Are extended warranties worth the money?

Looks like we're going to buy a 2005 Freedom Elite from Camping World. They're nearly done with their PDI and have plugged the only leak in the cabover. No other apparent problems. Got a call a few minutes ago from their rep who asked if we'd be interested in a 48 month extended warranty for $4,000. $50 deductible for work done on chassis or coach by CW: $100 deductible for work done by others. Is this a good deal? If not, why not? Can we get better extended warranties elsewhere for less? Anyone have any experience with CW's warranty service? Can we buy an extended warranty after the purchase or are they usually connected to the purchase? Thanks for any advice, Don

Weather they are any good or not is a hot topic of discussion. What is the most important to consider when looking at any extended warranty, is not what it covers, it's what it doesn't cover. That is the question to ask before you agree to buy anything. And don't just take a verbal word on it.  See it in writing. 

You can almost always buy an extended warranty cheaper elsewhere, i.e. from a broker rather than an RV dealer. They are a high profit item for the dealer. You would have to get quotes from other providers to see if CW is competitive or not. I wouldn't buy unless I had comparison shopped.

As to whether any extended warranty is a "good deal", it is like any other insurance. If you have numerous problems - or one very large one - it is invaluable, but the average person pays more in premiums than he collects in payouts. That's the nature of insurance. The only way you win is if you have bad luck.

You also need to look carefully at the coverage, whether it is inclusive (covers only the listed items) or exclusive (covers everything not excepted in the policy), chassis only or chassis plus house, etc.  Whatever it is, it will cover less than what you think - it is NOT a bumper-to-bumper warranty.

We bought a CWCare warranty from CW on our coach two years ago with the assurance that if we chose to discontinue the warranty before the four years was up, we could get a refund of the part that was unused.

We used it one time, for a heater control valve, $100 deductible, and it was paid without issue.

Since we just bought a new coach, and traded the other in, we are now wrestling with CWCare to refund the warranty portion unused. Interestingly, the procedure is that you have to cancel with the original dealer, and he sends the paperwork to CWCare and the refund is then made. Since the dealer is about to take a bit of a hit to a profit margin, it's not surprising that he is in no hurry to return my calls, but that will be another post.

Shopping is a good idea, and many here recommend Coachnet, and Good Sams also offers another program with another underwriter than Camping World, even though they are now as one. The devil is in the details, so be SURE you get a copy and read the thing, especially the exclusions.

I liked the reassurance of my extended warranty and fortunately I had but the one small usage. But on a used diesel pusher, as was my case, I was not willing to bear the exposure. You get to make that call in your own case.

Agree with Skyking. When we purchased our used DP, I wanted the warranty just in case the diesel engine went South while I was headed North to home, I don't trust any dealer or salesman to know the condition of the drive train.

Now that I have confidence in the engine and drive train I will not renew the warranty.

For good or bad I have not had to use it but I had a lot of peace of mind when I drove off the lot.

Here's my take on the extended warranties.

The company that you are buying the warranty from holds the cards, they have all the information based on past performance of each particular make and model on which they offer a warranty.  They use this information to formulate the amount of premium which they are going to charge for a particular warranty and that premium is intended to provide a profit to the company at the end of the warranty period.

Basically you are placing a "bet" with the warranty company.  You are betting that something "bad" mechanical will happen to your vehicle.  The company on the other hand, having ALL the information about the manufacture and maintenance history (what tends to go wrong) of the group of vehicles which you are buying takes your bet knowing that "they" have the advantage.  Basically you are betting against the house, not unlike those who sit down at a slot machine thinking that they actually have the ability to consistantly win.

Can an extended warranty be of benefit to you?  Rarely.  If the extended warranties were in place to protect the consumer then the companies who offer them would be as broke as our government.

My father was a professional salesman for over 50 years.  My youngest daughter and her husband are both in the RV sales industry.  Both of them grin from ear to ear when someone buys an extended warranty because for the salesman it's pure profit.  And what makes even less sense to you as the consumer is that the dealership will be more than happy to add the warranty premium right onto your loan!! 

Skip the extended warranty and "self insure".  You then will be the one getting the return on the "profit", not some multi-million dollar corporation that got to be a multi-million dollar corporation by taking your money and leading you to believe that they were doing YOU a favor.

