POLL: Catastrophic Repairs In the Last Year

[Dave and Jaime]

There are many threads that discuss extended warranties/service plans. One of the primary arguments in favor of them is "what if I have a major repair, like an engine or a transmission failure that costs me $10,000 to fix?"

To really assess your risk/reward on EW, you need what insurers call "actuarial data" -- likelihood of a claim. Suppose, for example that only 1 out of 50 people experience a major repair (engine or transmission rebuild/replace) that costs more than $10,000 to fix. That means that there is a 2% chance of such an incident in a year. If you are paying $1200/year to avoid a major out of pocket expense, you are making a bad bet. Why? Because on average, you would go 50 years, paying $1200/year in premium ($60,000) so that you could have that 1 in 50 year $10,000 repair bill paid by someone else. So let's gather some data. Answer "yes" if you have had a failure on your MH that would have cost in excess of $10,000 if performed by a dealer in the last 12 months -- regardless of whether it was paid by you or the manufacturer or an insurer or you did the repair yourself for less. Answer "no" if you have not had a failure that would have cost more than $10,000 in the last 12 months if performed by a dealer (regardless of who paid for it or if you repaired yourself). Exclude body damage, of course, because that is an entirely different type of insurance.

[Dave and Jaime]

I realize this poll is an oversimplification of the issue, as you would really need to find the frequency of repairs in a whole range of repair bills, multiply each range by the frequency % and then sum up to get the expected repairs bills in a given year for an average owner. (I used to teach college probabilty and statistics). And yes, this is not a true random sample because people choose to participate or ignore the poll and it could be skewed by those who self-select because of their strong emotions/opinions on EWs. With those caveats, it is still data, based on real world experiences, not hypothetical, "what if . . . ".

But here I simply wanted to have people understand just how frequent/infrequent a repair bill exceeding $10,000 was as they debate/decide whether to self insure or buy an EW.

So please, don't start criticizing before we get results. Use the loss data as you like.

[Jeff and Cheryl]

Easy to answer. None.

[Renipladlo]

FWIS - I would classify a major repair as one of the following:

1. Engine repairs other than normal service, i.e., warped head gasket; blown turbo (not turbo hose); failed pistons, etc.

2. Appliance which needed to be replaced, water heater, hydro hot, refer, furnace.

3. Repairs to one of those items above which resulted in removal and replacement of the unit into/out of the RV for repair, since labor was a significant part of the bill. For instance the sail switch on the furnace might have failed, in which case the furnace needs to be removed, and the switch replaced. The job is 3-6 hours depending on how hard it is to get to the furnace, etc. The furnace did not fail, but a component in the furnace failed which caused it not to operate at all, or limited only.

These are examples, so based on my criteria, we spent 750.00 changing the mixing valve on our HH unit, the part was covered under warranty, the labor was not

[Dave and Jaime]

Originally Posted by Renipladlo

FWIS - I would classify a major repair as one of the following:

1. Engine repairs other than normal service, i.e., warped head gasket; blown turbo (not turbo hose); failed pistons, etc.

2. Appliance which needed to be replaced, water heater, hydro hot, refer, furnace.

3. Repairs to one of those items above which resulted in removal and replacement of the unit into/out of the RV for repair, since labor was a significant part of the bill. For instance the sail switch on the furnace might have failed, in which case the furnace needs to be removed, and the switch replaced. The job is 3-6 hours depending on how hard it is to get to the furnace, etc. The furnace did not fail, but a component in the furnace failed which caused it not to operate at all, or limited only.

These are examples, so based on my criteria, we spent 750.00 changing the mixing valve on our HH unit, the part was covered under warranty, the labor was not

No one likes writing a check for more than a thousand dollars, of course, but I am measuring catastrophic failures -- the kind where you might have to take out a loan or cancel a trip and save up for the repair. Heck, if you can't afford several hundred dollars, how do you afford to fill up the tank at $300 a pop?

[edj]

Originally Posted by Dave and Jaime

There are many threads that discuss extended warranties/service plans. One of the primary arguments in favor of them is "what if I have a major repair, like an engine or a transmission failure that costs me $10,000 to fix?"

You probably should have added another couple of choices with lower amounts than $10k. I had to choose "No", because my RV maintenance/repairs totaled less than $100 for the past 12 months.

[mfire1339]

2008 $15,000.00=new engine $1,500= a/c repair, $1,200.brake repair. Not a good year.


Mike

[J Rod]

72,000 miles and no repairs exceeding $4,000.00
Rod Sprague
2000 Alpine 38 foot 350 engine

[takepride]

Dear Statistician:

Please develop a poll that asks if you paid more for your EW than the cost of repairs (either annually or for a term). That is a more pragmatic analysis of the question: "Was it worth it?"

My motivation was the big ticket diesel, but my justification is the actual results.

[Jim28730]

Originally Posted by takepride

Dear Statistician:

Please develop a poll that asks if you paid more for your EW than the cost of repairs (either annually or for a term). That is a more pragmatic analysis of the question: "Was it worth it?"

I'm with Takepride on this one. Anytime the major repair exceeds the cost of your policy, you are ahead of the curve.

[max49]

So far I'm the only 'yes' answer.

The good part is I have a $3500 ESP

The bad part is, they have not paid and it appears that they are microscoping any possible way to get out of paying.

[Jim A]

Not counting tires and routine maintenance (and entertainment center upgrades), I doubt I have spend $10K in true repairs in the 6+ years I have owned the coach. My largest single repair bill was probably around $3K, and that included some routine maintenance that would not have been covered by any warranty anyway. If I had paid for an extended warranty, I would be way behind.

The poll needs a few more price points to get some better feedback on repair costs versus need for a warranty.

I do pay 3 different emergency roadside service plans, but those are low cost. And one of those paid for itself many times over in the two calls I had to make.

[Barbaraok]

People pay hundreds of thousands of dollars for a coach and can't set aside 10% for repairs? Am I missing something here?

Barb

[Dave and Jaime]

Originally Posted by takepride

Dear Statistician:

Please develop a poll that asks if you paid more for your EW than the cost of repairs (either annually or for a term). That is a more pragmatic analysis of the question: "Was it worth it?"

My motivation was the big ticket diesel, but my justification is the actual results.

Don't need that poll. The answer is obvious. People spend more for the EW premiums than the cost of repairs paid by the EW. On average there has to be more in premium paid than repair bills by EW simply because the EW insurer pays substantial commissions, has its own employees/staff for claims handling and has to pay the covered claims and has to hire attorneys for those claims they deny that are disputed. The only question is how much of every premium dollar received by the EW insurer is paid out in claims. I'm betting lest than 50 cents, since the commissions are likely 25% or more and the cost of administration and overhead is probably at least 10%. And the EW insurer does want to make a profit. None of the EW insurers is going to tell you what % of their revenues is paid out in claims. But it can't be more than 100% or they go out of business almost immediately.