My warranty cost me $3700 for four years or 100k miles. It has currently paid out of $25k in work. The company is called National. I bought it through a local Jag dealer.

 

The fundamental flaw is the concept that someone else should pay for your repairs.
And in reality there is no such thing. How could there be in principal?

 

Yes, everyone knows your philosophy. Either do the repairs or yourself or have enough money to pay for them out of pocket. Some people are looking for other options.

 

Actually, my philosophy is out of necessity; I havent found a reliable way to make someone else pay for my problems- What fool would turn that down.

I am actually inquiring as to how the warranty scheme can possibly work. (and not the type to say 'my way or no way')
If problems are common and consumers get even 50% of what they paid in, mathematically its a losing proposition for the company in the business to make money.

What's the catch? either problems are rarer than we factor- or what they pay out is less than we factor.

 

Most aftermarket /CPO's don't cover plastic or rubber items..Crossover pipe ...headliner...dash.. lol

Just yesterday my girlfriend took her Cayanne S to Porsche for a noisy transfer case (very expensive repair..about $6k). She has Red Shield complete coverage that she bought for $3k (2 years - 40k miles in coverage). The Porsche techs said the case is going bad and you can feel it. The adjuster came out and said "its not that bad yet..claim denied". The service advisor thinks if we bring it in again, they will cover a PORTION of it. They can use used parts for estimates on what they will pay for. Porsche wont install used parts, so the remaining cost for a new OEM part is up to the customer. Disappointing experience. Easier to trade it in while it still drives great..

 

Funny story..... one of my kids asked me to help his mom (we were divorced a few years then) as she had gotten into a relatively serious situation. Seems she bought a used Geo Metro or some such car (had a 3-cylinder engine) from a dealer and the ONLY way they would let her finance it through them is if she ALSO bought the Powertrain Warranty they provided.... for MORE than what she bought the car for, something like $3000 warranty and the car was @2500 (yes, she is that... uh, stupid).
True story.
So anyway I went to the dealer and made them take the whole deal back. She did get charged $0.25 per mile, cost her under $100.

 

It should be obvious that overall for the warranty company to make money - and they do! - those taking out the warranties must be losing.

However, if one wants peace of mind (*) in theory a warranty may be worthwhile.

Except... too often a warranty company refuses to pay out.

(*) say in the case of such a big cost that you couldn't afford it

Over the long term just put the money you would have paid for warranties into a bank account for repairs and you'll end up the winner instead of the warranty company.

This kind of thing is sometimes known as self insurance.

 

That must have been embarrassing for her when big bad you had to get her out of a fix?

 

Yeah, she was pretty much a whipped puppy dog for awhile, and no b!+ching for some time. She ended up buying a Saab something.... 900 I think.

 

There are several approaches.

Mine is to spend less than half of what I could, and if something goes wrong then I can go out and buy a replacement car.

I also have multiple cars, so I can stomach some downtime to work issues out.

Only issues I have ever had, three burnt out light bulbs.

I am now facing the need to change the battery.

I should refinish the headlight covers.

From my observations, the best cars are the ones that get driven rather than sit.

 

Q&C queries how it is possible for extended warranty (hereafter referred to as EW) to work practically..

Yes our cars are mightily expensive to fix once something fails, but others aren't. In fact something I read a few years back stated that less than 40% actually claim on their extended warranty, this could be for a number of reasons (in addition to the EW companies not honouring a claim) namely :

1) Owner forgot they had EW when the work was needed (sometimes years after purchase)
2) Owner mislaid their EW paperwork
3) Owner didn't consider the claim large enough to make a claim
4) Owner couldn't be bothered
5) Car was faultless with nothing to claim on in ownership

Now, with less than 40% claiming that means that in 60% of cases the warranty companies are veritably rubbing their hands together with glee as it's clear profit. Appreciate if you took it out on an úber reliable marque just because you were scared something would go wrong (not gender specific), then at least you had the peace-of-mind (just a long as 1-4 above didn't apply) Of the 40% making a claim less than 15% of those (IIRC) made claims for greater than the total premiums paid.

Does that explain it suitably for you Q&C, simply put a business model built on a circa 60% profit margin is bound to succeed

I'll do some googling and try to find that link.

Downside for them is, owners of prestigious marques such as ours are always going to claim on their EW's if they have them, as our filing systems are better than most!

