I'm sure you will get lots of conflicting advice here. Get a copy of that proposed extended warranty and study it carefully. What does it cover? What isn't covered? What do you have to do in order to keep it in force? Where do you have to go to get warranty work done? How much will it cost? The answers to these five questions will help you make your decision.

An extended warranty is basically an insurance policy. You are betting that something major (expensive) will happen and they are betting it won't. Most extended warranties take over after the manufacturer's warranty has expired and run one or more years. Remember that the extended warranty isn't offered by the manufacturer or dealer but by a third company. That company, like all others, is in business to make money. They fully expect to pay out some claims, but they can't afford to pay too many, so they place restrictions on you and will look for way to deny the claim.

Consider this situation as an example. Your new Thunderscooter 5'er (yes, I made up the name) has a one-year manufacturer's warranty. The Supercold refrigerator has a two-year manufacturer's warranty. If the refrigerator quits during the first year, Thunderscooter will help you get the refrigerator fixed at no cost to you and will bill Supercold. After the first year, Thunderscooter doesn't have to lift a finger to help you with your no-so-cold refrigerator, so you turn to the extended warranty people. They may simply refer you to Supercold, or they may tell you to take it to a Supercold dealer for repairs. They may also want you to take it back to the dealer from whom you bought the Thunderscooter. Notice that they aren't actually paying for repairs but are just helping you get the warranty work from Supercold that you are entitled to anyway. If the extended warranty is for, say, two years after the expiration of the manufacturer's warranty, then they will cover the cost of repairs during that third year of ownership. The first year is under Thunderscooter, the second is under Supercold, and the third is under the extended warranty.

Sometimes those extended warranties require the warranty work to be done by the original selling dealer. That's fine if something happens close to home, but an RV is intended to travel. What happens if you are 3000 miles from home? You might be willing to drive 3000 miles back without a refrigerator, but what if it is an axle that is broken? That's why I said to read the proposed policy carefully.

The cost of the extended warranty is either paid all at once (by you at the time of purchase) or is rolled into the loan (and you pay interest on the cost). Since most extended warranties don't cover anything for the first year, many people choose to put that money into a savings account and just plan on covering the expenses themselves if/when they occur.

Clear as mud?

For a different perspective, we took 10% of the purchase price of our rig and put in an account and we add to it each month. We put enough in not only for repairs, but also for annual maintenance and for replaceable like tires and batteries. We do not have to wait until something breaks, - if it looks like it could be a problem, we get it fixed/replaced when we find it. We can also replace a complete assembly, not just the part that broke, and if we have one or two that has broken/is ready to break, we often replace both as if one goes, the other is usually not far behind. None of these things would be covered by an extended warranty. You could also fund the account with what you would pay for the extended warranty and just keep adding each month.

If you go the extended warranty route, make sure you know what they will cover in terms of hoses/belts/filters, and will they cover repairs to all broken parts, when the original part breaks and affects other parts. And make sure you understand how you notify, get approval, etc. Remember, the fewer claims they pay, the more profit they make.

Barb

Some will recommend it and some will not. The forum hosts, Howard and Linda have it. I defer to their use of such insurance since it is their decision and fits they comfort zone... in short it works for them.

To me, it's more a matter of a couple of factors, your overall financial situation and your personal comfort zone when it comes to matters regarding insurance and the sometimes problematic dealing with certain claim issues. To each his or her own. For me, I would rather self insure (when our time comes) and continue to fund that particular "savings account" as a planned expense. If something comes up, I have the money already set aside to pay for it. And since it's a budget item, the expense from that "account" will be replenished in due course. The problem as I see it comes when folks do not have such a fund set aside for whatever reason that may be, legitimate or foolhardy as the case may be. (not saying you or anyone is either... just generalizing) If your financial picture is sound, then self funding such insurance is probably the better way to go but there are exceptions like preference to let others handle the settlement of such things for instance. If your financial picture is such that you could be in jeopardy of struggling if a major repair came along and your ability to self fund was inadequate, then I'd recommend getting the extended warranty coverage having the peace of mind that it brings to such situations. Again there are potential exceptions.  

So how much do you need to adequately self fund such a plan. It has been suggested approximately 10% of the purchase price of your RV. Seems reasonable, though that could be a lot for a brand new rig. If you can handle that, you should be good to go. Just remember to budget for and continue to add funds to that RV self insurance "nest egg" regularly to ensure that account stays well funded. The bright side is, if you don't need those funds because you were lucky enough to have a reliable unit then that "fund" is yours to keep, unlike coughing up insurance premiums which are gone forever and only become worth it if you have sufficent claims to cover the cost of the premiums.

Yep... it's a gamble and it's a sure thing that the insurance company is basing your premium on a ton of data and setting it accordingly so they don't lose money on the law of averages.

JMHO, Brian

-- Edited by biggaRView on Saturday 31st of October 2015 03:56:50 PM