Are extended warranties worth the money?

Our premium would be $462 for $2,000,000 liability, not another $300.  It's not linear.

Interesting as our $3,000,000 umbrella policy is $177/year with State Farm,  Of course, that is after the $300,000 of other liability on car, MH and house.

We did take an extended warranty as a Motorhome was new to us and I felt there were very expensive items on board. We ended up with one claim, trouble with battery going dead. We called and reported the problem and of course the mechanic found a loose and corroded starter wire which cost $200.00 plus more labor than anything. The mechanic fixed it right away and didn't notify the warranty company and we had to submit the bill to unauthorized repairs and of course they didn't pay. They normally find away not to pay so it's a gamble and no to extended warranty.

They normally find away not to pay so it's a gamble and no to extended warranty.

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While a true statement, batteries are normally excluded as wear and tear items.  And repairs not involving failed parts are not covered either.

Jim Godward said:

Interesting as our $3,000,000 umbrella policy is $177/year with State Farm,  Of course, that is after the $300,000 of other liability on car, MH and house.

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Best rate I've ever seen! Keep that policy!

I really struggle when I read the word "investment" in any message discussing insurance (including extended warranties). Insurance in not an investment - it is something you buy to protect you from potentially large expenses you could not afford to pay out of your pocket. Liability for medical or property damages is certainly one of those, but accidental loss to your own property (house, car, RV) is a good candidate too.

But insurance for RV repair costs is a much more "iffy" proposition, and the restrictions in the typical 'extended warranty' policy make it even more so. It rarely make economic sense to pay for insurance on losses that are typically measured in a few hundreds of dollars, even if the likelihood of a claim is high. But as the cost and sophistication of the RV's systems goes up, it may reach a point where the risk of an expensive repair gets substantial enough to justify buying insurance for it.  For example, diesel engines and generators are both vulnerable to high dollar repair costs. Over 5 years or so, a $1000+ repair is fairly likely and a several thousand dollar repair possible. But even at that, the insurance cost is high for the dollar amount at risk.

IMO, extended warranties are insurance, not prepaid repair policies. Insurance pays for unexpected, unplanned for occurrences.  How much have you collected on your life insurance policies so far compared to your premiums paid? As Gary said, there are some very costly failures that can happen on a diesel engined RV. I don't want to worry about how I am going to pay for a $20k failure. Hopefully, I never will have one, but if I do, all the putting the premium cost into a bank account wouldn't do it.

BernieD said:

As Gary said, there are some very costly failures that can happen on a diesel engined RV. I don't want to worry about how I am going to pay for a $20k failure. Hopefully, I never will have one, but if I do, all the putting the premium cost into a bank account wouldn't do it.

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But you see, that's EXACTLY what the insurance/warranty company is doing, banking the money and playing the odds.

A month or so ago I had to replace the radiator and the A/C compressor on the Freightliner.  The compressor was surprisingly inexpensive, only $250.  But the radiator was another matter, $2,300.  By the time I got it back from Corpus Christi Freightliner I was about $5,000 poorer including a rental car for the week.  Would a four or five thousand dollar extended warranty have covered this expense?  Maybe.  Should I now go out and buy an extended warranty for the truck?  I'm pretty sure that horse has already left the barn.  I played the odds just like the insurance/warranty company, this time I figure it's push.

My father used to say "Insurance is the biggest legalized racket in the world" and I have to say I agree with him.  On the other hand I religiously carry towing insurance at a cost of around $120 per year, why?  Because I "have" handed over the credit card for a $1,000 tow bill and I just don't want to do it again.

I guess you could call me a hypocrite, I loathe extended warranties/insurance but I insist on towing insurance and full coverage insurance on paid for vehicles.  I'd never skip the towing insurance but if they'd make deer and elk get liability insurance I'd gladly do away with the full coverage.  I guess I'll keep betting against the house and see how that works out for me.

Foto-n-T said:

I guess you could call me a hypocrite, I loathe extended warranties/insurance but I insist on towing insurance and full coverage insurance on paid for vehicles.

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Not a hypocrite per se, just smart.    Those two items you mentioned are just much better policies for the money you pay.  $120/year for a good likelihood of needing a $1000 tow = good odds.  $600/year (or whatever your auto insurance is) for at least some likelihood of needing a car repair or complete car replacement around $15,000-20,000 (again an estimate) = good odds, plus at least half of that amount for liability coverage is legally required.  So only about $300/year is elective.  Much better odds and/or rate of potential benefit than the average RV extended warranty.

I pretty much detest ALL insurance, but recognize it as a necessary evil. Someone once described insurance to me as gambling. You are putting money down betting that you may need some major coverage in the future. They are betting that you won't, and adjust their rates based on the odds.  Guess who wins.......

Gary RV Roamer said:

I really struggle when I read the word "investment" in any message discussing insurance (including extended warranties). Insurance in not an investment - it is something you buy to protect you from potentially large expenses you could not afford to pay out of your pocket.

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Gary make a great point.  "large expenses you could not afford to pay out of your pocket".   

I think the average buyer of insurance/warranty protection needs to think through the difference between what you can't afford to pay vs. what you don't like paying.  Nobody likes a non-budgeted $1,000 expense that could have been covered by insurance.  But unless it's occurring regularly, in which case no insurance company will insure it, it shouldn't break the bank. 