Soz for the lesson in basic economics

 

Does not explain it to me. Makes it worse.
Say the EW cost $3000
And average claim is $6000
40% of consumers claiming would bankrupt the company.
Based on just overhead.
But upto 30% or more of the $3000 premium goes to the agent selling it.
What am I getting wrong.

 

They calculate that grandpa's weekly drive to Bingo night isn't too taxing on the car, and that he likely to croak before the full term of extended warranty runs.

Demographics of Jaguar ownership are rather geriatric. That determines average usage pattern that could favor atypical Jaguar owners.

Now, where did I put my teeth? Nurse? Nurse?!

 

Because the average claim is NOT $6000, that would be a complete engine and then for a premium marque, most are run-of-the-mill family hatchbacks and saloons with an average claim of £1000/$1300. Albeit am aware those stateside tend to get stitched up on vehicle repairs.

By way of example I changed the tranny on my X100 last year, I paid £300 for a 2nd hand unit delivered and £800 for fitting at an approved insurance repair agent and jaguar specialist.

Here's some American facts:

https://www.consumerreports.org/exte...ensive-gamble/

Key here is the statement:

'repairs covered by extended warranties for all brands was $837. Based on a $1,214 average initial cost'

So I've no idea where you pulled $6000 dollars from....although I could surmise at a guess?

 

Indeed, the only way the extended warranties work is when on average just 10% of the premium is returned to buyer.
Because 50% goes to dealership selling it.
40% goes to administrative cost and profit.

(I am deducing the 40% figure from the simple fact that they pay salesmen 50%- when did any enterprise pay more to its salesman than it made itself)
I got the 50% figure from Kiplinger. https://www.kiplinger.com/article/ca...anty-woes.html

40% gross margin is about right, and some of my spry colleagues here would argue that its not enough in a high risk enterprise. As in a simple shopkeeper operates on 50% gross without wild surprises.

 

In my example of the EW costing $3000; if the payout was not at least $6000, consumers would be foolish to get it.
As saving the same money would yield more- particularly considering the odds are 50/50 of having the expense at all.

Also, lets not lose the plot here, the OP paid $3700 and claimed $25k....on nothing major no less.

 

Yes but he is one perhaps in 1000 with that type of claim, do you have any evidence to back up your suppositions? I have provided just that to refute yours with a URL, albeit 5yrs old...and of course you can't believe anything you read on the darned t'internet!

Does everyone only buy their EW through a dealer? I know I didn't and rejected the one offered at purchase & chose the best I could find with the best reviews (that can of course be fabricated) on the interweb. In my case no middleman and the only warranty company currently recommended by Martin Lewis and Honest John

 

the original poster is asking about a EW on a jaguar forum and would assume for a jaguar. Dnt compare other brands.
You talk about used parts on your Jag in the UK where theyre like Fords in the US. $6000 maybe for a used engine and in 20 years I hit better than 50% bad used engine r trans and have to put in another. A new 5.0l engine in Jaguar or Land Rover is going to run $25k and up for a factory remanned unit. And unless you get a **** ext warranty theyre not going to put in used parts but factory OEM. 6k repair jag or Land Rover using OEM parts is nothing. And another thing you can negotiate a EW policy but as I have said earlier don't get a power train and don't get a deducible more than $500 just to get a cheaper policy. It also depends on when you buy the policy and the mileage and age when you buy it.

 

I've searched and can't find a 5.0sc engine with a 12 month warranty for more than £7k this side of the pond.

So I make that $9k USD.

Weird considering more jaguars are sold in the US than the UK...STRIKE THAT JLR vehicles...lol

You'd think they'd be cheaper.

Yes, it is a jaguar forum and cost will always cost more, but the figures I posted were across all marques, so Jaguar perhaps are a loss brand for EW companies. So on average they can and do make money.from it.

 

Not possible mate.
They have some of the smartest minds calculating the odds, and if that wasnt enough, nowadays, intelligent algorithms.
They will insure a chest of drawers falling off a cliff- like the bookies, take any bet you want to place, any- the odds are well calculated.
Moreover, the computers will drop you if they even smell a possibility of a loss- or raise the price to recover.

In fact, the simplest way to see it is; they will take risk that you would not. In other words if as example Jaguar engines predictably go bad- you wont risk it- and they want to pay someone lot of money upfront to sell you the warranty and take that risk. Still makes no economic sense to me. The only simile I can think of is Vegas giving you free drinks and a free room to take the chance to win a lot of their money.