After market Extended Car Warranty worth it?

Originally Posted by FrancisV

I analyze warranties, warranty companies and repair costs for a living. There are four levels of extended coverage you can purchase:

1) Exclusionary (a.k.a. bumper to bumper, luxury, new car, full coverage)
Covers about 95% to 98% of your out-of-pocket repair expenses and is the highest level of coverage possible. To qualify for this level of coverage your car needs to be up to 6 years old and under 60,000 miles. Exclusionary policies will never list any parts covered in the contract and only list the parts not covered or excluded (hence the term exclusionary). If you qualify, this is the policy to purchase.

2) Stated Component (a.k.a . comprehensive, major component)
Covers about 60% to 65% of your out-of-pocket repair expenses. Qualification averages less than 8 or 9 years old and under 100,000 miles. A stated component policy will have some level of coverage for every major mechanical and electrical system from engine, transmission, drive axle, steering , suspension, brakes, fuel system, air conditioning/heating to most major electrical components. Typically a good value for slightly older mid-mileage vehicles. This would also be a good choice if you recently purchased a used car and don't know the history.

3) Powertrain Plus (a.k.a. basic component, enhanced powertrain)
Covers about 20% to 25% of your out-of-pocket expenses. Qualification averages up to 10 years old and under 150,000 miles. Coverage typically includes engine, transmission, drive axle, fuel and water pumps, air conditioner and a handful of electronics like starter, alternator and window motors. This level of coverage is where your return on investment starts to become questionable. If you still owe money on your car or don’t know the maintenance and repair history it would offer some value.

4) Powertrain (a.k.a. drivetrain)
Typically available for vehicles up to 12 years old and under 150,000 miles. This is only going to cover the engine, transmission and drive axle and is a last resort level of coverage. You should only purchase this if you absolutely must keep your car operational for financial reasons (you still owe a lot on the car and you need coverage for a catastrophic expensive failure that would leave the car unusable and leave you still making payments). You will more than likely never get a return on your investment with this policy. This is simply catastrophic insurance.

One note is even though a policy says it covers the engine and transmission, this is only the internally lubricated parts in the engine block and head or in the transmission case. Typically the main reasons an engine or transmission stops running is because of sensors, computers or electronics and these are not covered by a powertrain plus or powertrain policy.

Also no policy is going to cover normal maintenance and consumable items such as brake pads, hoses, filters, belts, shocks/struts, exhaust systems and clutch disks for manual transmissions.

There are a handful of other important items to look at in any coverage policy. The first and most important is direct insured. Direct insured means there is a third party independent insurance company who is not affiliated with the warranty company backing the policy. The third party insurance company must be AM Best A rated. Be leery of a company backed by a risk retention group (RRG).

The second most important is wear and tear. There are two types of policies you can purchase, mechanical breakdown or wear and tear. With a mechanical breakdown policy a part must physically break in order to be covered. Plus if it fails from wear it is not covered. A wear and tear policy is a much higher level of coverage and says if a part simply doesn't operate the way BMW intended, it is considered broken and covered. A wear and tear policy will also cover parts that fail from wear. Wear and tear is the highest level of coverage possible. To be true wear and tear coverage, it must state a failure includes wear and tear in the policy. This is a must for an exclusionary policy, a good value on a stated component plan but not always available, and almost never available on a powertrain plus or powertrain plan.

The third item is the limit of liability. Every policy is going to have a limit if liability that states how much the policy will pay out over the term of coverage. The better policies have a limit of the value of your vehicle when you purchase the policy. With some policies it will be the value of your car at the time of repair. The worst limit is an inclusive value at time of repair. This means they add up all of the repair costs since the policy started plus the repair you are currently in for and if this amount is greater than the value of your vehicle on that day, the repair is not paid for and the policy expires. Powertrain plus and powertrain policies usually have a stated dollar amount as the limit, i.e. $10,000.

There are also a few other things to look at: does it pay dealership labor rates, is overheating covered, are diagnostics paid for and is the repair shop paid directly.

There is a lot more to a policy than simply what it covers. What really separates a good policy from a bad is how repairs are covered. Most issues with warranties are the majority of people don't realize exactly what they purchased.

There are about eight companies in the country that have been in business for over 25 years, have impeccable insurance backing and excellent reputations for handling claims. There are about 60 companies with fairly reasonable coverage and insurance. And there are over 600 other companies you can purchase from with questionable coverage and limited or no insurance backing. The reason most shops don't care for extended warranties is because most of the time they have to deal with the rather questionable companies.

Also, just because you buy it from a dealer doesn't mean it's a good company or a good policy. It just means the dealer likes it because it's the most profitable for them. The same applies to coverage offered by credit unions, car insurance companies and roadside assistance companies.

