Extended Warranties - Worth It?

[SpaceNorman]

Originally Posted by Betr2Trvl

As I noted in a similar post last week, first off they are not extended warranties they are pre paid service contracts.

They are also just like gambling in Las Vegas. These companies are not in business because thier customers get more back than they pay in, and they don't build zillion dollar casinos because people win more than they loose. They also both get customers based on the hype of a few (big) "winners" while the vast majority that lose money quietly hide in the corner.

Unlike Vegas, you are betting on your self to loose, not win, so the contract gives you a short list of what they pay for, and pages of legalese about what they don't pay for.

However, when we were considering a used coach, and as much as I am normally against extended warranties, I did build one into the cost of a used unit just because I didn't know what I didn't know about any used coach. However, in buying new, we did not feel it was necessary and did not get one.

Regards

I certainly don't consider the contract I have as a "pre-paid service contract".
Typically, anything that's marketed as a "pre-paid" is designed to get you to pay up front for things that you're virtually certain to use - usually by enticing you with a lower "unit cost" for whatever it is you're prepaying for than you can expect to get purchasing those services individually. That is NOT how the service contract I purchased is written.

The service contract I purchased is designed much like an insurance policy. It will cover the repair of mechanical failures with very specific exclusions and with tight wording as to what constitutes failure and a very well defined claims process. The comparisons to Las Vegas and gambling, while somewhat fitting - fail to capture the real reason one purchases a contract like this in the first place. We purchase them to mitigate risk. We purchase homeowner's insurance, knowing (and likely praying!) that we'll never get our premium money back. However, virtually all of us purchase homeowners insurance regardless - because it reduce individual risk by spreading it across a large pool of participants. Actuarial science predicts the # of covered failures that are likely in a given population.

Like many of us who normally decline "extended warranties", "service contracts" or what term they're marketed under for a $2,500 refrigerator ... and instead "insure ourselves" by willing accepting the risk, knowing that if/when the refrigerator breaks - we'll have to cover it ourselves - motor home service contracts are purchased to mitigate the risk that our LARGE investment in our coaches won't become a financial disaster if we have an exorbitantly expense mechanical failure during the period that service contract is in effect.

[ChasA]

Good job Norman. You gave an excellent explanation of exactly why I bought a policy and I am one who collected. Best $4000 bet I ever made. My ESP paid well over $12,000.

[Betr2Trvl]

Originally Posted by SpaceNorman

I certainly don't consider the contract I have as a "pre-paid service contract".
Typically, anything that's marketed as a "pre-paid" is designed to get you to pay up front for things that you're virtually certain to use - usually by enticing you with a lower "unit cost" for whatever it is you're prepaying for than you can expect to get purchasing those services individually. That is NOT how the service contract I purchased is written.

The service contract I purchased is designed much like an insurance policy. It will cover the repair of mechanical failures with very specific exclusions and with tight wording as to what constitutes failure and a very well defined claims process. The comparisons to Las Vegas and gambling, while somewhat fitting - fail to capture the real reason one purchases a contract like this in the first place. We purchase them to mitigate risk. We purchase homeowner's insurance, knowing (and likely praying!) that we'll never get our premium money back. However, virtually all of us purchase homeowners insurance regardless - because it reduce individual risk by spreading it across a large pool of participants. Actuarial science predicts the # of covered failures that are likely in a given population.

Like many of us who normally decline "extended warranties", "service contracts" or what term they're marketed under for a $2,500 refrigerator ... and instead "insure ourselves" by willing accepting the risk, knowing that if/when the refrigerator breaks - we'll have to cover it ourselves - motor home service contracts are purchased to mitigate the risk that our LARGE investment in our coaches won't become a financial disaster if we have an exorbitantly expense mechanical failure during the period that service contract is in effect.

We are on generally same page, maybe some nuances, but these and similar programs, are certainly not a warranty.

As for comparing it to insurance, kinda, but you can also buy "extended warranties" on your home systems too, but I'm not doing that either because they don't cover anything that can kill me financially either. Homeowners insurance (car, or RV, or even medical too) is all about protecting you from a catastrophic loss (if you nickel and dime your homeowners insurance, you are going to get you and your home flagged, and will regret it long term.....).

So, service programs or whatever you want to call them other than "warranty", are still more to me like gambling and hearing about the few "winners" / payouts vs. all the silent people that lost money due to fear mongering. And there is certainly nothing they would cover with my RV that can financially sink me........

But as I noted, I plugged a number in for a program to consider if buying a used unit for risk mitigation. Not sure I would have done it, but it would have been much more of a real consideration.....

Regards!

[montyhp]

I am in discussions with wholesale warranties right now. I don't consider $7200 for a 3 year exclusionary warranty (covers every thing but what is specifically excluded in the contract) to be such a bad price.

However, we carried american home shield on our house for a number of years, but there is only so many times you should repair an air conditioner unit before you should completely replace it with a higher efficiency unit. I guess AHS would let you pay the difference.

We have a norcold refer on our MH that I am in the process of replacing the power board on. About $200. If the cooling unit goes out, I am sure an extended warranty would cover the cost, but do I have the option of going with a residential unit? If the deductible is $500 then I am pretty much on my own.

So if I lose a turbo or an engine I would like to have the extended warranty, but if I want to put in a new refrigerator, I am not that interested.

What do you think?

[DrDaveMA]

Originally Posted by montyhp

I am in discussions with wholesale warranties right now. I don't consider $7200 for a 3 year exclusionary warranty (covers every thing but what is specifically excluded in the contract) to be such a bad price.

However, we carried american home shield on our house for a number of years, but there is only so many times you should repair an air conditioner unit before you should completely replace it with a higher efficiency unit. I guess AHS would let you pay the difference.

We have a norcold refer on our MH that I am in the process of replacing the power board on. About $200. If the cooling unit goes out, I am sure an extended warranty would cover the cost, but do I have the option of going with a residential unit? If the deductible is $500 then I am pretty much on my own.

So if I lose a turbo or an engine I would like to have the extended warranty, but if I want to put in a new refrigerator, I am not that interested.

What do you think?

Monty, with an exclusionary contract and the cooling unit went out you would get a replacement Norcold, if you wanted to go to a residential refer that would be on your own. If you loose a turbo or the engine gets dusted a three year extended warranty would definitely be worth $7,200. Your coach is 10 years old, all of the systems are older and are daily becoming more subject to failure. Class A DP are costly, IMHO an extended warranty is worth considering and in many cases should be obtained, particularly if your coach is getting older. Just one opinion.

[Ramets]

Originally Posted by DrDaveMA

Monty, with an exclusionary contract and the cooling unit went out you would get a replacement Norcold, if you wanted to go to a residential refer that would be on your own. If you loose a turbo or the engine gets dusted a three year extended warranty would definitely be worth $7,200. Your coach is 10 years old, all of the systems are older and are daily becoming more subject to failure. Class A DP are costly, IMHO an extended warranty is worth considering and in many cases should be obtained, particularly if your coach is getting older. Just one opinion.

Not in my experience. When our Dometic finally went bad I called Wholesale Warranties, or I should say XtraRide, and told them I wanted a residential as a replacement. They had no problem with it. Actually it was cheaper for them than an absorption one. They not only paid for the fridge, but the cabinet mods that had to be done.