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Car Forum / Kia Cars / March 2004Warranty Direct or other warranties
Has anyone had any experience with "WarrantyDirect" or any other aftermarket auto warranty companies? I do some work on cars that have aftermarket extended warrantties: For the most part, most pay, but only book time, as most shops charge, but they never pay the shop's labor rate. They pay low ball labor rates, and would rather install used than overhaul an assembly. Other than that, they are regulated by the state insurance commission of your state. If they play, you call the state insurance commission, and they will put them in line. I hope this helps? If you have a more specific question, please do not hesitate to post it here. Refinish King > Has anyone had any experience with "WarrantyDirect" or any other aftermarket > auto warranty companies? What happens when they go out of business the day your transmission fails. If you are going to get an extended warranty get it from the manufacturer. Even if a 3rd party warranty company has to put up a bond with the state insurance regulator (may not be true in every state) it probably won't cover all claims. One went out of business in NC a while back and it was a mess for customers. > Has anyone had any experience with "WarrantyDirect" or any other aftermarket > auto warranty companies? >Has anyone had any experience with "WarrantyDirect" or any other aftermarket >auto warranty companies? I've had Warranty Direct for three and a half years and they paid $75 with no problems for rental car (during a factory warranty repair) and also paid the regular rate of the Ford Dealer to rebuild the differential ($860). They didn't pay for the new fluid and gasket, about $50. I paid around $1300 for the warranty and have recovered about $1000. It runs another 3.5 years or 100K miles. -- Elbridge Gerry, of Massachusetts: "What, sir, is the use of militia? It is to prevent the establishment of a standing army, the bane of liberty. . . Whenever Government means to invade the rights and liberties of the people, they always attempt to destroy the militia, in order to raise a standing army upon its ruins." -- Debate, U.S. House of Representatives, August 17, 1789 >>Has anyone had any experience with "WarrantyDirect" or any other aftermarket >>auto warranty companies? [quoted text clipped - 5 lines] >about $50. I paid around $1300 for the warranty and have recovered >about $1000. It runs another 3.5 years or 100K miles. That was a FORD? It required a new diferential? Boy that's news....LOL Scott in Florida Save your money!! Historically only about ONE PERCENT of all manufactures extended service plans, ever pay out more than the cost of the plan and its deductibles. If it were me I would put the price of the warranty in an interest bearing bank account. If you have a covered repair draw the repair cost, less what the deductible would have had to pay, to pay for the repair. The odds are you will come out way ahead. IF you believe you will beat the odds, then buy one sold by the manufacture. Few dealers or repair shops will honour after market warrantees because of their many restrictions. You have to pay the bill, then seek reimbursement from the warranty seller. mike hunt > >Has anyone had any experience with "WarrantyDirect" or any other aftermarket > >auto warranty companies? Extremely good advice: Except for the payment! Most paid before we had the car finished. Some were PIS'a, but the State Insurance Commission of Pennsylvania oversees the Extended Warranty Companies, and licenses the sellers, mostly the used car dealers not affiliated with a car company for the aftermarket brands. Call the State Insurance Commission, send the complaint with a copy to the warranty company. See how fast they resolve it. Refinish King > Save your money!! Historically only about ONE PERCENT of all > manufactures extended service plans, ever pay out more than [quoted text clipped - 12 lines] > > >Has anyone had any experience with "WarrantyDirect" or any other aftermarket > > >auto warranty companies? I believe you missed the point of my post. 