Self insuring is a good financial deal as long as you can afford to replace expensive parts, when and if that should happen. On a towable RV, there aren't many really expensive parts to insure; on a gas motorhome there are a more (the drive train), but still not too bad a risk;. On diesel coaches there are numerous VERY expensive parts to the power train, so insuring it begins to make sense.

The other reason people buy these things is that it is a way to budget some of the repair expenses. Maybe not a good way, but it introduces a discipline for those who struggle with such things. These folks are the ones who complain most often, because they fail to realize that there will still be many non-covered expenses and they feel they have been "ripped off". Caveat Emptor.

Coach-Net was mentioned earlier in this thread. They are NOT a provider for extended warranties. They do roadside Assistance only.

I've had two coaches with Extended Warranties and one without. One had few claims but I did get a small partial refund when we traded before the policy expired. The second coach had numerous claims and we actually collected about $1200 more than we paid in premiums. However, we did not renew when it expired - the price was simply too high on an 8 year old diesel coach. So we are now self-insuring.

Foto-n-T, I agree with you in principal that extended warranties are a profit source. However, if one can afford one, it's also a great measure of relief/peace of mind if and when something major goes south. We're boomers in our last year of gainful employment. Though we have a good retirement financial cushion, most of it is tied up in long term investments and annuities so funds aren't immediately available for expensive repairs. Once we give our notices in December, we'll have a "dry" period of 2 yrs before Social Security and our annuities kick in. We've got the money now to invest in a 3 yr extended warranty to cover the dry spell. $3000 for the coach/chassis warranty now seems to be an inexpensive alternative to putting out many thousands in the event of stove, refer or major subsystem failure on a 2nd hand 2005 Chateau. Yes, ideally, self insuring is a more practical way to go but would come up pretty short if the major failure happened within our 2 y. I appreciar dry period. I appreciate everyone's advice but fear of major bills and need for peace of mind have won the day. Soooo, the policy CW is offering is through Good Sam essentially runs bumper to bumper. Has anyone had good/bad experiences with this policy or the service? Also, since we're buying the RV through CW, they're "giving" us a 1 yr, "free", GS Roadside Assistance policy and are trying to sell us a $695.00 GS Tire and Wheel Protection policy. Any ideas on these two programs? Thanks for everyone's input, it's been very helpful. Don

Bumper to Bumper! don't believe it. It is either inclusionary or exclusionary find out which and read for your self exactly what is covered. Don't take anyone's word for it.

And if the good sam fairy made a truly bumper to bumper warranty let us all know!!!

I would hate to hear that you got a plan for above stated reasons and had an engine overheat and melt down without it being covered. It does happen unfortunately.

Steve

First of all, let me clearly state that I have never been nor will I be in the insurance sales business. I think the business is there because there is a market, and there's no doubt you have to weigh the benefits to you as an individual. You also need to be realistic and know that if there was not a substantial profit margin in it, it would not get the play that it does.

I don't think it is inherently obscene to make a profit on a good or service, but I do think it is obscene (or maybe even a little fraudulent)  to sell something and not provide the value or service that you sold. That's why you need to clearly understand all the fine print and not just hear the sales pitch.

I also don't think it is realistic to self insure everything, especially diesel injector pumps and the ensuing labor to install it. A propane water heater not so much.

When I bought my first DP, I was a babe in the woods, and I wanted that first year to contain zero surprises financially. The extended warranty provided that. After much more experience and using the knowledge of others here in the Forum, I might make a different decision, were I to buy another used DP.

I think the experience of others is important to consider when extended warranties are discussed (refer to Ned's issue recently) but the real worth of an extended warranty is really only known by the person who is interested in buying one and depends on how much loss he is willing to bear in a catastrophic failure. I don't believe there is a yes or no answer to the question.

And, yep, I do have a large life insurance policy. I will get to use that one, for sure.

I would suggest taking the $3k and buying two ounces of gold, $1,553 each.  At least you'd have a chance to get your money back.

$695 for tire and wheel protection??  I wouldn't bet against the house on that one.  Keep your tire pressures where they are supposed to be, make sure the lug nuts don't fall off and try not to run over scrap steel going down the interstate and you should be fine.  Better yet, take the $695 and buy a tire pressure monitor system, but not from Camping World.

You are quoting lines straight from the "How To Sell An Extended Warranty" handbook that they probably give to all new CW salespeople:

BlueGekko said:

it's also a great measure of relief/peace of mind if and when something major goes south.

