Extended warranty advice

[autotragic]

If you see the value of buying an extended warranty, buy 1? Do you feel guilty or ashamed if someone points out they are in the business of making money and aren't covering more than they take in period? Maybe your extended coverage will pay for itself, odds are better that it won't. It's simple business. Sorry if that hurts your feelings.

Hurts my feelings? Boy howdy...if you think some internet stranger's retarded rants hurt my feelings I've got news for you. I don't care.

Also why the hell do you care how I spend my money? Weirdo...I don't tell you what to do with yours so how about you not tell me what to do with mine?

So from this point forward you are wiped from my reality, lol.
(that's adding you to my ignore list since I know you are too stupid to get it)

You can argue with yourself over extended warranties as much as you like.

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[Zandcwhite]

Hurts my feelings? Boy howdy...if you think some internet stranger's retarded rants hurt my feelings I've got news for you. I don't care.

Also why the hell do you care how I spend my money? Weirdo...I don't tell you what to do with yours so how about you not tell me what to do with mine?

So from this point forward you are wiped from my reality, lol.
(that's adding you to my ignore list since I know you are too stupid to get it)

You can argue with yourself over extended warranties as much as you like.

Some don't understand how DISCUSSION forums work. Enjoy building your echo chamber via your blocked list. Have fun effectively talking to yourself by blocking anyone that doesn't share your views.

 

[TheRaven]

They still know profits and losses. That's just basic business. The basic powertrain is 36k, we were nearly double that. Most of the extended warranties being compared in this thread are 80k and we were close to that. Again, in the case that you needed major repairs you'd save money, but in reality odds are you simply won't.

Again with the "business"...dude those principles are ancient. The insurance industry for the large part completely stopped operating the way you seem to expect like 10-15 years ago. The overhead for things like adjusters and actuaries is high and they realized they didn't really need them for smaller products like automobile liability policies and extended warranties.

We're not talking about a family-owned general contractor here. These are multi-billion-dollar insurance conglomerates.

And, aside from that, the simple fact remains - you are VERY unlikely to not spend far more than the uninflated cost of any given warranty on the JL for a given timeframe. In the case of the JL, it's a slam dunk no matter if you understand the money behind it or not.

 

[Trails]

This may sound arrogant but here is the correct unalienable truth.

You may enjoy the peace of mind a warranty brings, you may even be one of the few who ends up incurring more covered repair expenses than the cost of the coverage, but statistically warranties are, by design, written to make those that issue them money, which means that by definition, they can only make that money at the expense of those who buy them, and this can only happen if the premiums, plus interest made on that money, exceeds what the insurer pays out in claims.

Surely you've seen those Carshield commercials and other competitor products on TV. On comes some policy holder who, even truthfully, talks about how much money that policy saved them. Sounds great right? Here's what you don't see. You don't see the 61 people for every one like the one who gave favorable testimonial, who--even if they are happy with their warranty purchase decision--paid more for the coverage than any reimbursement they received from it.

Ask the insurer if they take the premiums and invest them in....wait for it...car warranty policies. They don't. Because they're dis-, not investment vehicles.

All this said I understand those who buy them. For people living close to their expenses they may help hedge against repair costs, but those far savvier than me would suggest the harsh reality that maybe a less expensive vehicle than a Wrangler might be best for them. Other people like the peace of mind warranties offer. I get that. But statistically if you take those monies you'd spend on the warranty and invest them, you will come out ahead.

So everyone is extremely clear and what "statistically coming out ahead" means: please understand, some owners who take this advice may end up spending more in repairs out of pocket. I'm not guaranteeing everyone will save money. I am saying that on average far more people will spend less paying for repairs with that saved money than putting it to a warranty.

I'm not anti-insurance. I'm a huge proponent, but insurance that covers potential catastrophic costs, like medical insurance, or that mandated by law such as auto liability.

You are forgetting an important factor in your analysis. Dealerships get paid less for warranty work than what a dealer would charge an individual customer. Example: You buy an extended warranty for $2,000. You have a repair that would cost you $3,000. (if paying out of pocket). Warranty company only reimburses dealership $1,500 for the warranty work. Net result: You saved money and the warranty company still made money. The "loser" in this situation is the non fully reimbursed dealership. Possibly, they might still might have made some money, especially if it was an otherwise slow time at the shop.

 

[AndySpill]

You are forgetting an important factor in your analysis. Dealerships get paid less for warranty work than what a dealer would charge an individual customer. Example: You buy an extended warranty for $2,000. You have a repair that would cost you $3,000. (if paying out of pocket). Warranty company only reimburses dealership $1,500 for the warranty work. Net result: You saved money and the warranty company still made money. The "loser" in this situation is the non fully reimbursed dealership. Possibly, they might still might have made some money, especially if it was an otherwise slow time at the shop.

Yes, dealerships get paid less for warranty work.

But those are things that Stellantis stands by and pays out for that are covered as part of your purchase (not extended) warranty or a recall.