The first rule in finding a good company is if you're being pressured to purchase immediately, walk away. This is not a company you want to deal with. Another sign is does the price keep coming down? No respectable company is going to pull this. The biggest giveaway is are they offering a discount? Not one major warranty company offers discounts. No mother's day discounts, no first time buyer discounts, no free gas cards, no money back at the end of the warranty. Run away from these companies. The bottom of the barrel are companies who advertise on radio or TV, or send something in the mail, or call you. No major warranty company advertises on TV and not one sends anything in the mail and they absolutely will not call.

Is it worth it? Obviously if a policy pays more in repairs than what you paid for it then it's worth it. Since you don't know what your repairs are going to be, you really need to look at this as any other type of insurance. I've never filed a claim on my homeowner's policy and after 30 years was it worth it. Absolutely, because it protected my investment in my house. If you bought a 5 year policy for $3,000 and in the end it only paid for $2,500 in repairs did you win? Absolutely. You would have had to pay the $2,500 without the policy. This means you protected your investment in your car for 5 years for only $500. That's a good value and a good investment. Buying from the wrong company or not buying the highest level of coverage you qualify for would be a poor investment.

Is putting $3,000 in the bank and self-insuring a good investment? That's not an investment, it's a gamble. If your head warps in two weeks there goes your $3,000 and you still have years of repairs to worry about. There is no such thing as self-insuring, either you get coverage or you don't. The basic concept of insurance is someone else has to gamble and not you.

Some people like insurance, some don't. But don't buy a warranty for peace of mind. Peace of mind has no real value. The only reason to buy a warranty is to protect your investment.

If you do purchase a policy, the most important point is you must maintain your car according to the manufacturer's guidelines and document that you have. This is not just for extended warranties. Most people don't realize it is also a requirement to maintain the original factory warranty. If you don't do the maintenance and document it, your factory warranty would also be voided. Also, with just about any warranty you can do the maintenance yourself if you'd like. Just keep your receipts and document the mileage.

One note for BMWs, a lot of policies require an oil service every 4 to 6 months or 3,000 to 5,000 miles. Ask for a rider to allow you to go by BMW's oil service recommendation.

If you want to learn more about extended warranties a very good resource is consumerautomotiveresearch.com.

Wow great!!
Thank you , now which warranty to choose from?

love your logic.....exactly how i think.....
on the last E60 I had, the option to warranty was $3500
Over the 3 years, I spent about $1000 on repairs, I pocketed the rest by "self insuring"
and hey, if you get stuck with a $3500 bill, you break even and sell the car!

Originally Posted by MrTantrum

I completely understand and do not question your logic. My typical policy is to self-insure / self-warranty. When I ask the question, "why do companies sell warranties" my answer always is "to make money". This being said, they set the fees for warranties to a level with an expected profit margin overall. What this typical margin is, I have no idea, but am confident that their intent is to make a profit. Kind of like a casino, where some win and some lose, but the house always clears a profit. I've always gambled on being one of the "winners" and to this point in my life I am far ahead of the game by not purchasing warranties. This is not to say that at some point an event may occur that completely turns me upside down. Until then, however, I personally find it difficult to dole out my hard earned cash for something that may or may not pay for itself.

Again, not criticising you in any manner, just giving my philosophy.

I went with warranty.........mostly because my Dad retired from the dealership, and I trust the people who own it. It is my 4th BMW from the same dealer.

Originally Posted by racingluxury

I just got my car back again. Changed bushings. DTM pump, vaccum pump... over $2000...worth it at 67k? of course it is!!! Btw, I have Continuous Care Extended Warranty. Cost about $3500. I'm about to take it in again for the water pump change this week.

Damn! If I had as many problems with my car as you, I'd sell it ... warranty or no warranty!

My warrranty was the same cost........also a bumper-to-bumper, except for the routine stuff.

When i purchased my 08 535i i also had to think about the extended warranty(mine still had a good bit on it)....i decided to go with the 72month or 100k...and let me say WORTH IT...ive had my brake pads and sensors replaced, exhaust vanos solenoid x2 replace with some other things..and already payed for its self and besides they give it such a nice detail when you bring it in haha! But really id say with a BMW or any newer German car its worth it. Parts are getting more and more expensive and with all the electronics and sensors much less user friendly to fix.

Originally Posted by E60ninja

When i purchased my 08 535i i also had to think about the extended warranty(mine still had a good bit on it)....i decided to go with the 72month or 100k...and let me say WORTH IT...ive had my brake pads and sensors replaced, exhaust vanos solenoid x2 replace with some other things..and already payed for its self and besides they give it such a nice detail when you bring it in haha! But really id say with a BMW or any newer German car its worth it. Parts are getting more and more expensive and with all the electronics and sensors much less user friendly to fix.

I'm guessing you got a direct bmw extended warranty? or was it 3rd party?

Originally Posted by burnie35

Damn! If I had as many problems with my car as you, I'd sell it ... warranty or no warranty!

