I’m generally of the opinion that extended warranties are not worth the cost, unless your name is Doug and you deal in used Range Rovers or Astons. When I buy a TV or an appliance (or seemingly any damn thing these days) I reflexively refuse the extended warranty/protection plan, and that’s worked out pretty good for me so far. I also usually do not buy them for my cars, but a few years ago, I made an exception.
I was buying a used BMW with some existing factory warranty remaining, but not much, and this particular BMW came with an ///M badge — much like Josh’s new ride — which might as well stand for muy costosa reparación. To add fuel to the fire, I’d caught a bad AC evaporator soon after I bought it and had it fixed under warranty, a job that involved removing the entire dash and would have cost me a few grand. So, I took to the task of finding a warranty to cover my ass for the next few years.
Any research done on extended warranties results in many, many stories of denied claims and frustrated customers, but there are a few of these companies that actually seem to be trustworthy. In the end, I narrowed it down to a couple options, Fidelity and EasyCare, and ended up choosing EasyCare. (Just a note here: if you have access to USAA’s warranties because of your own, or a relative’s, military service, they seem to be some of the best in the business.) For EasyCare TotalCare — their top of the line coverage — on my car, for 3 years and up to 85k total miles with a high $500 deductible, I spent around $2500. I was really just looking for catastrophic coverage, and liked the idea of a $500 bill if something went really wrong compared to a $5000 bill. Just for reference, a replacement engine from the factory for my car is rumored to be around twenty grand before labor, and that was not a bill I wanted to ever see.
At the beginning, I was happy with my purchase, and was confident that I’d made the right choice. The warranty definitely made me sleep better at night, but as time went on, I wondered more and more if it had been a good decision. After all, I could have just put that cash into an emergency fund for repairs instead. I did end up having a couple of small claims, both related to tire damage, and both quickly covered, to EasyCare’s credit. The only other issue I had with the car over the past 3 years was a sensor that went bad, which just cost me a couple hundred dollars out of pocket.
With my warranty’s expiration coming up in a just a few days, I took my car to the dealer one last time for a thorough inspection, to make sure there was no issue that hadn’t yet presented itself to me. I got the car back with a clean bill of health, knowing then that I’d spent around $2000 on nothing more than peace of mind.
Now you can say that that’s just $50 dollars per month for protection against a much bigger bill, but that’s also two grand that I didn’t spend on track days or performance modifications instead. In hindsight, would I have spent the money? Of course not. If I buy a similarly complex car in the future, will I buy another extended warranty? I might be less likely to, but I wouldn’t be that surprised if I do anyway. Peace of mind is a valuable thing, after all.