Auto insurance mechanical breakdown coverage v new car manufacturer extended warranty

[Osprey]

We recently purchased a new Subaru Forester and declined the manufacturer’s extended warranty. When we obtained car insurance for it from Geico we were offered 7 year/100,000 mile mechanical breakdown coverage for a much lower price than the Subaru extended warranty. We took the Geico coverage and are paying a portion of our premium for it and can cancel at any time.

I am curious on members thoughts on insurance company mechanical breakdown coverage and on whether keeping it is a good idea.

 

[frank]

the last time I bought a new car I took the 7yr/100000 mile warranty and never had a chance to use it. it cost me about 1500. and that was in 2012. did not know that insurance companies like geico sold that product. it will be interesting to see the feedback on this. Is there an url to see what that warranty covers?

 

[Osprey]

https://www.geico.com/auto-insurance/mechanical-breakdown-insurance/

I’m going to call today and see if there is a brochure with more details.

 

[CRLLS]

We purchased a Hyundai with 10 yr/100K powertrain warranty 8 years ago. We have <60k miles on it today. Never had anything go wrong where we needed the warranty. We bought a used Ford Escape Titanium with all the bells and whistles. We bought the top of the line extended warranty from a FORD dealer online. It cost around 60% of the retail price. It covers almost everything including electronic components. These things can be expensive to fix/replace. I feel by going with the mfgr's warranty, I would have less "issue" in having the work covered.

This is only the 2nd time that I ever bough an extended warranty for a car in over 50 years of car ownership. The other one paid for itself several times over. I have mixed feelings about having this one pay for itself or not.

 

[Bamaman]

Note that ESP's will not come into effect until the original manufacturer's warranty period is up. That means if you trade out of the car or if it's totaled out in a wreck, you need to go back to the ESP company and ask for a complete refund.

I wouldn't consider ever buying any ESP that's not a product of the auto manufacturer. Outside ESP companies also need to be fully backed by an insurance company or they're not worth the paper they're written on. Not every ESP company is viable financially.

(I used to work with auto dealerships who used outside ESP companies and their experience is not always good.)

 

[Just_Steve]

Note that ESP's will not come into effect until the original manufacturer's warranty period is up. That means if you trade out of the car or if it's totaled out in a wreck, you need to go back to the ESP company and ask for a complete refund.

I wouldn't consider ever buying any ESP that's not a product of the auto manufacturer. Outside ESP companies also need to be fully backed by an insurance company or they're not worth the paper they're written on. Not every ESP company is viable financially.

(I used to work with auto dealerships who used outside ESP companies and their experience is not always good.)

^^This^^

 

[pb4uski]

+1 I had a insurance company client who wrote extended warranty coverage.... they were outrageously profitable... also, in my entire adult life I have never been in a situation where I would use that coverage... we keep our cars but not for that long. Waste of money in my experience.

 

[travelover]

I never buy insurance against losses that I can easily sustain. Car repairs fall into that category, house fire insurance / health care insurance do not.

 

[Chuckanut]

My experience on most extended warranties is that they are rarely a good thing to buy. Modern cars, even those that aren't Toyotas, are far more reliable than they were a few decades ago. Getting to 100,000 miles should not involve any significant repair costs for most of us.

What I want is an extended warranty that starts sat 150,000 miles and goes to 250,000. I might buy that if the price is right.

 

[OldShooter]

The bold print giveth and the fine print taketh away.

My son was buying a used car and the dealer was pitching a warranty. DS sent me the warranty to review. Basically it excluded everything that usually causes problems; brakes, fuel system, ignition system, etc. About the only thing it insured against was a rod coming through the side of the engine block.

A couple of years ago I bought a Soob WRX from a dealer who touted their "free lifetime warranty." That warranty took a slightly different tack: It requires that all oil changes, scheduled service, and inspections specified by the manufacturer be done on time. Who ever does this? Miss an oil change by a month or 500 miles and they can deny warranty coverage. Omit the "scheduled inspections" dealer enrichment program, same. My conclusion was that this warranty was worth exactly what I paid for it.

