The Ins & Outs Of RV Extended Warranties
This blog post has been on my “list” for a while and I’ve resisted writing it mostly because I wasn’t sure of my own conclusions. Discussions on extended warranties are akin to opening a can of Sicilian worms in an Italian bait shop. It’s a MESSY topic with lots of very heated opinions on each side of the fence. After 5 months of thinking, testing (yes, actual real-life testing) and experience I’m going to be honest and tell you there is no absolute answer. Extended warranties are not for everyone. They can be a waste of money, they can be supremely helpful and they can also be everything in between. Our situation is that we currently have an extended warranty, it has worked and paid out for us (we’re ahead on our money), but I’m still not sure it’s worth it (I know, I’m a walking contradiction).
So what I am going to do in this post is give you the tools to decide for yourself on whether you need one including how to negotiate the best policy, traps to be wary of and what to plan for with claims. So, take a big breath, sit down in your comfy chair and here it goes:
1/ To Buy Or Self-Insure -> That Is The Question
The truth is for most items you buy in your lifetime extended warranties are simply not worth the money. They are often overpriced for the protection you get and you rarely get your money’s worth. In fact that’s the very reason they are so very lucrative for the people who sell them to you!
The only situation where this question becomes “iffy” is when you’re dealing with a very expensive item (like an RV) where the cost of repairs can be really, really high. At this point it becomes a grey area. For many people simply putting money aside every month for repairs and using that “self-insurance bucket” when something comes up will put them ahead on $$ for the lifetime of their RV. For others the financial worry of a major breakage is too much to bear and buying a warranty for “peace of mind” makes their RV life alot smoother. You’ll have to decide, based on your own financial situation, age of your RV, $$ value of your big ticket items and risk tolerance whether self-insurance will work for you.
2/ An After-Market Warranty Is More Like Insurance
If you decide to buy an extended warranty one key thing to understand up-front is that, unless it’s manufacturer-provided, it’s really more like insurance. Manufacturer-backed warranties (e.g. the one you’d get with a brand new RV) are more like “true” warranties in that they pretty much just fix anything that goes wrong. After-market warranties are different. When you buy an after-market warranty you’re basically trying to insure against some future breakage/failure on an item which is no longer supported by the manufacturer. These non-manufacturer warranties can be very specific and have lots of potentially tricky “outs”. You cannot treat an after-market warranty like a safe-house and think everything will just “get fixed”. You can also not treat an after-market warranty like a bank deposit and think you’ll get your money back. Know and understand that if you sign an after-market warranty it is a contract that you may never use and you need to abide by all the details to get your “insurance” to pay up. If you go into the process with this understanding you will be much happier with your decision in the long run.
3/ Not Every RV Warrants A Warranty
Even if you’re bought into the whole idea of an extended warranty not every RV owner should get one. Here are some of the cases I would not consider it:
- New RV Owner – New RVs typically have a “breaking in” period which will often require lots of trip to the shop. If you’re buying a brand new RV it should come with a manufacturer-backed warranty for at least a year, and that’s the warranty you should use before shopping for one on your own. If you’re buying a “new” used RV you may be able to negotiate a 1-year repair plan backed by the shop you bought it from to get you through the “break-in” period -> that’s what we did with our rig. In fact we got the shop to throw in a 1-year plan for free and spent the first 6 months getting free repairs on all our systems from the dealer. Well worth it and not a cent out of our own pocket.
- Older, Used RV Owner – Most RV owners will tell you that if things are going to break, they’ll do so in the first few years. Once your engine, appliances and other items are “broken in”, your chances of any kind of warranty-backed repair drops dramatically. Also as your RV gets older you are more likely to simply replace/upgrade things rather than repair them and these new items won’t be covered by the original warranty. Lastly as your rig ages policy costs go up and the cost-benefit of having a warranty goes down.
Personally I feel the best candidates for extended warranties are newer RV owners past their initial 1-year factory warranty who feel they still have some “breaking in” to do, or in-between owners (RV is a few years old, but not yet old enough) who need the insurance in case something comes up. It’s a cost-benefit decision and only you can make that assessment for you. In our case once our current 5-year warranty is done we’ll not be buying a new one.
4/ Dealer-Sold Warranties Are Big Money Makers -> For The Dealers
Many RV dealers will try to sell you an extended warranty when you buy your RV. Unless the warranty is backed by the dealership itself (which is extremely rare) and you plan to get all the repairs done at that very shop, I would never personally sign up to one of these things. Dealer-sold warranties are typically much more expensive (often twice the price) and less comprehensive than any warranty you can get externally. Avoid the trap and shop around on your own.
5/ Key Items To Negotiate In An Extended Warranty Policy
Assuming you’ve decided to go-ahead on a warranty purchase start looking around and getting quotes on policies. Get several quotes and then get a copy (and read) each of the contracts before you sign. You want to treat an extended warranty like insurance which means you should look to get all your “big ticket” items covered (the ones you can’t afford to fix on your own), but you ALSO need to be aware of the fine-print and “outs”. In my mind the 2 most important “must have” items in an extended warranty are:
- Exclusionary Policy – Extended warranties come as either “inclusionary” or “exclusionary” policies. Inclusionary are the most common kind (also the cheapest) and will only cover the specific items listed on the contract…in other words if it is not on contract it is not covered. This sounds great in principle, but can be a real “gotcha” if some non-covered part you didn’t even know about causes your claim to be denied. Exclusionary policies are the other way around. They only list items which are NOT covered on the policy…..by contract everything else IS covered. Since RVs are extremely complicated machines with thousands of interacting parts many of which I don’t even know the name of, my recommendation is to go for an exclusionary policy. They are more expensive, but they are much more comprehensive policies, much simpler to understand with alot less potential “outs”.
