Glad I bought the extended warranty for my car

[Earl McLain]

That $200 was probably parts and labor.

And if it's roof-mounted like most antennae today--i'd pay the $175 for labor. Sunroof in my wife's 2008 Scion Xb needed repair, and the headliner removal step-by-step from All-Data was all i needed to convince me to buy a tube of caulk instead. Estimated labor billing time for the roof liner remove/install was in the 6-8 hour range (by a mechanic, not by an insurance guy!!)

For my 2017 Ford Flex, in order to add the module to add Navigation to the Ford Sync system--i'd have needed to start with removal of the front seats to disassemble the center console, and then if i recall correctly partially disassemble the dashboard to get to the connectors. Part would have been just $300 or $400, but it would have taken a full day to install. All-Data's estimated billing time to swap out that module was 7 or 8 hours as i recall. So i just use a USB cable to connect Google Maps on my phone--and will never need to purchase an update.

Parts are cheap, labor is...well...labor!!

[Keegan Shields]

My dealer's profit on my contract was about $300. But it absolutely is pure profit in that they just need to collect the money. The manufacturer is on the hook for any resulting costs from claims.

The manufacturer is collecting most of the margin. Your dealer is just a reseller of the warranty.

[Dave Lehnert]

I am guessing your warranty was aftermarket, not from the dealer? Some independent repair shops refuse to deal with extended warranty companies because of the extra time they take to deal with. Also, the extended warranty companies often pay an hourly rate that is lower than the shop normally charges, or they don't allow enough hours for the repair. Some shops will require the customer to pay and then let the customer deal with the warranty company. Other shops will require the customer to pay the difference between the warranty labor rate and the normal shop rate.

No, it was warranty from the dealer.

[Dave Lehnert]

All the dealer/factory warrantees I purchased there was no need to go to the Warranty Company.... it was the dealer right there on the spot and they always paid. You must have purchased a aftermarket one... perhaps it came in the mail and was much cheaper?

No, Dealer warranty.

[Jim Becker]

The manufacturer is collecting most of the margin. Your dealer is just a reseller of the warranty.

That's not really in conflict with what I said. And for the $2350 I paid for 10 years, 100K miles with $0 deductible, "they" (the manufacturer) would potentially lose money on the first claim if it's, say...the head unit. Even worse if the transmission went because their portion of costs someone out of warranty $12K is still a big chunk of change. Consider also that my contract covers everything...literally...other than wear items and some specifically listed cosmetics, etc. Pretty good insurance policy, IMHO, if for some reason my particular vehicle is "the one" that has issues over time.

[Jerome Stanek]

That's not really in conflict with what I said. And for the $2350 I paid for 10 years, 100K miles with $0 deductible, "they" (the manufacturer) would potentially lose money on the first claim if it's, say...the head unit. Even worse if the transmission went because their portion of costs someone out of warranty $12K is still a big chunk of change. Consider also that my contract covers everything...literally...other than wear items and some specifically listed cosmetics, etc. Pretty good insurance policy, IMHO, if for some reason my particular vehicle is "the one" that has issues over time.

Is there a chance that they can deny a claim for some reason.

[Bill George]

No, Dealer warranty.

Factory warranty I bet not.... and was it a new or used vehicle. Never heard of a factory authorized warranty being approved off site. Speaking from GM, Honda and now Toyota experience.

[Jim Becker]

Is there a chance that they can deny a claim for some reason.

Negligence, etc., such as not following the published maintenance schedule, using non-spec fluids, modifications that cause a failure, etc. Expected things. Manufacturer ESCs have less issues with claim denials than "third party" contracts that are often focused on finding ways to not pay.

[Keegan Shields]

"they" (the manufacturer) would potentially lose money on the first claim

Nope, that's not how insurance works. The risk is spread out over all of the vehicles covered.


For example, if the stereo head unit in a particular car has a failure rate of .01%, costs $500, and there are 100,000 cars covered, then the expected cost per covered vehicle is $0.05.

If the manufacturer charges you $1 to cover your head unit, that's $0.95 of profit / covered car or $95K in profit for our theoretical insurance program.


The risk to the manufacturer comes when the failure rate ends up being higher than expected or their cost of replacement increases unexpectedly.

Since there isn't a general insurance market that competes to insure your specific car's head unit, there's no real pricing pressure which would reduce the rates.

So the limiting factor for a cars warranty program is how much the customer is willing to pay (perceived value). Obviously, components with a high failure rate or an unusually high cost would be excluded from the warranty.

[Doug Garson]

Keegan, I think you are "splitting hairs", don't think Jim was suggesting the company was actually losing money overall, just that the one claim might be for more than he paid for the coverage.
Another consideration is the dealer you are dealing with (no pun intended). When we bought my wife's used Mini, it still had a few years warranty left on it. When the warranty was close to expiring, they encouraged us to bring it in for service. They made a bunch of warranty covered repairs on things we didn't know were a problem but they knew from experience were. It was good for us and them as the repairs were covered by the factory warranty so they made more money. So it depends whether the dealer has loyalty to the owner or the factory.

[Jim Becker]

Nope, that's not how insurance works. The risk is spread out over all of the vehicles covered.

I know how insurance works...I was in the industry for a few years and my father was in the industry for over 30 years. My statement wasn't meant to be taken literally as Doug pointed out, but I can see how my wording might have made it seem to ignore how underwriting spreads risk. I'm sure that they have worked things out so that they come out ahead by offering the ESCs. But from an individual owner perspective...I'm happy, covered and have no worries for major costs over the next ten years if I hold the vehicle that long. If something goes bang, it will not be a big, surprise expense.

[mike stenson]

I don't understand what your saying? The extended warranty's come in different coverages and at different prices, never buy one from a after market mailing, only with the factory coverage. Its an insurance policy.

I can't make it any clearer then.

[Paul F Franklin]

So as the factory warranty on my Ranger is nearly up, I have the paperwork for the Ford Extended Service play and have been considering it. The "ultimate" level plan covers all failures except those specifically listed in the "not covered" clause. In the not covered clause is: all failures to a covered part caused by normal wear and tear and not a defect in materials or manufacturing. So tell me, if a fuel pump (say) fails after 4 years, how is that not going to be considered a normal wear and tear failure? Who gets to decide what is normal wear and tear and what is a defect in materials or manufacturing? Pretty sure it's not going to be me.

I am not talking about normal wear items like tires and brake linings, those are clearly excluded from coverage.

Maybe some plans don't have this exclusion, but I see it as a huge loophole, am I wrong?

[Keegan Shields]

So as the factory warranty on my Ranger is nearly up, I have the paperwork for the Ford Extended Service play and have been considering it. The "ultimate" level plan covers all failures except those specifically listed in the "not covered" clause. In the not covered clause is: all failures to a covered part caused by normal wear and tear and not a defect in materials or manufacturing. So tell me, if a fuel pump (say) fails after 4 years, how is that not going to be considered a normal wear and tear failure? Who gets to decide what is normal wear and tear and what is a defect in materials or manufacturing? Pretty sure it's not going to be me.

I am not talking about normal wear items like tires and brake linings, those are clearly excluded from coverage.

Maybe some plans don't have this exclusion, but I see it as a huge loophole, am I wrong?

Of course its a big loop hole.

[Bill Howatt]

I think it could be used as a loophole and while your fuel pump issue one thing, what if they say XXXXXXX miles is the normal wear and tear life for an engine or transmission.?