Extended warranties

Anybody who has bought an RV recently has probably heard the sales pitch about buying an extended warranty. I am in the process of buying one now and I certainly had to sit through the presentation even though I mentioned that I generally do not do that sort of thing. The RV is new and so is covered by the manufacturer's warranty for the first year and the engine/drive train is covered for 36 months/36000 miles.

However I sat down this morning and read the brochure that they gave me and then the online information and was surprised at the limits that were specified - towing was limited to $300, the "complete coverage" plan had a $100 deductible, there is a $50 limit on fuel replacement if the issue is a broken fuel tank, a $100 limit on manufacturer required deductibles and so on, and this for an $8000 6 year coverage plan. In the past when I bought a used RV I also bought the Good Sam Extended Service Plan for a year or so to cover anything that might break in the first year of use, but found that the GS plan was limited in the hourly rate they would cover. One time I needed it for a broken starter for a Ford V-10 in the middle of rural Utah Good Sam ended up covering $14 of the $400+ repair although in fairness I should mention that they completely covered the replacement of the AC for the rig, minus the deductible on a later claim.

So the question in this post is whether extended service plans are worth the money for new RVs, and which ones are better than others. If you were buying one, what would you do? Please keep in mind that I am, and never have been, handy with tools. Those around me weep when I pick up a hammer ... 

I've seen a number of threads on this subject, and the general consensus was that you'd come out ahead if you took the money it would cost you for the 'extended warranty' and put it into a dedicated repair fund.

That, and the general belief that the dealer was just trying to pad his bottom line . . .

Optimistic Paranoid said:

the general belief that the dealer was just trying to pad his bottom line . . .

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I did not want to repeat earlier threads, and I assume this has been thoroughly discussed, but I was hoping that there might actually be some decent warranty plans out there and that someone might recommend one. The idea that I would spend $8000 for an extended warranty on a new RV seems silly on the face of it, but perhaps there are some good plans. I just don't know.

There are plans that have much more generous parameters than the one you cited, but the dealer is probably promoting the one that makes the biggest commission for him.  If he has no alternative, get quotes from agencies such as Wholesale Warranties and RVing Solutions (to name just two)

https://wholesalewarranties.com/best-rv-warranty/

https://www.rvingsolutions.com/extended-service-plan-esp/motorhome-travel-trailer-fifth-wheel/

My personal recommendation is to not buy any for a trailer and to think long and hard about one for a motorhome. Many pros and cons, all of which have been discussed here numerous times. They all have numerous limitations on the coverage, claims process,  labor rates, parts prices, etc.  None of them are just handing out a blank check to make everything well again.

Gary RV_Wizard said:

There are plans that have much more generous parameters than the one you cited, but the dealer is probably promoting the one that makes the biggest commission for him.  If he has no alternative, get quotes from agencies such as Wholesale Warranties and RVing Solutions (to name just two)

https://wholesalewarranties.com/best-rv-warranty/

https://www.rvingsolutions.com/extended-service-plan-esp/motorhome-travel-trailer-fifth-wheel/

My personal recommendation is to not buy any for a trailer and to think long and hard about one for a motorhome. Many pros and cons, all of which have been discussed here numerous times. They all have numerous limitations on the coverage, claims process,  labor rates, parts prices, etc.  None of them are just handing out a blank check to make everything well again.

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Thank you. That is exactly the type of information I was hoping to get.

As far as selling the warranty I mentioned being a profit center for the dealer, I think that a comment on the warranty companies home page tells it all:

They claim to offer superior claim processing, exceptional customer service, and unmatched profitability options where I assume the profitability refers to the RV dealer's part of the arrangement.

Whether you buy from an RV dealer or a broker/agency, the sales commission is a substantial hunk of the price.  However, agents like wholesale warranty sell dozens daily and are low overhead operations (a phone and a computer), so they can discount whereas most dealers look for max mark-up.