The discounts you cite: I'm not sure that dealerships are forced to cover non Stellantis purchase warranty repairs (i.e. repairs that you'd pay out of pocket for if you don't have an extended warranty) at such lower reimbursement rates.

 

[Trails]

Yes, dealerships get paid less for warranty work.

But those are things that Stellantis stands by and pays out for that are covered as part of your purchase (not extended) warranty or a recall.

The discounts you cite: I'm not sure that dealerships are forced to cover non Stellantis purchase warranty repairs (i.e. repairs that you'd pay out of pocket for if you don't have an extended warranty) at such lower reimbursement rates.

I'm not talking about 3rd party extended warranties. I'm referring to the genuine Mopar extended
warranty, similar to what Granger Chrysler Dodge Jeep Ram sells at their cost plus $25. It IS a Genuine Mopar warranty. The repair shop has no idea what you paid for it, and that you got it $25 above dealer cost from Granger CDJR.

 

[AndySpill]

I'm not talking about 3rd party extended warranties. I'm referring to the genuine Mopar extended
warranty, similar to what Granger Chrysler Dodge Jeep Ram sells at their cost plus $25. It IS a Genuine Mopar warranty. The repair shop has no idea what you paid for it, and that you got it $25 above dealer cost from Granger CDJR.

Still, I'd be inclined to think that how much Stellantis is able to reduce the reimbursement they pay a dealership for such extended warranty work over what you'd pay out of pocket, as well as the small markup in price for you to purchase the warranty at, still does not on the whole find the average warranty holder spending less in repairs using this approach, than the out of pocket higher cost of paying for the repair themselves, multiplied by the likelihood of that repair, a.k.a. the expected value of the repair. Part of the fly in this ointment in this approach I believe may be the assumption that Stellantis' repair cost savings is past along to the purchaser of the warranty, much that it would be nice if it were.

Might this warranty be better than others...? I'll certainly concede that it might.

Also, the interest you might earn investing that money you didn't use purchasing an extended warranty, considering the repair is statistically also likely to occur "later than sooner," has to be considered as well. The warranty company is certainly banking on the passage of time putting off some covered issue that eventually manifests itself, as they invest policy holders premiums.

 

[Jay_Jeep]

Realistically, your daughter will still be within powertrain warranty through high school, and the extended warranty probably won't really kick in until she's in college.

I'd think there's likely some benefit to her not worrying about a big expense then (or potentially having to call you to ask for money for a big expense). Also, it may make her feel more comfortable properly maintaining and repairing the vehicle during that time.

Yeah I’ll definitely be keeping up on the maintenance. And also don’t have issue wrenching myself. The JL electrical system makes me nervous and is way more advanced than my old CJ days. I just want her to have reliable transportation and some that can handle Midwest winters. And truth be told I hate to let the Reign go when I by my new one, I have been waiting for that color for a minute but she’s not getting a new one, I am haha.

 

[Ratbert]

The answer is YES. There is A TON of benefit. You will spend far more in repair cost than the cost of the warranty. DO IT.

The idea that "warranties only work because they bring in more money than they spend" is obsolete information. Modern warranties don't work that way. When it comes to the JL, YOU NEED A WARRANTY.

Are you thinking their reliability engineers and actuaries don't run their algorithms and actuarial loss models when determining those prices? That they don't care if those models indicate that it's worth the risk?

 

[TheRaven]

Are you thinking their reliability engineers and actuaries don't run their algorithms and actuarial loss models when determining those prices? That they don't care if those models indicate that it's worth the risk?

They don't model consumer extended warranties anymore, they haven't been doing it for over a decade...two in some cases. Yes that's how they USED to do it. But it's no longer deemed necessary.

 

[Ratbert]

They don't model consumer extended warranties anymore, they haven't been doing it for over a decade...two in some cases. Yes that's how they USED to do it. But it's no longer deemed necessary.

They're actively trying to get more people to buy their extended warranties while simultaneously, on the average, losing money from them? That seems incredibly questionable.

The only scenario I'm aware of where that would kind of make sense is when laundering money.

 

[TheRaven]

They're actively trying to get more people to buy their extended warranties while simultaneously, on the average, losing money from them? That seems incredibly questionable.

The only scenario I'm aware of where that would kind of make sense is when laundering money.

You are looking at a picture that is way too small. Again, the brokers that sell the warranties take a commission and pass on the liability...so those guys make money regardless of claims. Then the liability gets placed in a fund with hundreds of thousands of other policies. By the time it gets to the fund, there's no way to identify what it is...its been through layers and layers of packaging. There are other Wrangler warranties in there, there are Honda warranties, Toyota warranties, Chevy warranties, and most likely liabilities that aren't even warranties. It's just one big pile of money that gets tossed into another, way bigger, pile of money.

See you have to remember that this is just a bunch of rich people making money. They only care when they stop making money, and a few thousand JL warranties that cost the fund $5-10k each don't even move the needle...especially now that they've removed a ton of unnecessary overhead from the process. As long as that pile of money keeps growing, they just. don't. care.

