousands of dollars in my account because of it. But, to each his own.

[NorthernDriv]

I bought one, only to be told - "Thats not covered because its normal wear and tear" if you replace it with new and the new one stops functioning it is covered. After I purchased it I received the rest of the paper work. For the warranty to be valid, I must have the oil changed, in the Cummins engine, at a certified dealer, every 3700 mile/4months, otherwise no coverage!!??? Thats no coverage on say the Transfer switch or A/C! First and last one I get.

[JFXG]

As one further caution, if you get a service contract, be sure to get a good one. As with almost anything in life if you buy cheap the low quality will not serve you well. You want "comprehensive coverage" (the specific words are important), not a list of things covered. It's a bit more expensive. You want "Consequential Damage" (also more expensive), and you want to read the contract before signing. If these things are not there, or if there are bizarre exceptions or requirements far more stringent than those stipulated by the manufacturer (such as NorthernDriv's oil change requirements), then you're dealing with weasels and should walk away.

It is normal that you have to maintain on the manufacturer's recommended schedule, and it is normal that the contract does not cover the normal wear of consumable parts such as brake pads, belts, and fluids, unless these things are destroyed by the failure of some other, covered part. (This is the "Consequential Damage" I referred to).

It can get complicated, but rightly done it can be a very worthwhile buy.

[Ramets]

One thing I would add, is get the gasket & seals rider also.

[MSHappyCampers]

Originally Posted by luckydog1949

Frankly, you would probably be better off to put that money into the best interest bearing account you can find, and draw from it for repairs. We bought a four year extended service contract about 18 months ago when we bought a 2005 Itasca Horizon. So far, it looks like we will have spent several thousand dollars more for the contract than will be spent on repairs. I don't plan on buying another one. Either way is a gamble. You're betting that your coach will have more problems than the insurance company thinks it will. If you take good care of your machine, you'll lose the bet most of the time. That's the only way the companies issuing extended service contracts can make any profits.

I agree!

[Sky_Boss]

As one person already said it is like making a bet and hoping you win. I like to make the analogy of wealth protection. It is like auto insurance. If you never have an accident the house wins.

a year and a half ago when I bought our DSDP I bought a 4 year policy through Wholesale Warrantees administered by Pro Tec. It cost me $6000. As I said, it look at it as wealth management and can afford (not like) to loose $6000 over 4 years. I would have a very hard time soaking up a major repair like a turbo and an a major engine service would be a serious problem.

To date I have received nearly $7000 in service claims with another item to be completed in the next couple weeks or so. That will take me up to nearly $9000 of coverage and I have 2.5 years to go. Items that they have covered (not all of them are listed) include new HWH, front AC, steering components, drive axle air bags, tag axle inner seals, front engine cover seal/gasket, dash AC hose, brake work and more. I have paid out $800 in deductibles.

I have not has a single problem with claims. All claims have been handled quickly. Only recently did they delay me a couple days sending an inspector to the Spartan factory to take pictures for their claims adjustors. Nothing was rejected.

I've had OUTSTANDING customer support from WW. When I first reviewed the sample contract there was a clause that I didn't like the way it was worded regarding full time use. I asked them to add an addendum to the policy to clarify the issue which they did and I signed up.

I'm NOT a heavy diesel mechanic nor am I strong in my knowledge about large system maintenance. Maybe a person with that kind of background and the facilities to do things like rebuilding a turbo, engine or transmission might be capable of saving a lot of cash doing themselves, I highly doubt most of us can.

Again, in the end it is a matter of wealth protection. If one can afford to toss thousands of dollars into a new engine then be my guest and play the odds that you won't have to. Those are good odds. OTOH, if you are like Sandee and I with a good but not unlimited income and of which a blown engine could be catastrophic to our well being, then maybe a GOOD service contract, ESW or what ever you want to call it is worth the peace of mind.

I know I sleep a lot better already.

BTW...I agree that for the most part I wouldn't buy a policy through the dealer. We bought ours through WW directly and saved some cash upfront plus paid for it over 18 months without interest.

[Newmar 14]

Don as I read your message, you purchased a 2006 rv in 2012 and purchased a warranty. How many miles were on unit when your purchased contract. I have been reading this thread-one day I decide to buy then next day I decfide not to-we have a new rv so everything is covered for obne year so I feel I am throwing away money for the first year. Not sure how much the premium would be if I just waited til end on the warranty period.

[vanbuskirk]

It's a gamble... but it s paying off for us. We purchased our 2008 FRED a year ago and to date the warranty has covered 2000 + in charges... of which will increase in the next day or so as our MH is once again in for repair for the same nagging problem. We took the gamble because this is our first diesel and we know that they are more expensive to maintain and repair. After what we have been going through over the course of the last two months I am glad we took the gamble.

