The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Frankies Girl on June 02, 2017, 04:45:08 PM
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So my renewal came up and it's about $30 higher than last time with zero changes on the books. Did some shopping around and the company I'm with is still about $100 cheaper (even with the rate hike) than everyone else. (wow)
BUT I have some silly stuff (maybe?) that I could cut. Just torn about cutting them out and need some opinions if anyone is willing.
Currently have two vehicles. Both driven very, very lightly now. One is 14 years old, state minimum coverage due to age. Other is 4 years old, full coverage still. Also have an optional extended warranty through the insurance company that is pretty amazing. I pay $75/year for this coverage for 10 years, total of $750 for the complete policy but I can cancel it any time. Once it is cancelled however, I can't reinstate it.
How it works: if anything mechanical breaks/dies, they cover it completely after a $250 deducible and also foot the bill for a rental car in the event I need one. I can take it anywhere to get it fixed; they don't make me choose from a limited pool or go to a dealer - my choice completely. This coverage lasts for 10 years/100K miles. That's it. No gotchas, no limits. If the car's transmission goes out in year 8, $250 and they pay the rest. If the A/C dies and the engine blows and the transmission locks up... $250 (maybe per incident but still) and they cover the rest. So a possibility of saving literally multiple thousands and the hassle of shopping around for the best price vs the up front cost of $750 total for the coverage.
So I am not worried over the sunk cost or anything. I know that logically this is a gamble they will win, because folks that would take them up on this sort of thing likely do the research for a reliable car, and make sure to perform regular maintenance on the car if they are in the habit of keeping it for 10 years. So they know their audience, and are profiting most likely every time. BUT... for the low price of $750 over a 10 year period (not counting the deductible) I can be assured that anything that does screw up on this car is covered and I don't have to deal with multiple quotes or anything. Just take it to my guy and tell him to fix it and the insurance will pay for it.
I am likely going to drop the full coverage on this vehicle as well, but the extended warranty is so enticing I'm having a hard time talking myself out of cancelling it right now. I know logically that my vehicle is likely to make it to 10 years easily with no issues especially since I do not drive it more than 2K a year now, but I also know I will be so, so mad at myself if I cancel it and then a year or two from now, the damned transmission dies and I'm out $3k for it...
(and I have to mention I do not ever buy extended warranties ever on anything, but this one really does have the earmarks of a decent gamble all the same which is why I got it in the first place. I have had crappy old cars most of my life that I drive for 12-15 years usually, so that is likely coloring my distaste over dealing with car repairs.)
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What is the car on which you have the extended warranty?
If it's something reliable (Honda, Toyota, Nissan, Mazda), I'd drop it.
If it's something unreliable (VW, Audi, Chrysler, Dodge, all other Euro brands), I'd drop it.... and sell that car, replacing it with something reliable.
If it's something in between (Hyundai, Kia, Ford, GM), I'd probably drop it. I'd accept the minor chance of major parts (engine, transmission) failure, and can repair/replace minor parts (everything else) myself.
YMMV and all that.
P.S. The extended warranty covering a free rental car is of minimal value to you, because you have a second car you can drive anyway, while the other is out of service.
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Check. It's a Nissan, and I researched extensively before purchase for reliability and I am impeccable with general upkeep and maintenance. Last vehicle lasted 17 years, over 300K so I know what I'm doing in general.
And I agree that the rental car coverage is not a particular draw, but it's part of the deal so I wanted to include all the perks to make proper judgement.
thanks for your thoughts!
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The only thing I might be concerned about on Nissan is if you have a model with a CVT transmission. Anecdotally, they don't seem to have the durability record of traditional torque converter automatics. Otherwise, should be a reliable choice.
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It does have a CVT trans, but it seems to be covered up through 2018 through Nissan for 5-year/60,000-mile limited powertrain coverage specifically to address the issues that they'd had with earlier models of the CVT according to their website info (I'd remembered them mentioning the extended coverage and had to go look up the details).
I read up on it at the time of purchase, and heard the same questionable long term reliability, but also realized I do not drive aggressively, don't put lots of wear/tear on the vehicle itself. It is a 2013 model with less than 20K on it right now, and I do hope that by 2013 they'd figured out the issues and made improvements reliability-wise which is why I took a chance on it considering the better gas mileage and other advantages.
But that is something to consider in dropping the very cheap warranty, as the transmission for this vehicle averages around $4-5k to replace counting parts/labor.