SargeW said:

I pretty much detest ALL insurance, but recognize it as a necessary evil. Someone once described insurance to me as gambling. You are putting money down betting that you may need some major coverage in the future. They are betting that you won't, and adjust their rates based on the odds.  Guess who wins.......

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The lawyers?

My last girlfriend and I bought a 3 year old DP in 2009 and paid $3600 for the extended warranty which we bought from the dealership. Within three months the warranty had paid for itself. A slideout got stuck. Towing and repairs were well over $1000. Then the refer went out, that was around $2000. We had a number of other smaller issues that were solved. The motor for the electric awning over the entrance door was a $500 part.

For me the biggest advantage of extended warranties is the piece of mind.

Currently I am no longer with my GF. I have a 94 Damon class A that cost me $6500. I don't have an extended warranty for this rig because if something happened that would cost me a lot of money I would just buy another RV.

zzyzx said:

My last girlfriend and I bought a 3 year old DP in 2009 and paid $3600 for the extended warranty

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That's a much better price ratio for THAT rig you had, than the OP's quoted price of $4000 for a 7-year-old entry level Class C.

I just thought I would share my story with the fine people of this organization and forum: I purchased a 4 year unlimited mileage extended warranty from ACC WARRANTY GROUP in April of 2012. In My of 2013 I took my coach to Premier Motor Coach Services in Tucson Az. ( I know a lot of folks here have used them, great company to work with, very professional) for my annual checkup for the upcoming summer trip. After the service techs went through the coach they found several items that needed to be replace and or repaired. Some under the extended warranty and some not. Premier sent to Acc Warranty the work order for approval of their part of the repairs. After numerous unanswered phone calls and faxes and three weeks of time, they finally sent approval, the repairs were done, I picked up the coach and we off for the summer. Upon returning home from the summer trip Sept. 1,2013, I went to Premier to return a level that was left in the coach.At that time I found out that Acc Warranty hade not paid the repair bill. This was the first time I ever had a claim. On Sept. 9,2013 I sent by email and snail mail a written cancellation notice to Acc Warranty Group requesting my prorated refund. After aprox. 30 days wait time I began calling to find out status of refund. I called everyday for a week. No return phone calls. Finally on Oct.18th got a call from Steve Burgess the owner of Acc Warranty, he said to me go **** yourself and if you want your money sue me. Please what ever you do, think twice about doing business with a company like this, they gladly take your money, do not pay for repairs and then upon cancellation according to their contract do not refund your money. After posting this notice on another forum I have had several people come forward ad tell me the same thing has happened to them . Thanks for listening, I hope this notice can help you to stay away from ACC WARRANTY GROUP 

I bought an extended warranty when  bought my coach 18 months ago.  I thought it was 4 years of 40,000 mils.  The coach had 34,000 miles on it when I bought it.  Turns out it is 40,000 TOTAL miles not 40,000 additional miles.  On the plus side I have recovered about twice the purchase price in warranty repairs; refrig rebuild, jack panel replacement and a basement freezer replacement.  400 miles left on the warranty and it looks like I need new jacks.  Lesson, check what you are buying.  I did not, but I still made out OK. Bottom line on an extended warranty,how much risk are you wiling to assume?  I think an extended warranty on used equipment is a good idea until you get an idea of what you really bought.  8)

I will just offer my experience. Last year we bought a 10 yo motorhome after having it inspected by both a chassis and house inspector. Items were fixed before we purchased it from a private dealer. I did not buy warranty insurance.
Shortly after, the dash air and inverter quit. Since then the stairs quit extending, the aft furnace quit and the refrigerator defrost heater quit. I fixed all the items myself except the dash air which was $2700 alone. The total cost to fix everything came to about what the cost was for the 1st year of warranty insurance.

In our case it was a wash, except I didn't have to deal with the insurance company and try and get them to pay for the work. I figured they had exclusions that would not have covered some of the things.

If you are able and willing to fix things, then you might want to take that into your decision to buy insurance.

Regarding extended warranties, remember the insurance companies would not sell these policies unless they make money on them. Therefore, on average, your cost is more than they pay out. If you can afford to self insure, do so. If not, get the insurance with a warranty. We bought warranties when we were young and had limited savings plus a pile of kids. Now we are in a different place, and we don?t buy warranties. While I wouldn?t like a $2000 bill, it would still be significantly less than if I had bought warranties for our cars and RVs. We take care of our equip,met, and DH can fix many things himself. YMMV.

timjet said:

In our case it was a wash, except I didn't have to deal with the insurance company and try and get them to pay for the work. I figured they had exclusions that would not have covered some of the things.

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Absolutely true... there is ALWAYS fine print that will apply deductibles, coverage maximums, etc. that will prevent the warranty carrier from losing too much on the deal.  As UT said, the companies are only in business because they make money.  Every so often you might get "lucky" and have it work out in your favor.  I think of it like casino gambling (which I don't do)... I'd rather hold onto my own money and spend it as needed.

I didn't get an extended warranty.  The warranty company will want you to take your RV to an "approved" service center.  That means they have a negociated discount with the service center, which will put you at the back of the line of paying customers.  I prefer to pick who works on my camper if I can' fix it myself.  And if they start jacking me around or put my RV out in the back pasture and forget about it, I'll just go pick it up and go somewhere else.  After reading all the horror stories about trying to get an RV fixed while still under factory warranty, do you think it would be easier with a 3rd party warranty company?  Not likely.