Here's some facts and opinions to consider:
All the engineers at all of the manufacturers are insane, and they have seen fit to add unnecessary, unreliable, and complicated computers to every conceivable system that never needed computers before. There's no denying computers are necessary and definitely beneficial for anti-lock brakes, air bags, and engine / emission controls, but my rusty trusty '88 Grand Caravan daily driver has an automatic transmission, delayed wipers, head lights, dim-able dash lights, numerous interior lights, air conditioning and heater, power seats, windows, and locks, and not one of those systems needs a computer. You have computers involved in all of those things and they accomplish very little beyond what my van will do except cause a real big pile of grief and expense when they fail. That's an educated opinion based on the many vehicles I've been called in to help diagnose.
It is a fact, however, all of these computers live in an environment that is not conducive to reliability for electronics and high technology.
Chrysler has been the world's leader since the 1950s for innovations that actually benefit car owners, like the alternator, (a term they copyrighted), electronic voltage regulator, electronic ignition, computer-controlled ignition timing, lock-up torque converter, anti-lock brakes, (1969), air bags, etc. And everyone else copies them a few years later. GM has been the world's leader in developing customer-unfriendly business practices that drains their car owners' wallets after the sale, and unfortunately, that is also something most other manufacturers copy within a few years. For example, when a computer fails, you can't just run and get a used one from a salvage yard. You need a new one from the dealer, then they have to install the software. GM is even working hard to cut out the independent repair shops so you have to go back to the dealer for almost everything. Chrysler hasn't done that, ... Yet, but with the serious increase in complexity, especially of the electrical systems, a lot of independent repair shops either send you back to the dealer or take your car there themselves.
One of the things I overheard very often at the dealership was "what you need isn't covered". That is more common with insurance policies, (these aren't warranties) that are from aftermarket companies. There's a pile of profit in these contracts, so you know that on average, you're paying WAY more for the coverage than the average person collects in benefits.
For $1400.00, you're assuming you're going to have breakdowns that total more than that. While that is certainly possible, you're guaranteed you'll be spending 1400 bucks instead of risking having to spend that much. One thing most people don't realize is when you're told the repairs aren't covered, you can request a refund of the remaining policy, and put that money toward the repair. The insurance companies are very happy to do that rather than argue with their customers over what's not covered and why.
Another indisputable fact is that 80 percent of the premium, ($1120.00), goes to pay commissions to everyone involved in the sale of that contract. Do you suppose there is a financial incentive to convincing you they're a good deal? If you've been told you have to buy the contract right away, ... Don't. That is a high-pressure tactic made famous at GM dealerships to close the sale. In fact, you normally have up to when the manufacturer's warranty runs out, or typically 30 or 60 days to decide. There are even companies that will solicit you for the next few years. I still get letters from them pertaining to my '93 Dynasty.
Now, to be fair, and argue against my points, if you're going to be covered for the next 100,000 miles, (not UP TO 100,000), consider the cost of a catalytic converter, replacing cylinder head gaskets, or rebuilding or replacing the transmission. Then this contract will be a good value, IF those things are covered. If you find something written in the fine print like, "internally-lubricated engine parts", don't expect it to pay for much in the way of engine repairs unless a total rebuild is necessary. Even then, you may find they only cover a small portion of the parts and labor needed, and you're stuck with the rest. "Internally-lubricated parts" means the crankshaft, pistons and rings, connecting rods, all the bearings and the oil pump. There's a whole lot more to an engine than that. Water pump failures, for example, are common, but that isn't an internally-lubricated part. With normal maintenance and care, serious engine failures are very rare on any brand of vehicle. Years ago we considered an engine on borrowed time when it reached 150,000 miles, and some were known to have problems as early as 75, 00 miles. Today it's easy to get 400,000 miles as long as the rest of the vehicle doesn't fall apart.
Another trick that is common at GM dealerships, and I suspect it happens other places as well, is the multiple deductibles. I've heard this complaint so many times about the seriously-crooked Chevy dealership owner down the road from me. Suppose you need a leaking axle seal replaced. Cost is $300.00 and you have a $100.00 deductible. The door locks don't always work but that hasn't been diagnosed yet. By the time you have a chance to take off work to take the van across town to this shop, the wipers stopped working on the delay settings. You're going to leave the van for a few days so they can fix everything at once, and of course you expect to pay the $100.00 deductible.
When you come to pick the vehicle up, you're handed a bill for $350.00 That's $100.00 for the deductible on the $300.00 axle seal repair only. The locks were a separate problem with a separate bill, and a separate $100.00 deductible, ... For the repair! The diagnosis took two hours at $100.00 per hour, but your contract only pays for repairs, not diagnostic time. Most contracts DO cover diagnostic time, but only what is allowed by the manufacturer when it's under their warranty, and that's usually one hour without approval for additional time. No one called the insurance company to get approval for additional diagnostic time, so they won't pay for it. If you're lucky, you'll only have to pay the second deductible of $100.00 and only half of the diagnostic time, or another $100.00. So far you're paying almost as much toward these "covered" repairs as the insurance company is paying. PLUS, you paid $1400.00 up front for the privilege.
