Originally Posted by BamaToy1997
I am sorry, but you are wrong. One could claim that insurance companies are a "scam" if we were to use your logic, but time has proven that to HAVE insurance is the better option. I have paid thousands upon thousands of dollars over the years for my insurance, and have never needed it. Doesn't mean that it was a bad idea to have it. It is simple numbers. The CHANCE that you will have a major failure or malfunction is low. Therefore the extended warranty companies are playing a gamble, just like every insurance company does. They take a gamble that they will have a larger group of people that will never need to file a claim than they have that WILL file a claim. How is that a scam?
Obviously they make a profit off it. Just like your insurance company makes a profit as well. NO company does things out of the goodness of their heart. They do it to make a profit. Not a scam, just a means of making a profit like every other business. I have worked with extended warranty companies (Both as a repair facility, as well as a purchaser of the warranty on my own vehicles) for over 20 years. What is your experience based on? I will give you a perfect example.
I bought a 2005 Town and Country van for my family that had 65k miles on it. The factory warranty had expired. I paid $2500 for the extended warranty policy. We had a $100 deductible. 1 year after we bought it the passenger window regulator failed. replaced at dealership with brand new regulator and motor. Invoice cost of repair was $350. My cost? $100. So at this point I could TECHNICALLY say I was only out $2250 at this point. 6 months later the AC compressor failed. Invoice cost was $1400 due to metal in lines and other parts being replaced. My cost? $100. So now I have spent $2700 and have covered $1750 in repairs. About 2 and a half years after initial purchase the transmission fragmented. Invoice cost? $4500, my cost? $100. This was the last claim I had to make and we drove the van for an additional 6 years. So my total out of pocket expense was $2800. Total repairs on claim: $6250. Yeah, I really got scammed there huh?
Insurance isnt a scam its the law. not really a choice?
As for the warranty its like life insurance. its a statistical probability of how likely you are to have problems, nothing more. you cannot reasonably think that it ever favors the buyer right? if you took the policy duration and cost and said that 50% of buyers will need repairs cost more, and the other half will need less. Thats total crap, the company would be out of business in a day. Those warranties are hugely profitable for a reason, you are incredibly unlikely to need it during the time/mileage specified especially when you get to write exclusions that you wont have to pay for, and if you DO need it it will probably be much cheaper than the policy (especially when they arent charging themselves normal service and parts prices!) plus they get to at least collect a deductible.
Now if you do have MAJOR problems and it wasn't caused by something they can blame then you will be happy you had it. It is EXACTLY like Vegas though, you play their game by their rules with your money except you have no chance of winning. By buying the warranty you are guaranteeing you lose that money, and in reward you are gaining the shaky peace of mind that you probably won't lose more for that time period. Sure it could work out great for you if your car is falling apart, but they know the stats and will take that money to the bank far more often.