- Consequential Damage – One of the biggest potential bummers in a warranty claim can be denial of a big ticket item due to damage from a non-covered part. Imagine a non-covered part (say some type of gasket) blows and damages a big, expensive covered part (say, your transmission). Unless you have consequential damage the warranty company can legally deny your claim. This is a situation you never want to be in. Even if you decide to buy an inclusionary policy, make sure consequential damage is part of the policy.
These are my personal “must have” up-front items. Working from this baseline, look for the following clauses too:
- Understand Transfer and Cancellation Policies – Make sure that you can transfer or get out of the policy if you sell the RV or decide you don’t like it.
- Know Who’s Backing the Warranty – Most of the folks you get quotes from will be brokers (i.e. companies who sell you products from other companies) and not the actual people managing your warranty and claims. So, make sure you find out who that is. You’ll want to be sure the claims company is a reputable one and the underwriter is a solid, A-rated insurance firm.
- Make Sure You Can Use Any Repair Center – If you’re travelling around you don’t want to get stuck somewhere the warranty isn’t accepted. Make sure they’ll accept any repair center nationwide.
- Call Around & Check Reputation – Call some RV shops nationwide and ask them if they’ve worked with this company before and what the claims process was like. If they’ve got a bad rep or are not well known that’s not a good sign.
- Check On Full-Time RV Coverage – If you’re a fulltime RVer make sure the warranty you buy is valid for full-time use of the RV. Some are not, or require a surcharge for that purpose.
- Understand Term Limits, Deductibles And Claim Procedures – If you’re getting a 60,000 mile policy does that 60K start from today, or from the day you bought your RV? Also what are your deductibles and how difficult is it to make a claim?
There are many more details, but those are probably the most important ones. Just make sure you read all the fine print so you know the potential “gotchas” up-front.
6/ Keep Ontop Of Maintenance & Contract Details
Once you’ve bought a warranty make sure you stay ontop of maintenance and any other contract “gotchas”. Most warranties will deny claims if you do not follow manufacturer-recommended maintenance guidelines, or let your parts rust, or do not change out worn parts. If your fridge fails, the last thing you want is to get denied because you didn’t do your yearly fridge service. Stay ontop of it and keep your records in order.
7/ If You Make A Claim, Follow Policy Procedure (And Prepare For Time & Hoops!)
We’ve used our extended warranty twice since we bought it, and although it’s worked and paid up both times, neither experience was painless. No matter who you use, make sure you understand the proper procedure to make a claim. Extended warranty companies require the damage to be assessed up-front (sometimes they’ll even send their own inspector) and will then need to approve the repair before any work is done. Ontop of that warranty companies will often only approve a certain labor rate and number of hours for repair (based on national averages and internal guidelines). This is where things can get really gritty. Assuming you’ve been ontop of your maintenance and there are no other “gotchas” in your contract you might still end up arguing with the warranty company on how much they’ll pay for the repair….so you’ve got to prepare for time, patience and some back and forth!
As an example our first repair was in CA and the shop labor rate was above what the warranty would accept. We managed to negotiate the shop down, but it took a couple of days of back and forth. Our second repair was in OR. This time the warranty company wanted to send an inspector (2 days), wait for his report to be approved (another day) and then, even though we passed inspection and the labor rate was OK, they would only reimburse 2.7 hours on what the shop deemed to be a 5 hour job. In the end we managed to negotiate a compromise, but it was still alot of painful hoops to jump through. Bottom line, if you make a claim expect to spend some time on it.
8/ And Our Solution Was….?
So, given all that who did we get our policy with? I got quotes from several companies including Good Sam’s, GoRVWarranty and Wholesale Warranties. Good Sam’s did not offer an exclusionary policy so I decided against them up-front. GoRVWarranty and WholesaleWarranties (both brokers) offered similar contracts at vastly different prices. My research on GoRV dug up some questionable practices** and alot of folks who were unhappy with the company (poor after-sales service) so I negotiated a hefty sum off WholesaleWarranties and stuck with them. My finally policy was for 60 months/60,000 miles, $100 deductible with CSI/Allegiance, underwritten by American Bankers Insurance (A.M. Best “A” rating) and costs us ~$1.5 per day. It’s an exclusionary policy with consequential damage and free tire plan thrown in. So far I’ve been very happy with WholesaleWarranties. They are easy to deal with and (more importantly) they’ve “gone to bat” for us against the warranty company each time we’ve had a claim. I’m still not sure the warranty is worth it (we could have managed each of our past 2 claims faster and easier with money put aside), but only time will tell.
That’s it folks. If you haven’t already fallen asleep I’d love to hear your experience and thoughts on extended warranties. Feel free to comment away below!
** UPDATE: As of Nov 13th, 2012 Go RV Network, the parent company of Go RV Warranty filed for Chapter 7 bankruptcy in the West Texas District court. Definitely happy we avoided them as a broker.