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BlueGekko said:

We've got the money now to invest in a 3 yr extended warranty to cover the dry spell.

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BlueGekko said:

failure on a 2nd hand 2005 Chateau.

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BlueGekko said:

fear of major bills and need for peace of mind

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Note that I added emphasis to the word invest to indicate that an extended warranty is NOT an investment.  It's insurance with a LOT of loopholes and deductibles that will result in you still likely paying a pretty sum if something breaks.  And it's not as if every Used RV is destined for some kind of major failure... most of us own 2nd-hand models after all. 

You notice that they STILL keep trying to sell you stuff... Roadside Assistance (after the first "free" year is up), $700 Wheel and Tire Protection, etc.  Wait, shouldn't the wheels and tires be covered in that "Bumper to Bumper" coverage of the $3000 policy?  There's a major loophole (in their favor) already.

I have a 1994 Class A motorhome (11 years old than yours) bought 5 years ago and haven't had any need for major extended warranty coverage yet.  Has stuff broken?  Yes.  Has it been catastrophic and left me pennyless and unable to figure it out for myself?  No.  My 17-year-old RV fridge went out last year, but I'm going to buy a $400 residential model (a small piece of your $3000 even if you did need that) instead of a $1200 RV replacement.  There are always options to make cheaper repairs than what CW would have you believe.  Meanwhile, your $3000 is earning interest and you keep the leftover money at the end of the 3 years... instead of having a giant hole in your pocket.

I went a slightly different route which has worked for me.  I asked for a premium quote on an exclusive policy but with a higher deductible, mine is at $ 500.00.  The insurance premium was significantly lower, about $1,500.00 less for a 5 year plan.  Because my fear is only over the big stuff, not the minor issues, this seemed right for me.  Here is how i work the insurance against the insurance.  Most smaller repairs items are a nuisance. but rarely something that I have to have fixed immediately.  I keep a list of little things that go wrong. Currently, my door awning won't extend, my windshield washer is not working, the fan in my roof vent is not working.  I accumulate these "minor" items.  Then I make one trip in and say fix all of these items and I pay only one $ 500.00 deductible for the service trip.  Had I taken each repair in separately, I would have not met my deductible and all repairs would be out of pocket and more likely to make the service plan a waste.  This way, I get the peace of mind I need over the expensive items on a used DP, yet I still get some benefits out of the plan.  Believe it or not, I had a very honest CW employee explain this system to me.  He said, as long as you can be patient regarding some repair items, you can always get more benefit our of the plan than what it cost you.  This has proven true for me so far.  Just my 2 cents.

Good advice, Steve.

The only way to truly judge the ultimate value of an extended warranty is at the end of the warranty period. The older the coach, the greater the expected value, but even newer coaches have problems and system failures. And also know, that since the selling agent probably has a 35-40% profit margin in the sales price of the warranty, that is a negotiable amount. Any quoted price can be negotiated lower just like the quoted price of a coach.

I'm in Missoula, MT right now waiting to have two of my Atwood leveling jacks replaced. At over $2,500, and this is my third jack failure, as well as having to have our toilet replaced and sensors on our refrigerator and work done twice to our Twin Temp system etc...etc...etc...the cost of our extended warranty has been covered and we still have another 3 years of coverage remaining on our 4 year old coach.

My Jeep went out of warranty in May and I bought a 3 year extended warranty on that. Several weeks ago, our GPS-radio stopped working. The Jeep dealer wanted $2,600 for a new one, but for a $100 deductable, it's being replaced Saturday morning. That more than covers the entire cost of the warranty and we have 34 months remaining.

Some people put new tires and batteries into their motor homes, buy extended warranties and then trade the coach in on a new one. But if you're going to keep your coach for an extended period, especially if it's a bit older, an extended warranty can be a very good idea. Just negotiate the price!

Extended warranties are like any other form of insurance.  You send the company money.  They send you a piece of paper.  The paper is a promise to pay you money if/when you have a claim.  For each dollar you send them, on average, expect about 50 cents in return.  Not a good investment.  The remaining 50 cents pays for G & A, broker and agents commissions and fees, claims adjusting expense and last but not least, profit. 

If I could find a company that only sold insurance with a minimum deductible of $1,000, I would buy it in a heartbeat.  If anyone knows of an insurer that underwrites on that basis, please let me know. 

The problem is most consumers want their cake and they want to eat it as well.  That's works better for the insurance company.  They simply charge more money.  And of course, they make more money. 