That is exactly what i was thinking LOL... holy crap that car is a lemon

I got warranty from the same company that provides warranties to BMW for their CPO's.............at least that's what I was told.

not me......sorry

Originally Posted by stevendc

not me......sorry

Steven, Could you tell us the warranty company and type of policy you purchased?

Thanks.

http://www.assurantsolutions.com/aboutUs.html

Originally Posted by LycanNyc

I'm guessing you got a direct bmw extended warranty? or was it 3rd party?

Yessir I did, and so far worth it besides I can drive as hard as I want with it...if only tires were included haha

Thanks Francis V, great info!

I'm disabled and can't self insure.........so I bought a warranty for peace of mind.......

I got the extended route 66 on my 2002 x5 3.0 2 years ago. $1295. the basic warranty was all I could get with the "exotic BMW" I had no problems getting work paid for, drive shaft, transfer case rebuild, etc. but I found out on the basic there was a dollar limit of $3500- which got pretty well used up. I felt they were fair and easy to have dealer or indy shops to get paid. The indy shop did a replacement to the output shaft that the stealership had already done! I had to bring parts to bmw because they wouldnt pay twice for a 8 month old repair!.
In this type of car, i feel the extended warranty was a tremendous value, just wish I could of got the easy street, higher coverage. its time to dump my nice driving money pit! main computer is low on memory!

Originally Posted by wooded7

I got the extended route 66 on my 2002 x5 3.0 2 years ago. $1295. the basic warranty was all I could get with the "exotic BMW" I had no problems getting work paid for, drive shaft, transfer case rebuild, etc. but I found out on the basic there was a dollar limit of $3500- which got pretty well used up. I felt they were fair and easy to have dealer or indy shops to get paid. The indy shop did a replacement to the output shaft that the stealership had already done! I had to bring parts to bmw because they wouldnt pay twice for a 8 month old repair!.
In this type of car, i feel the extended warranty was a tremendous value, just wish I could of got the easy street, higher coverage. its time to dump my nice driving money pit! main computer is low on memory!

No more wagons, so I got the Route 66 Easy Street Feb 2012 for ~$2400 which will take me through 2016! Have not had to use it so far...but based on all the issues under warranty, I would not have kept the car without it. Crossing my fingers, toes, eyes, etc.

it's also depend how and who was using this car before you got it. I got with extended BMW warranty (not CPO), so from day one I started repair everything I didn't like it, so I replaced in the end I guess for $ 10,000 to $15,000 worth parts and labor, just ex : both front and rear active controls, tight support, head rest airbag, rear axle boots, some front suspension parts, some small oil leaks (it's a bunch sensors on rear side of the engine, so all leaked a little), emission control, software updates, belt tensioner.

It buys you peace of mind, and is good deal if you need it......

I've a 2008 528i CPO with an extended maintenance agreement. My car has low (<30K) mileage and is in excellent condition.

Factory warranty expires in Sep 2012. CPO covers me till Sep 2014. Extended maintenance covers me till Sep 2014 as well.

CPO warranty has many exclusions and is not as good as factory warranty. Should I look for an extended warranty?

Or may be the CPO warranty is good enough, should I look for a warranty after CPO coverage expires now or should I wait?


I'm a first time BMW owner and have zero experience with extended warranties. I do not want to get hit with an unexpected bill...Any suggestions from the forum are much appreciated.

Even with CPO or an After Market warranty........you still have to pay for the PM's and many of those are costly. I would stay with the CPO till 2014 and by then you may be ready to trade the car.

Someone on this Board owes you a good steak and Silver Oak for that time investment.

Agree......

Originally Posted by asterix4

I've a 2008 528i CPO with an extended maintenance agreement. My car has low (<30K) mileage and is in excellent condition.

Factory warranty expires in Sep 2012. CPO covers me till Sep 2014. Extended maintenance covers me till Sep 2014 as well.

CPO warranty has many exclusions and is not as good as factory warranty. Should I look for an extended warranty?

Or may be the CPO warranty is good enough, should I look for a warranty after CPO coverage expires now or should I wait?


I'm a first time BMW owner and have zero experience with extended warranties. I do not want to get hit with an unexpected bill...Any suggestions from the forum are much appreciated.

I've been offered the following coverage from a local dealer. Any suggestions from the forum?

Easy Care's Total Coverage plan:

6yr or 100K miles: 1336
7 y or 100K miles: 2329
8 y or 100K miles: 3097

For the 5th and 6th year, the coverage would "wrap-around" the BMW CPO. For the 7th and the 8th year, it would be total coverage including inside electronics... Easy care is a reputed Extended Warranty provider.
I'm wondering what is the typical markup by the dealers on such quotes?
Any suggestions??

I don't know if the "mark-up" is in the warranty, or inherent in the work dealer gets for repairs.........