'Historically only about ONE PERCENT of all manufactures extended service plans, ever pay out more than the cost of the plan and its deductibles.' I was referring to the fact that even the best of warranties from manufactures paying just claims are not a good investment. On average 99% never pay out what they COST, let alone more than they cost. Believing one will save money buying an extended warranty is a fallacy. mike hunt > Extremely good advice: > [quoted text clipped - 24 lines] > > > > mike hunt I don't know where you get your figure of 1%. Seems pretty low to me. What is the source of that data? However, the point is correct that one should not buy an extended warranty assuming that it will save them money. That's not how it works. To understand extended warranties, you have to understand insurance in general. Insurance is a pooled resource where many people contribute to protect any one of them from a overwhelming loss. Almost everyone pays more than they get back. That's the only way it works. I pay more than a thousand a year to protect myself from a potential $500K loss if my house burns down. For every house that does burn down, there better be 500 people who don't have claims in order for the insurer to pay for the loss. Extended warranties are insurance. You are not prepaying repair costs. You are paying to protect yourself from potential losses if you are the unlucky one whose car suffers a major breakdown or requires a series of smaller, but expensive repairs. The cost of the insurance is based on the odds of the occurance and the cost to the insurer when it does happen. In the house example, the loss is huge but across all households, the chance of it happening to any one person is extremely small. Cars are seriously damaged or totalled much more frequently than houses burn down. Therefore, the cost to insure against that loss is a much greater percentage. I might have to pay $1K to protect against a very rare $500K house loss, but have to pay more than a $1K to protect against a more likely loss of a $20K car. Similarily, a major repair might run $3K (small when compared to $500K), but much more likely than a house loss. So it may cost me $300 a year to insure against that. It's all about risk and reward. The decision equation should be something like this. What would be the impact of a $3K repair bill? It's not likely to happen, but would it be devastating or just a monumental pain. Then you look at the particular car to gauge on average how likely that loss is to occur. Taken together you have some indicator of risk. Then you weigh that risk against the cost to insure against that risk in the form of an extended warranty. The question is not whether you'll get $1000 in repairs back on a $1000 extended warranty. You are very, very likely not to. The right question is how much is it worth to YOU to insure against the major loss. Most people I know would be ruined if their house investment went up in smoke. Many might be willing to risk a $3K repair loss. There are ways to gain more value from an extended warranty, but you should never buy one assuming you will get more than you spend. Live example. I have a 2000 Passat Wagon. I love the car, but I know that VW cars can be expensive to maintain. I bought an extended warranty for about $1,200 that adds to my powertrain warranty. I figured it would cover something in the seven years and therefore the net would be something less than the $1,200. The piece of mind was worth it to me. Turns out that the car had front end suspension problems and few other annoying things which together cost about $1,200 to repair and were covered. So I'm in the lucky position of having gotten my extended warranty for free. But I did not count on that when I bought it. >I believe you missed the point of my post. 'Historically only >about ONE PERCENT of all manufactures extended service plans, [quoted text clipped - 6 lines] > >mike hunt At one point in my life I was Group Sales Manager for ten years for one of the largest megadealerships corporations on the east cost. Those figures were available to me in that capacity. ESP are huge money makers for the issuers and the sellers. mike hunt > I don't know where you get your figure of 1%. Seems pretty low to me. > What is the source of that data? >At one point in my life I was Group Sales Manager for ten years >for one of the largest megadealerships corporations on the east >cost. Those figures were available to me in that capacity. ESP >are huge money makers for the issuers and the sellers. > >mike hunt If you pay the usual grossly inflated prices most dealers gouge you for, right after they weasel through what the documents fee is for. You can buy HondaCare warranties for $40 over cost if you shop. >> I don't know where you get your figure of 1%. Seems pretty low to me. >> What is the source of that data? > I don't know where you get your figure of 1%. Seems pretty low to me. > What is the source of that data? [quoted text clipped - 11 lines] > better be 500 people who don't have claims in order for the insurer to > pay for the loss. Except for one thing: They actually pay out a VERY high percentage of warrantys, but since the full amount is paid up front, they have the 3-4 years of the normal warranty for free - and that's when they make all of their profit on the money you paid them. If they pay out $1000 at 6 years, they are still roughly $800 ahead. You'd need $2000 in repairs for them to loose money. Most cars that I know of require at least 2-3 repairs a year, mostly minor. So they fully expect to pay $1000 back to you and keep the profit - because not everyone needs more than $1000 in warranty work. >I believe you missed the point of my post. 