I'm sure you're aware of the term "commoditization"...this is essentially that. It's just not worth the effort anymore to put the analytics into smaller insurance products like these.

 

[AndySpill]

You are looking at a picture that is way too small. Again, the brokers that sell the warranties take a commission and pass on the liability...so those guys make money regardless of claims. Then the liability gets placed in a fund with hundreds of thousands of other policies. By the time it gets to the fund, there's no way to identify what it is...its been through layers and layers of packaging. There are other Wrangler warranties in there, there are Honda warranties, Toyota warranties, Chevy warranties, and most likely liabilities that aren't even warranties. It's just one big pile of money that gets tossed into another, way bigger, pile of money.

See you have to remember that this is just a bunch of rich people making money. They only care when they stop making money, and a few thousand JL warranties that cost the fund $5-10k each don't even move the needle...especially now that they've removed a ton of unnecessary overhead from the process. As long as that pile of money keeps growing, they just. don't. care.

I'm sure you're aware of the term "commoditization"...this is essentially that. It's just not worth the effort anymore to put the analytics into smaller insurance products like these.

While it's entirely possible that warranty pools are bought and sold by investors and pooled into larger investment vehicles (no pun intended), when that specific vehicle policy was first devised bean counters did their best (and they are not perfect, especially with a new model vehicle) at estimating what would break, when, how much it would cost them to cover the expense of fixing it for you, what return on investment they felt they could get on your warranty purchase, and whether a particularly repairs would even be covered.

If these analytics were done at the macro level of all vehicles in an investment pool I'd be more inclined to feel that some vehicle warranties might be worth it, or perhaps more worth it than others from a more reliable auto maker, but even then, it would only be a matter of which policies (not that you say otherwise) are more or less worth it, not a matter of whether any single vehicle specific policy would statistically be worth it: it wouldn't be statistically to the policy holder if the bean counters did their work correctly.

I agree that institutional investors may not concern themselves with the analytics of how an individual policy was formed (or they might,) using largely instead its profit since inception as a yardstick on whether to purchase it, and if so, for what amount, not much differently than a savvy Shark Tank investor will allow sales to trump any personal notion they may have on whether a product will thrive.

 

[TheRaven]

While it's entirely possible that warranty pools are bought and sold by investors and pooled into larger investment vehicles (no pun intended), when that specific vehicle policy was first devised bean counters did their best (and they are not perfect, especially with a new model vehicle) at estimating what would break, when, how much it would cost them to cover the expense of fixing it for you, what return on investment they felt they could get on your warranty purchase, and whether a particularly repairs would even be covered.

YES, they did...extensively...10-20 years ago. This is exactly the point...all this data costs money to collect, and what they kept finding is that new data wasn't really all that useful. Oversimplifying - they can correlate the "cost" of each policy with the relative cost of the vehicle. However this isn't done at a per-model or even per-brand level. It's done (was done, actually) at a vehicle class level, and as time passed they zoomed out even further and just started modeling the cost trends in each class. It's those trends that determine the prices that brokers tack their commissions on to.

Bringing all this back to the subject of the thread - the cost of an extended warranty is no longer a reliable indicator of the cost to maintain a given vehicle. Example - FCA warranties are among the cheapest in the business, yet their vehicles are among the most expensive to maintain. The cost differences now are due to the commissions that are being paid to the chain of brokers and salespeople that sell the warranties. Over time this has come to mean that the cost of an extended warranty for any given vehicle is tailored to the class of buyer that they expect to buy that particular vehicle.

I want to make clear at this point that the above explanation is what I remember from a lesson on warranties and insurance from a friend of mine who manages funds like these. He dumbed it down big time for me because i'm an engineer not a banker. The details aren't really what's important anyway in a thread debating whether or not an extended warranty for a JL Wrangler is a good idea. The question, as always is - will I spend less on a warranty than I will on repairs for a JL out of warranty? And the answer to that is ALMOST DEFINITELY YES.

Let me also be clear that I am NOT addressing the reliability of the warranty itself. Whether or not that warranty will be honored when it is needed is another story altogether. Again that comes back to the dealers.

 

[Eddiechi]

Yeah I’ll definitely be keeping up on the maintenance. And also don’t have issue wrenching myself. The JL electrical system makes me nervous and is way more advanced than my old CJ days. I just want her to have reliable transportation and some that can handle Midwest winters. And truth be told I hate to let the Reign go when I by my new one, I have been waiting for that color for a minute but she’s not getting a new one, I am haha.

"The JL electrical system makes me nervous"

This is why I got the Max Care 100k on my last 2 JL purchases.. have had no issues on my 2023 but my 2020 had the head unit replaced 3 times, cost of head unit was equal to cost of 100k warranty.... dont care if I never use the warranty on my 2023 just know its there if something goes south at 80k but to everyone their own of course.


As TheRaven mentioned in 3rd post - " Look up Tom Winkels to get a great price" although he is no longer at Hayes Jeep but now at LAFONTAINE JEEP KALAMAZOO - [email protected] - he had the best Mopar price both times I purchased,,,,,,,,

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