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Showerthought: A claims guy in Phoenix told me most people buy coverage on the wrong car and it stuck with me
I was grabbing coffee at a gas station outside Phoenix last Tuesday and got chatting with a guy named Ray who works claims for a big warranty company. He said something that stuck with me: the people who get burned the most are the ones who buy a plan on a 2 year old car with 25,000 miles, because that car is still in the sweet spot where nothing big fails yet. The folks who really come out ahead, he said, are the ones holding onto a 2015 to 2018 model with 90,000 to 130,000 miles where a transmission or AC compressor can run $4,000 to $6,000 out of pocket. He also told me almost nobody reads the exclusions list before signing, they just look at the monthly payment, and that is where 80 percent of his angry calls come from. It made me rethink the advice I gave my brother in law, who was about to buy a plan for his practically new Civic. I told him to wait and put that money in a savings account for now instead. I am curious if anyone here has actually come out ahead on a plan for a newer low mileage car, or is it pretty much always a wash until things start breaking?
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dakotacraig9d ago
Ray is right about the exclusions list being where people get mad, that part hits home. I sold cars for a bit and watched folks sign up for a warranty on a 2 year old ride and never once ask what was NOT covered. Here is the thing though, those plans on newer low mileage cars are not always a total wash. If the car is a brand known for early problems, like certain turbos or CVTs that act up around 40k, a plan can bail you out before the factory warranty even ends. But for a plain Civic like your brother in law has? Yeah, you told him right. Those things run forever and the plan money is better off sitting in an account. The math only flips in your favor once you are past 80k or so and staring down a repair that costs more than the plan itself.
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