Extended Service Contracts: Be an Informed Consumer BEFORE YOU BUY and you will be H

[jstdreamin]

My decision to buy an extended service contract was predicated on the fact that I was buying a used, 2008, DP coach from a big dealership built by a Mfg that was out of business. Our coach was a great value and we love it! I'm particular about maintaining full functionality in my vehicles and toys YET, I'm not mechanically proficient AND "Murphy" seems to follow me around when I try to be Mr Fixit! (Yes, go ahead and laugh with me!)

I bought a 48 month "Gold" "Nationally" branded extended warranty that is actually administered by an insurance company, and not the "National" brand (surprise!). It has a $250 deductible. After18 months, IT HAS PAID FOR ITSELF IN FULL!

BUT.....

With this said, my advice is to ask lots of questions and understand all aspects of what is and is not covered by the selected plan. AND More importantly, one needs to FULLY understand how claims must be processed! These plans are VERY different than what you might have on a car or truck. And don't believe anything that isn't in writing as there is no "gray", just black and white. Many times, the sales people do not understand the details or the claims process but as the contract holder, you must!

I (and my shop) was ignorant of this process and it cost me $$$$ when my shop followed the usual "diagnose>fix>diagnose>fix" process. My contract provider, being an insurance company, requires that a claim be filed and approved by an adjuster for each step BEFORE any work can be performed. My claim was rather complicated and had multiple issues that required the "diagnose>fix>diagnose>fix" process to solve so the contract provider refused to pay for a portion of the repaired that wasn't pre-approved. Ultimately my shop and I shared the cost of this education!

Also, as previously mentioned, these contracts don't pay for everything. Some things that seem completely logical parts of a given system are excluded from coverage because they are very expensive to repair. For example, my chassis AC wasn't working properly. The problems with the fan/motor system at the front of the coach was covered, but the leaking hi pressure pipe going from the AC unit to the engine in the back was not covered. Fixing this pipe required special tools and several hours in labor. My contract provider pre-determines how many labor hours and the labor rate that they will pay for a given repair regardless of what it actually takes or what the market rate is for shop labor. Remember that when you sign to have your unit repaired, you essentially agree to pay what the shop charges, NOT necessarily what the contract provider reimburses. I think it's a good idea to write in something on the service agreement like: "I am not responsible for cost of repairs if warranty claims process is not properly followed". Haven't tried this yet but I will if I have to use someone other than my regular shop where I have developed a good personal relationship with the owner.

So, be informed, do your homework and make absolutely sure that you do not agree to purchase a contract or an RV with a contract BEFORE you get comfortable with the above research from the selling dealer. Most of the time these contracts are sold during the financing and contract signing process and the finance person may not know the details and In my case the dealership management were all smiles, but very pushy and impatient once I agreed to buy. My selling dealer didn't even provide us with a brochure on the plan stating that it is "online" NOT! I was tired after a long day at the dealership and had a 4 HR drive ahead and ASSumed this contract would be similar to those I had purchased for my vehicles. My error!

I appealed to the insurance provider about my claim for several weeks thru multiple contacts only to be told that my claim was "closed". I wrote an email to the company VP who didn't have the courtesy to reply.

PS. While I would love to, I'm not naming names because I take responsibility for not being a better informed consumer so BE INFORMED!

[Scooter]

At least you called it by the correct name....it is not an extended warranty. I don't know if your contract was "parts named" or "exclusionary" Which ?

Don't know much about "book" shop rates or who controls. You are right about reading every word of the contract....and not to rely on a brochure.

Usually, there is a "gatekeeper" or administrator between you and the insurance company. Was there one? Sounds like the insurance company and the administrator are the same ??? Yes, you can name the company. Look at the very last page of the contract, down at the bottom, and you might see the actual insurance company.

Thanks for your post........

[Mr_D]

Originally Posted by jstdreamin

I (and my shop) was ignorant of this process and it cost me $$$$ when my shop followed the usual "diagnose>fix>diagnose>fix" process. My contract provider, being an insurance company, requires that a claim be filed and approved by an adjuster for each step BEFORE any work can be performed.

I have never seen a Service Contract that didn't operate this way!

[jstdreamin]

But Mr. D you are a clearly a "veteran"! With all of the research that we did in the 6 months prior to our purchase here on IRV2.com as well as other online and offline publications, I did not read anything about how Extended Service Contracts are administered and claims paid. That was obviously my error!