So, @Osprey, you really have to figure out exactly what the coverages are before you can make any kind of decision about whether to buy one or the other. Both options might be effectively worthless.

I insure against things that would be painful or difficult financially. House fire, for example. DW losing her very expensive/low 5 figures diamond. (Though insuring the diamond is a marginal call.) I do not insure my cell phone and I do not buy extended warranties on anything. My auto and house insurance deductibles are the largest they will sell me: $2500. YMMV.

 

[Chuckanut]

A couple of years ago I bought a Soob WRX from a dealer who touted their "free lifetime warranty." That warranty took a slightly different tack: It requires that all oil changes, scheduled service, and inspections specified by the manufacturer be done on time. Who ever does this? Miss an oil change by a month or 500 miles and they can deny warranty coverage. Omit the "scheduled inspections" dealer enrichment program, same. My conclusion was that this warranty was worth exactly what I paid for it.

+1

I ran into the same thing shopping for my new Rav4. The 'lifetime warranty' would require me to have the car serviced at the dealer, do a lot of unnecessary work that Toyota did not call for, and, if I left the area I'd be out of luck.

The only extended warranty I would buy is from the manufacturer and then I would buy it only if I was living on the financial tight-rope and a sudden expensive repair would mean financial calamity for me.

Even then I would wait until I was near the end of the regular warranty period and find one of those out-of-state dealers who would sell me the extension for less than the dealer I bought the car from. You can shop manufacturer's extended warranties if you really want one.

 

[ziggy29]

I wouldn't consider ever buying any ESP that's not a product of the auto manufacturer. Outside ESP companies also need to be fully backed by an insurance company or they're not worth the paper they're written on. Not every ESP company is viable financially.

I totally agree.

A couple things to remember about maintenance agreements or extended warranty plans from the manufacturer:

* You don't have to buy them from the dealer who sold you the vehicle. Generally you can buy them from any dealership that sells them unless the manufacturer limits this practice. (Toyota, for example, was not allowing dealers to sell these across state lines for a while.)

* You don't have to buy them at the time you purchase the vehicle. Generally you can buy them *any* time before the factory warranty expires.

* Authentic manufacturer warranties are typically honored by *any* dealership in the country for that make. With a third party warranty there is no assurance it will go smoothly or that the garage will take it (you may have to pay first, seek reimbursement and hope they don't jack you around).

* You need to be meticulous about regular servicing on time, and keeping all records of it. If all your servicing is done by the dealer, these days they should have record of it -- but keep the proof anyway.

What does that mean? If you really want one, you can shop around and take your time. For my 2018 Toyota Prius Prime, I noted that some Toyota dealers were selling them for half the price of other dealers -- sometimes even less! (What they lose in margin, they hope to make up in volume and manufacturer incentives.) For example, for a 10-year, 100K mile warranty I saw quotes ranging from $1400 to almost $3000. For the same product! That tells you how much they are marked up, since I guarantee the dealer charging $1400 is not losing money on it.

Essentially these are insurance products. And like all insurance products, the company selling them profits on them, meaning that *on average* your warranty will be a money loser for you -- not to mention that both the manufacturer AND the dealership need to profit from it. But it can also, occasionally, save you from a large unbudgeted expense. Part of the reason we buy insurance, even when we can theoretically afford to self-insure, is for the peace of mind of not worrying about a massive unexpected expense. That peace of mind has some value, and if you decide the price is worth that peace of mind, even if financially suboptimal on average, then so be it. But again, shop around for the best price for an authentic manufacturer warranty -- they are the same product no matter which dealer you buy it from.

 

[Big_Hitter]

I am curious on members thoughts on insurance company mechanical breakdown coverage and on whether keeping it is a good idea.

