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Smart Shopper Extended Warranties
2866 messages, Last post on Nov 09, 2009 at 8:08 AM
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Edmunds article: Third-Party Extended Warranty Scams
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Replying to: dampier (Dec 09, 2007 7:52 pm) So what should I buy? The fact is, most extended warranties turn out to be profitable mostly to the people who sell them. That's because companies either have to limit what is covered, make the price high enough to guarantee solvency, or risk bankruptcy. Most folks who buy extended warranties do so after a car repair sets them back $1,000 or more. If only they had the extended warranty - that would have been covered and you wouldn't have needed to scramble to find a credit card with enough credit left on it to cover the repair. Many car manufacturers with a less than stellar reputation for quality obviously stand to make some serious side money marketing extended warranties to cover repairs that probably would never be necessary on higher quality automobiles. Many car makers routinely offer extended service contracts themselves, often limited in what they do cover and at prices higher than you might expect from a Honda or Toyota. Instead of risking big money on a service contract you may never use (or need to use just once, negating any 100% refund clause), or never get to use, here's a better plan. Your own extended service contract! Gather pricing for today's extended service contracts from car dealers, online sources, and even from banks and credit unions (which often also sell the same flawed contracts that dealers do). Then take the amount charged for a three, four, or five year contract and open a new savings account (do not co-mingle this money in your existing checking or savings account - it's too tempting to use it for other purposes). Either deposit the full amount of the contract or arrange to auto-debit your checking account for each monthly "installment" to be deposited into this online savings account, preferably earning around 4% interest (they are out there). If you opt for the "installment plan" it has to be a process you set up to happen automatically - it's too easy to "forget" paying it otherwise. Now you'll have a set aside account specifically for auto repair costs, typically containing around $1000+, also earning interest. Next time your out of warranty car requires repairs, you get to be your own claims adjuster and decide whether or not this repair would be covered under an extended warranty contract. If you tell yourself yes, you write a check from that account to cover the repair cost. Do not use this account for the things you'd normally pay out of pocket for to handle car maintenance (tires, oil changes, etc.) The chances are good that you'll discover at the end of the "contract," you'll still have money in that account that would have otherwise gone to pay for a villa someone at PrimeGuard probably owned on Maui. You also get to keep the interest as your free gift! Yeah, there's a small chance that some major repair bill may empty that account too, but ask yourself if you were a customer of 1Source, Warranty Gold, or API just how much they are willing to pay for that repair! |
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-But you're absolutely right.  I've always suspected that bit about claims being less likely to be paid the closer a customer got to having his benefit outweigh his purchase price. |
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Replying to: dampier (Dec 09, 2007 6:07 pm) |
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Ultimate Warranty Corp, based in Ohio, has collapsed. They will likely drag their 'insurer' down with them. Surprise, surprise. They are still scrambling to figure their $$, so don't expect to get claims paid anytime soon. Most contracts I've seen have a big VSC in the upper left corner, with Ultimate Warranty Corp. in the fine print. The are 'insured' by Capital Assurance Risk Retention Group, based in South Carolina. see article in the Minneapolis Star Tribune: link title
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Replying to: mitzij (Dec 18, 2007 11:53 am) You would think that any "informed consumer" would not have purchased such a policy from such a company, but we know they sell them all the time  Dennis |
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| There website it still up and running. Acting as though they are a happy little company. I can't file a claim, however. That page is mysteriously 'unavailable at this time'. | |
I like the idea of "self insuring" with a separate account but I am also looking at Warranty Direct and AAAuto. Does anyone have experience with them, esp. WD?
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Replying to: mergen (Dec 21, 2007 1:01 pm) |
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I was offered this by a wholesaler I am think of buying a C230 from. Seems pretty comprehensive, and way cheaper than the dealer one. I am of the mind to stick with the manufacturer though, but MB is a rip off.
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Replying to: scottinky (Dec 26, 2007 4:21 pm) 
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