[Sky_Boss]

Originally Posted by Newmar 14

Don as I read your message, you purchased a 2006 rv in 2012 and purchased a warranty. How many miles were on unit when your purchased contract. I have been reading this thread-one day I decide to buy then next day I decfide not to-we have a new rv so everything is covered for obne year so I feel I am throwing away money for the first year. Not sure how much the premium would be if I just waited til end on the warranty period.

It had 51,500 when we got it. I think the many folks have had the same internal debate on when to by a service contract with a new purchase. I think the odds are better for the ESW company the newer the coach but the premiums should be lower too.

I still think it boils down to as another person you approach to tolerating risk. I *THINK* that if I was in a place I could afford a new unit I would still try to find the right ESW to reduce that risk.

[jdoran1973]

I would get the warranty. Learned the hard way that coming up with several grand at once for a large repair is tough . Will take the peace of mind that a good warranty gives, even if I am adding to a monthly payment to do it.

[RJsfishin]

I don't know how anyone can give advice on this one way or the other
The simple fact still remains that if you are an average person w/ average luck, you will loose on this gamble every time. And adding the fact that adding the cost of this to a monthly payment, is costing you probably triple the original price,.....so tell us again how you came out ahead, or even close to breaking even.
Those thinking of "peace of mind at any cost" just mite be the cause of those same people to have monthly payments their whole life.

[Sky_Boss]

Originally Posted by RJsfishin

I don't know how anyone can give advice on this one way or the other...

In effect, didn't you just give advice? Just saying'...

I think that the major theme of the advice given on this thread and others like it is very similar to your advice. It IS a gamble. It boils down to this:

1. One is gambling that they MIGHT have a problem that could be so expensive that it warrants this kind of protection.

2. They are gambling that they MIGHT spend more on the warrantee (and interest if they so choose) than they would have on fixing items covered by the warrantee themselves.

3. They MIGHT be gambling that the warrantee company is above board and will faithfully execute policy payouts in a manner the person buying the policy expected.

In the end it still reduces down to how much exposure to extraordinary repair costs an individual wants/can tolerate. If someone wants to accept the cost of cumulative system repairs even without an extraordinary item then then an EW MIGHT be a good way to do that. If they can tolerate even a single major item such as a radiator, turbo, engine or any major component then that is a fair rationale for them to chose NOT to go with an EW. OTOH, if an individual decides that they can not or do not want to be exposed to such extraordinary expenses (cumulative or single) then an EW MIGHT be the way they choose to go.

This is no different then how folks approach life, health or auto insurance. I've "lost" a LOT more money on "useless" auto insurance than I could ever loose on ESWs.

For ME as it specifically applies to MY situation and experience MY choice to purchase an ESW means I have beat the odds. In fact, the amount of money that policy has saved me already will come close to paying for the next one I MIGHT purchase.

[Dog Folks]

I asked that same question on another forum.

Here is the response by someone who said they spent 40 years in the industry selling these policies: "I cannot give you personal experience with the specific company you are asking about. But, I can relate experience of forty plus years of selling extended warranties and doing thousands of repairs involving those same warranties.

The agent selling the policy is paid a high percentage of the cost of the policy for their involvement. The adjusters making the payment for repairs are paid on the basis of what they don't pay and finding reasons not to pay. After commissions, overhead, and repairs they either make a profit or go out of business and you will not have any coverage going forward. Many take the going out of business route every year and open up next week as a newly named company. Wholesale Warranties is simply a seller of warranties and not the ultimate issuer of the policy. And, no, there is very little state regulation of these companies."

He also commented later saying:"It really is pretty simple math. Whatever amount you pay for the warranty, 75% is going to commissions, advertising, and overhead. The 25% left is used to pay claims and make a profit. If more than 25% of the money you invested is used for claims, they lose money. The odds are great that they are not going to give you back more than 25% of your investment in your claims. Some people like to gamble and think they are going to come out ahead but experience has to tell you the vast majority will not"

You can decide for yourself.

[forest]

I have found that many repairs done with warranty companies end up costing much more than if they are paid for by the customer. An example would be where a dealer says the hot water heater needs replacing. I have never had to replace a complete water heater, but a circuit board or electrode may be bad. So the guy who bought the warranty feels all warm and fuzzy because the warranty company has paid for his new HWH, at a cost of $900. The guy who is paying out of his own pocket put in a ignitor board for $200.

IMO, I like the put the money in high interest account theory, and call that your warranty.