'Historically only >about ONE PERCENT of all manufactures extended service plans, [quoted text clipped - 6 lines] > >mike hunt Most people never recover what they paid for medical or home owners insurance either. If everyone got back more than they put in, no one would sell insurance. The point of insurance isn't to make money, it's to avoid being the one who gets stuck with costs 50 times what the insurance costs. >> Extremely good advice: >> [quoted text clipped - 24 lines] >> > >> > mike hunt > Save your money!! Historically only about ONE PERCENT of all > manufactures extended service plans, ever pay out more than [quoted text clipped - 9 lines] > > mike hunt Excellent post, mike...for once. >>> Has anyone had any experience with "WarrantyDirect" or any other >>> aftermarket auto warranty companies? You mean that for once you agree? ;) mike hunt > > Save your money!! Historically only about ONE PERCENT of all > > manufactures extended service plans, ever pay out more than [quoted text clipped - 14 lines] > >>> Has anyone had any experience with "WarrantyDirect" or any other > >>> aftermarket auto warranty companies? >> Save your money!! Historically only about ONE PERCENT of all >> manufactures extended service plans, ever pay out more than [quoted text clipped - 11 lines] > >Excellent post, mike...for once. Excellent if you don't understand the concept of insurance. >>>> Has anyone had any experience with "WarrantyDirect" or any other >>>> aftermarket auto warranty companies? Of course it's insurance. The point is the odds are 99 to 1 against you ever recovering any more that your original cost. It's your money in any event, spend it were you wish but why not turn the odds around in your favor by 'self insuring,' as suggested? The sellers make big bucks betting you, with your money, that you will believe you can come out ahead when they know up front the odds that you will come out ahead are minuscule. mike hunt > >> Save your money!! Historically only about ONE PERCENT of all > >> manufactures extended service plans, ever pay out more than [quoted text clipped - 16 lines] > >>>> Has anyone had any experience with "WarrantyDirect" or any other > >>>> aftermarket auto warranty companies? >Save your money!! Historically only about ONE PERCENT of all >manufactures extended service plans, ever pay out more than [quoted text clipped - 9 lines] > >mike hunt Honda Care extended warranties are relativley cheap if you shop around. I just got one for a 2004 Accord EX V6 for about $800 (100,000 mile, 7 years, $0 deductible). They are exclusionary (anything not specifically excluded is covered) and include a road service plan. They also provide $35 a day for a rental if a warranty repair can't be done while you wait. It won't take much to pass $800 in seven years. >> >Has anyone had any experience with "WarrantyDirect" or any other aftermarket >> >auto warranty companies? >Save your money!! Historically only about ONE PERCENT of all >manufactures extended service plans, ever pay out more than >the cost of the plan and its deductibles. That's interesting but only marginally useful in determining whether to buy an extended warranty or not. The key is the "more then the cost...". That eliminates from consideration those cases where the policy cost $1000 and "only" paid out $995. A much more useful statistic would be the ratio of cost paid versus benefits received. I'm bought 3 extended warranties on cars in the past 25 years. None have paid out MORE then I paid for them. ALL of them paid out at least 85% of their cost. For the last 15% I "lost", I don't consider it a loss since it bought me piece of mind and a complete lack of worry about whether something would break as well as what it would cost. So for that $150, which comes out to about $30 a year, I didn't have to worry about any unexpected expense or downtime or what it would cost, etc, etc. Generally speaking I agree that most extended warranties, such as on TVs and such, are a waste of money, but my experience with auto extended warranties is that they aren't too bad a deal. I do agree that you should not expect to come out ahead in the long run, I just don't