RV dealers sometimes [often?] make more money on the commissions they get for financing, extended warranties and "protection" plans than they do from the RV sale.

Gary RV_Wizard said:

Whether you buy from an RV dealer or a broker/agency, the sales commission is a substantial hunk of the price.  However, agents like wholesale warranty sell dozens daily and are low overhead operations (a phone and a computer), so they can discount whereas most dealers look for max mark-up.

RV dealers sometimes [often?] make more money on the commissions they get for financing, extended warranties and "protection" plans than they do from the RV sale.

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I am not really familiar with most of the warranties, but I generally see a lot of potential issues.

First, I do not even know if some of these warranty companies are financially sound. Even if I did decide to buy one I would not feel comfortable not knowing if the company was financially able to live up to the obligations or that repair shops would accept them. That is not true for the Good Sam ESP plan as they are well known, but who is going to know about some of the other places in small remote towns in rural areas?

Second, when I said that I was not going to pay $8000 for a warranty the dealer told me that as a veteran I qualified for a discount from the $8000 price. The discount was $3000 with me "only" having to pay $5000 for the warranty. I suppose that was supposed to make me feel better but what it really did was show just how much profit was packed into that $8000. Had they told me that the discount was 10% I would have felt it was a true discount, but a 37.5% discount really says that they know they are charging too much.

And, added to all of that, are severe limitations on what the warranty covers, so I do not see how they can get away with selling those things at that price. I suppose it is because they offer to finance the cost, so it is mostly hidden from people.

I suppose I may end up with something, at least for a short time, but I suspect that it will be a Good Sam ESP plan as they are not terribly expensive, everyone seems to accept them and this new RV is a diesel and I do worry about the repair costs a bit.

You can get a sample policy with no obligations.  Read everything.  Twice.  Last page.... down at the bottom will give you the name of the underlying insurance company.  You can check their financial health at the three ratings companies.  (Try Weiss Ratings for unbiased ratings). 

You need an exclusionary policy.  Parts named policy is not good for you.  $5K for a exclusionary policy is almost in the ballpark, especially for a diesel engine rig.  Keep searching.  WW might be OK....GSam is iffy, I have read.  We went with USW Corp ESP in Ohio.  800-233-9878.  Our RV is 2003 and this was the last time any ESP would insure a 14 y/o RV.  Not yet used it.  Think GSam will let you buy a plan year to year.  If you want to cancel other plans....there is the Rule of 37 (or something) where they keep a goodly portion of your $$.

MikeFromMesa said:

First, I do not even know if some of these warranty companies are financially sound. Even if I did decide to buy one I would not feel comfortable not knowing if the company was financially able to live up to the obligations or that repair shops would accept them. That is not true for the Good Sam ESP plan as they are well known, but who is going to know about some of the other places in small remote towns in rural areas?

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Mike, even though I, personally, would never buy an extended warranty, I thought you raised a damn good point here.  I got curious enough that I decided to try to find an answer.  I found a page from the Federal Trade Commission that applied to automotive extended warranties (I'm guessing RV warranties would be similar).

https://www.consumer.ftc.gov/articles/0054-auto-service-contracts-and-warranties

among other things, they said:

"Find out if the auto service contract is underwritten by an insurance company. It?s required in some states. If the contract is backed by an insurance company, contact your state insurance commission <http://www.naic.org/> to ask about the solvency of the company and whether any complaints are on file.

Insurance regulations generally require companies to:

  * maintain an adequate financial reserve to pay claims.
  * base their contract fees on expected claims. Some service contract
    providers have been known to make huge profits because the cost of
    their contracts far exceeds the cost of repairs or services they
    provide.
  * seek approval from the state insurance office for premiums or
    contract fees.

Check out the dealer and the administrator with your local or state consumer protection office <http://www.usa.gov/topics/consumer.shtml> or local automobile dealers association <http://www.nada.org/> to see if any complaints are on file against the company. You also can search online for complaints."