Extended Service Plans - To Buy or NOT to Buy

With extended service plans (often called extended warranty plans), you don't always get what you pay for.

I'm going to get just a tad verbose in this post, so I apologize for that in advance. But hopefully sharing my experience will help some who are faced with the question of whether to buy or not - and HOW to get the best price.

I know some RV owners think these plans are a waste of money. Some reason that if you just "put the same money aside" over the life of your motorhome, you will always have enough for repairs - even some high cost ones. But I am a firm believer in having an extended service plan; just as I was a firm believer in having other types of insurance when I was in business. First of all, the temptation to send that money that was "set aside", is just too great. And furthermore, I tend to like being covered for potentially catastrophic losses. BUT, like most insurance, it is certainly true that you must read the fine print AND shop around before purchasing.

Everybody is entitled to their own beliefs, and for some folks there are valid reasons not to buy an extended service plan. For example, maybe your motorhome is over 15 years old and the cost of the service plan would outweigh what repairs might cost. Or maybe you are very handy with repairs, do all of your own work on your motorhome, and/or don't mind installing refurbished parts. It all depends on your situation. I'm not very mechanically inclined (except for electrical work), and my motorhome is still "young enough" where I can still get a "reasonably priced" service plan. For me, the "piece of mind" I get with coverage for potentially high-ticket repairs, still outweighs the price of the plan.

The silliest reason I ever heard NOT to buy an extended service plan is... "They are really just insurance policies and these companies just want to make money off you." YES, they are a form of insurance, and YES, they want to make money. I certainly would not buy insurance from a company who was not intent on making money. They likely wouldn't be around when I needed them.

If you think that having an extended service plan may make sense for you, the next question becomes, how to find the "right plan" without paying too much. When my Diplomat was new, 7 years ago, I was offered "The Monaco Plan" by my dealer with a 7 year term, for several thousand dollars. The plan was a good exclusionary plan, with a good contract. It is worth pointing out here that an "exclusionary plan" is one that pays for everything, except for what is specifically excluded in the contract. These plans generally cost a little more than a "specified perils plan", which only covers what is listed in the contract and nothing more. Generally an exclusionary plan covers much more.

But back to the Monaco Plan... My dealer wanted WAY too much money. I found a Monaco dealer in CA who would sell it to me for about $1500 less than my dealer's bottom line. BUT I also found the very same plan, administered by the very same administrator (Prizm), but without the "Monaco" name attached to it, from an internet vendor for about 1/3 the price. I bought that one. My dealer's markup was probably over 150% after Monaco tacked on their profit. After the new coach was out of warranty, I about broke even on the plan over the next six years. Never had any claims rejected. It was a good plan.

Now that my coach is seven years old, I needed a new plan this year. I've recently retired, so I'm going to be using the motorhome a lot more, and it's now a 7-year old coach, so things are likely to start needing repairs soon - especially with increased use. The original broker I bought from was no longer selling extended service plans, so I went shopping again. I first checked with dealers whom I thought would give me a "fair price" to get a "benchmark" figure. I also looked hard at the "Good Sam" plan, but I thought it cost way too much for the coverage that you get. Then I turned to the internet to compare prices. I found "Wholsale Warranties.com", a company in San Diego. I met their owner, Jeff Shelton, at the FMCA convention in Georgia this past March after attending a seminar he gave. He seemed like a trustworthy fellow, who promised to stick with clients after the sale to help with any claims problems that may arise. (There's only so much a broker can do in this area, but still it's a good feeling to know they'll be around.) As before when I bought from an internet vendor, I also checked Jeff's company reputation, both on the various RV forums, and also with the administrator of the plan he recommended for me. I also checked the ratings of the administrator themselves, as well as the insurance company that backed the plan. All panned out, so I bought a fairly comprehensive exclusionary plan from them, paying about half as much as the lowest dealer price I had found.

Yes buying an extended service plan on the internet can carry some risk. But you have to do your homework - carefully read the plan and check out the broker and the administrator. And also check out their online reputations. (Remember, the selling broker and the administrator you will actually be dealing with for claims are NOT the same companies.) If you have questions about the contract ask your questions of BOTH the broker and the plan administrator before you buy. (You should get the same answers.)

I have little doubt that I will either save money or at least break even over the next four years I have this plan. But even if I don't, I will certainly enjoy the peace of mind afforded by having a "safety net" against that possible catastrophic repair that may or may not come my way.

Bottom line... You can save tons of money on these plans, and minimize your risk, if you do your research and shop around. By the way, I mentioned Wholesale Warranties.com above because that's who I bought from. In my opinion, they are a great company to do business with. But there are other good internet vendors out there. There are also bad ones. Do your homework!