think it's as bleak an experience as some suggest. If it were me I would >put the price of the warranty in an interest bearing bank >account. If you have a covered repair draw the repair cost, less [quoted text clipped - 9 lines] >> >Has anyone had any experience with "WarrantyDirect" or any other aftermarket >> >auto warranty companies? -- Elbridge Gerry, of Massachusetts: "What, sir, is the use of militia? It is to prevent the establishment of a standing army, the bane of liberty. . . Whenever Government means to invade the rights and liberties of the people, they always attempt to destroy the militia, in order to raise a standing army upon its ruins." -- Debate, U.S. House of Representatives, August 17, 1789 >>Save your money!! Historically only about ONE PERCENT of all >>manufactures extended service plans, ever pay out more than [quoted text clipped - 8 lines] > have paid out MORE then I paid for them. ALL of them paid out at > least 85% of their cost. Actually the payout was about 50% This is what the other poster keeps missing - this is not like a typical insurance policy, which is why they can make a profit with a $800 payout on a $1000 policy. The reason: The warranty is meaningless until 4 years or so have passed and the original warranty expires. All that time it is free money for them with no risk at all - pure profit. Using a typical interest scheme, they say that your money doubles in 7 years. So 4 years is close to 50%, or $1500 - before they even get into paying out a dime. Even while paying out on the iriginal policy, they get another $100 or so in interest. So even if they pay out more, the normal deviation is about $1150 at worst on the policy. You pay $1000 and they pay $1500. You save $150 and get some peace of mind and they keep the $400 extra interest they made. Everyone wins. That's in a worst case scenario for them barring a castrophic failure. But that's good too for you as a consumer - because one transmission is $1600 a pop at least, just in parts, if it is an automatic. So you are right, AZ - you stand a 50/50 chance of getting either $850 out of it or $1150 out of a $1000 policy - which isn't really saving you money - but it ALSO protects versus things like GMs infamous gasket rebuilds or Chrysler's crummy transmissions if you are unlucky enough to have it happen to you. I know of a lot of people who have a big bill like that pop up at around 6-8 years. It's interesting that this topic is going on. My local news channel recently did a report on one such company. Here is the link to their website with the article. <http://www.woodtv.com/Global/story.asp?S=1700275&nav=0RciLPnY> Scott Grandville, MI > It's interesting that this topic is going on. > > My local news channel recently did a report on one such company. > Here is the link to their website with the article. > <http://www.woodtv.com/Global/story.asp?S=1700275&nav=0RciLPnY> True. That's why factory warranties only. > AZGuy wrote and Cruzrtwdgt snipped from: > [quoted text clipped - 29 lines] > crummy transmissions if you are unlucky enough to have it > happen to you. and then top this off with the fact that most people sell or trade the vehicle before the extended warranty is done. If you buy the vehicle and don't know about the warranty, and you use another source for work besides the dealer, they never have to pay. >> AZGuy wrote and Cruzrtwdgt snipped from: >> [quoted text clipped - 34 lines] >don't know about the warranty, and you use another source for work besides >the dealer, they never have to pay. But if you are not so foolish as to forget you have an extended warranty when you sell it, it can be a great selling point for your used vehicle. If you have the extended warranty and it's transferable you should be able to get at least several hundred dollars more for your car when you sell it since the buyer has assurance he won't have to put out $2000 for a new transmission a month after he buys it. -- Elbridge Gerry, of Massachusetts: "What, sir, is the use of militia? It is to prevent the establishment of a standing army, the bane of liberty. . . Whenever Government means to invade the rights and liberties of the people, they always attempt to destroy the militia, in order to raise a standing army upon its ruins." -- Debate, U.S. House of Representatives, August 17, 1789 >Has anyone had any experience with "WarrantyDirect" or any other aftermarket >auto warranty companies? Bought Mazda pickup (new) which came with "aftermarket", i.e. non-Mazda warranty. Warranty company went out of business before end of warranty. Beware - these are scams to avoid warranty claims.
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