So I wrote this post in hopes of educating other "Newbies"!

[Hikerdogs]

The way I look at it an extended service contract is like any other type of insurance. In this case the company is betting the premium you paid will exceed any claims you have in the future, you're betting the cost of future repairs will exceed the amount paid in premiums.

The difference is that the insurance company has an entire staff researching the cost of repairs and setting the price of the premiums to turn the tide in their favor. They also make the customer jump through a series of hoops to make a claim. Any misstep along the way is rewarded by the claim being denied.

[SpaceNorman]

Originally Posted by Hikerdogs

The way I look at it an extended service contract is like any other type of insurance. In this case the company is betting the premium you paid will exceed any claims you have in the future, you're betting the cost of future repairs will exceed the amount paid in premiums.

I use the "betting" analogy when I discuss insurance too ... and while it's a cute way to describe it - it really doesn't speak to the real reason that insurance is purchased - which is to mitigate individual risk through shared cost.

Like many others on the site - I studiously avoid purchasing extended services contracts that seem to be offered for virtually anything and everything we purchase these days. I'll happily "bet" whatever I just purchased isn't going to break - and accept the risk for most purchases I make.

However, when it came to my coach - I sprang for an extended service contract. The downside risk of a major engine or transmission failure on a large diesel pusher like mine was simply too rich for my wallet. The service contract wasn't cheap ... and the "mother may I" rules associated with making a claim (albeit understandable) are both cumbersome and frustrating. I'm one year into a 5 year contract ... and just had my first claim paid (... to the tune of roughly $1,200 to address an issue with the coach's air leveling system). Whether or not I'll break even on the deal is yet to be seen - however, I'm still OK with having purchased the contract for the security of having laid off some of the risk associated with ownership.

[rick Yother]

I also bought the coach only extended serive contract on the 2011 Fleetwood Southwind I bought at Camping world in Chattanooga... It is one of the deals where you think you are buying it from Camping World but it is through an insurance company....so beware. Expect to deal with insurance company. Had I been told it was not a Camping world contract, I would have not bought it through Camping world ....but with the service I have received by the Camping world service center I will never buy anything else from Camping World service has been terrible

[PanJH]

Originally Posted by SpaceNorman

I use the "betting" analogy when I discuss insurance too ... and while it's a cute way to describe it - it really doesn't speak to the real reason that insurance is purchased - which is to mitigate individual risk through shared cost.

Like many others on the site - I studiously avoid purchasing extended services contracts that seem to be offered for virtually anything and everything we purchase these days. I'll happily "bet" whatever I just purchased isn't going to break - and accept the risk for most purchases I make.

However, when it came to my coach - I sprang for an extended service contract. The downside risk of a major engine or transmission failure on a large diesel pusher like mine was simply too rich for my wallet. The service contract wasn't cheap ... and the "mother may I" rules associated with making a claim (albeit understandable) are both cumbersome and frustrating. I'm one year into a 5 year contract ... and just had my first claim paid (... to the tune of roughly $1,200 to address an issue with the coach's air leveling system). Whether or not I'll break even on the deal is yet to be seen - however, I'm still OK with having purchased the contract for the security of having laid off some of the risk associated with ownership.

I'm the same way-- no contracts on anything, except the motorhome, even that came at the last minutes before the 1 year factory coverage expired. We had many,many issues with the coach during the first year so I decided to go ahead and get coverage. In the 2 years we have been covered by the extended contract, it has almost paid for itself. 5 more years to go before it expires. I have not had any issues with coverage. The shops I have dealt with have been knowledgeable of the process and everything has went smoothly with negligible delays getting approval .

[Gary RVRoamer]

Thanks for the well-thought-out advice, jstdreamin. Hope it helps some folks.

"breaking even" on an extended warranty is not really a good thing. It means you had lots of expensive problems. Nice that you got insurance to help pay for it, but much better not to have so many expensive problems in the first place. Insurance is NOT something you want to make money on, whether home, car or RV.

Too many of these policies get sold as a way to pay for routine repair costs. That's never a good idea. Why send your money to someone else, pay them a hefty commission, and then have to beg to get some of your money back? How can that ever work out in your favor unless you have multiple major repairs?