I have it on my 09 forester turbo - paid for itself the first year i had it when the sunroof went out - that was about $1500 which is about the cost of the 5 year service contract

 

[jimbee]

I am curious on members thoughts on insurance company mechanical breakdown coverage and on whether keeping it is a good idea.

They are typically a good deal for the seller, usually not a good deal for the buyer. I would not buy it.

 

[Osprey]

Thanks for all the responses so far. I called Geico and they do not have a written description of the coverage they could give me other than the info on their web page that I linked earlier. I thought that was very odd.

 

[OldShooter]

Thanks for all the responses so far. I called Geico and they do not have a written description of the coverage they could give me other than the info on their web page that I linked earlier. I thought that was very odd.

Not odd. Wrong. Somewhere there is a document. It's hard to believe that they wouldn't give it to you prior to purchase but after purchase I can't imagine that they wouldn't. Or, file a claim to clean spilled ice cream out of the carpet and see how fast the document appears.

I'd try for a different customer service rep or ask to talk to a supervisor. That contract is in there somewhere.

 

[Osprey]

Not odd. Wrong. Somewhere there is a document. It's hard to believe that they wouldn't give it to you prior to purchase but after purchase I can't imagine that they wouldn't. Or, file a claim to clean spilled ice cream out of the carpet and see how fast the document appears.

I'd try for a different customer service rep or ask to talk to a supervisor. That contract is in there somewhere.

I called twice and both reps said they did not have a written document to share that spelled out coverage in more detail

 

[REWahoo]

I called twice and both reps said they did not have a written document to share that spelled out coverage in more detail

Run.

 

[38Chevy454]

I'm with the rest, I typically never buy any extended warranty for any vehicle or other item. It helps that I am able to do most of my own repairs, but i agree with the general statement that i only pay for insurance against things I am not able to cover without financial difficulty. Car repairs do not fall into that category. It may not be fun to pay a large bill, but over long term, self-insuring is the better financial choice.

 

[RobbieB]

Yeah, no doc, no policy, no contract.

Oh my engine blew up. Sorry that's not covered.

 

[ziggy29]

I called twice and both reps said they did not have a written document to share that spelled out coverage in more detail

That is awful -- that might as well say "we'll cover it if we feel like it". Cancel it, like yesterday.

 

[Jerry1]

They are typically a good deal for the seller, usually not a good deal for the buyer. I would not buy it.

Generally I agree with this, however, I’ve had a couple cars with extended warranties and they did end up paying for themselves. Of course those were GM vehicles so the odds may have tilted a bit more in my favor. Plus, I receive employee pricing (father in law is a GM guy) so that helps too. Right now I have one on my truck (6yrs/100K miles). I’m going to sell the truck right before I hit one of the cutoffs. On my other car I went bare. DW does just not drive enough. I’d need something like a 10+yr/100K warranty and they just don’t sell those.

 

[CRLLS]

No small details on the coverage before buying is not uncommon in a lot of situations. The detail is too difficult to convey with a short synopsis. Much like buying an auto or life insurance policy, and many other kinds of service purchases. "They" give the prospective buyer a short description outlining some major points. If you buy, then you get formal documents with more detail than most will read. You then have a short period to cancel at no cost if you don't like the details. Not the way I would like it to be. But it is what it is.

 

[travelover]

Generally I agree with this, however, I’ve had a couple cars with extended warranties and they did end up paying for themselves. ............

If you were in the business of pricing and selling extended warranties and had all the durability and lab test data on the car and all of its components, would you price the policy so that most people come out ahead buying it? That is exactly the position the manufacturer is in.

 

[Ian S]

For me it's easier to buy a vehicle like Hyundai or Kia with a solid lengthy initial warranty. No question about what's covered and I've found routine maintenance at the dealer to be reasonable in extent and price. I mean oil and filter change for $30 is hard to beat although they just increased it to $40 for 2020.