Normally I pass on warranties.  But after my 3 month old F250 died in Death Valley a few years ago and it was necessary to flat bed tow it to Las Vegas, I reconsidered my decision.  Of course that was after I started researching the problematic Ford 6 liter diesel.  Still I question the wisdom of buying warranties.  My  Ford warranty, the best in terms of coverage, has one very significant weakness.  It has very limited towing.  In my case, it pays up to $100.00  I wonder what it cost to tow my truck from Scotty's Castle in Death Valley to Las Vegas.  That was about 175 miles.  I'm guessing it was a bit more than $100.00.  So is it worth it.  Not yet. 

So far I've paid $4,500 for six years worth of protection.  In the 4 years since I purchased the first policy, I've had two claims.  The first was under the original 100,000 mile drive train warranty.  The second, a rear differential seal was less than $100.00.  Still, theirs always the chance I could blow the engine.  Then I would be looking at maybe $10,000 worth of repairs.  If I renew the warranty in two years, I'm sure my total warranty premium will be upwards of $8,000.  Almost the price of a major repair. 

Now if I put that money in the bank along with the money I saved by not buying computer, cell phone, televisions, major appliance and home warranty policies, I'd certainly be on the plus side of the ledger.  Actually I bought a warranty on my Imac 4 years ago.  It gave me an additional two years protection.  If only it was two years and 3 months.  It cost $159.00.  The hard drive went 3 months out of warranty.  It cost me $125.00 for the new hard drive plus the software to recover my data from the failed drive.  Now I'm thinking of buying an extended service contract for my wife's MacBook Air.  That's $259.00 for two years.  Of course, the logic board went after four months.  I hear that's a big ticket item so I'm thinking maybe.  Still, when I add everything up, it gets to be a sizable amount of money.     



 

I too would shop around to get other quotes. The price of $4000 is including a nice commission so that too is negotiable. Another quote or two will help you play one against the other and get a better deal.

I got a plan like this on my last used car and like Steve said I saved up some minor repairs for one visit/deductible. I also had one $1800 repair which alone was more than the premium. Whether it would be worth it will be known in a few years.

An interesting "insurance example" (aka extended warranty coverage)...  Our insurance agent called earlier this year to tell me that I should raise the coverage on our stick house.  He suggested that it is insured for "only" 75% of the value, whatever that might be these days.  Of course he wanted 30% more premium for this increase in coverage.  DW and I talked about it for a few weeks, off and on.  We ask around to find out how many houses have been totally destroyed within 40 miles of here in the last 10 years.  Then we noticed that there have been houses in this area for the last 1000 years and they are still standing.  So, I called 'em back and ask how much we'd save if we lowered the coverage to 50%... "not much" was the answer since most of the risk is not from the house being destroyed but for liability coverage... in case someone got hurt visiting for example.  I told 'em, we are very happy to leave the coverage just the way it is.  In the remote chance that it burns to the ground or if a tornado blows it into the next township, we will either get a smaller house (ok, I guess) or try to scrape up enough money to make up some of the difference.  The liability coverage is a different story.

$1000/yr for a RV that's worth, what? Just guessing, $75,000?  That's the upper limit of what you can lose, $75,000.  If it were a stick house, you could probably insure something worth $500,000... plus get $500,000 of liability coverage or more. 

The biggest risk facing anyone who drives is liability... and the extended warranty policy doesn't cover one dime of that.  If you want to mitigate risk with insurance, double your liability coverage and decide to pay the mechanics.  My 2 cents, FWIW.

On our motorhome policy, liability is a minor part of the premium.  Comprehensive and collision represent over half of the premium.  Liability insurance is cheap.  Our $1,000,000 umbrella is only $306/year.

That's a pretty good rate for liability, add half the MH liability ($300K) premium... probably close to $800/yr.  Could probably double that to $2M for another $300.  This is $1667 of insurance per dollar of premium.  Then CW wants $1000 for repair claims, say $25,000 for a major, major simultaneous engine/transmission/fridge failure...  or $25 of insurance per dollar of premium.  Plus what's the chance of that?  1/1000?  What's the chance of a major wreck and injuries/liability... 300,000 injury wrecks/yr out of 140 Million vehicles...2/1000 with big bills, $100K is not that much in hospital costs.  Just sayin'...

I don't know... depends on each situation I guess.