The wiper problem turned out to be a corroded splice in the wire harness. This presents another sore point for mechanics. The most efficient and least costly repair is to cut away all of the corroded sections of wire and splice in new pieces. That will take about an hour including the time to find the cause of the problem. That means another $100.00 out of your pocket. You can say that's for the deductible, or it's for the full repair. Regardless, it's $100.00 from you. The rub is, just like when a wiring repair is covered by Chrysler's warranty, the insurance company will only cover the repair if the entire harness is replaced. That might sound like a good deal since it's real common for a harness to cost between $300.00 and $600.00, but to get to all the places those run to, the mechanic has to disassemble a lot of stuff and take a lot of connectors apart. With such a complex operation, there's a real good chance of him making a mistake, pinching a wire, stretching a terminal, mispositioning a bracket, etc. That bracket could rattle or transmit a normal vibration into the passenger compartment. The wire might rub through the insulation and short out and blow a fuse intermittently. These, or any of a dozen different problems might not show up for months or years, but they never would have occurred if that wiring harness was repaired instead of replaced. Chrysler insists they must be replaced because if there is a problem with it, whatever caused it could affect more circuits, and they don't want to take that chance. Also, corrosion and rubbed-through wires aren't going to be causing a problem yet on a vehicle new enough to be under their warranty. They also have a policy that any repair done to a vehicle under their warranty must result in returning that part of it back to "same as new" condition. The aftermarket insurance company is not under those restrictions, but it provides them a good loop hole. If you understand how these vehicles are put together and how hard it can be to do some of these repairs, you would choose to have the harness repaired. You'd pay the $100.00 and the insurance company would pay nothing. If you chose to have the harness replaced, you'd still pay $100.00 for the deductible, and you'd wonder for the rest of the life of the van if any of the next problems are related to something that had to be taken apart. Understand too that the mechanic knows he's going to lose because the amount of time he will get paid for is almost always less that what it actually takes him, and sometimes, on big jobs, he can end up working for many hours for free. There's a big incentive to rush or cut corners.
Sometimes two people can have identical vehicles and contracts, and a part is covered on one but not the other. A good example might be the "H-valve" on the air conditioning system. The valve might fail and not be covered on one van, but on the second van, the compressor, which IS covered, might send debris throughout the system, and the H-valve could become blocked. Then it would be covered because the failure was caused by the failure of a part that was covered.
Also look at the name of the company issuing the contract. If it is being sold through Chrysler, you'll only get that through a Chrysler dealership, and I think only if you buy the vehicle from them. They are going to have a vested interest in keeping you happy so you're likely to have fewer arguments about what is covered. According to some national trainers, Chrysler is one of the top three manufacturers in the world when it comes to customer-friendly business practices, but that doesn't mean you might not be in for some surprises or arguments. The up-side is your van will be repaired by the people who understand it the best and have the factory training and parts. The down-side is you're very limited in where you can go for the repairs.
If the contract is through an independent insurance provider, you generally can go to any repair shop, but then another problem pops up. That is getting paid. Most of these aftermarket companies have notorious reputations for very slow payment. For a while most repair shops stopped releasing the vehicles to their owners until they got paid. That led to a lot of owner complaints, so now, you can usually expect to be told you will have to pay the shop for the repairs, then submit the paperwork yourself to get reimbursed. I don't know this for a fact, but I suspect you will have to argue less about what is covered than the shop would. That's partly because the insurance company wants to make you happy so they're less likely to want to argue over some of the charges, and partly because if the shop is told, "that repair isn't covered", they have no desire to waste their time arguing on your behalf. They'll just take the bad news and pass it on to you. Often the repair shop gets quizzed in depth about why some parts were needed or some charges were added. The shop has to argue their point, and that takes time. The insurance companies know you aren't a car expert and you can't be expected to answer most of their questions.
I know I didn't tell you "yes" or "no" to buying this product, but I gave you some information from my experiences while working at a very nice family-owned Chrysler dealership through the '90s. There are people who will tell you they made out very well and are happy they had the policy, but then you have to wonder why their vehicle needed so many repairs, and how much more they spent out-of-pocket than if they had gone to other shops or done some of the repairs themselves.
I'll leave you with one more of the dirty tricks my local Chevy dealer pulls. When a head light bulb burns out on a car under warranty, GM pays 0.2 hours to replace it. It only takes a couple of minutes, but like most other manufacturers, 0.2 hours is the least they will pay for any repair. The dealer has decided they have a one-hour minimum labor charge, even for warranty work, and it appears GM is fine with that. That means they want $100.00 plus the cost of the bulb to pop it in for you. GM will pay them $20.00 plus the cost of the bulb, and you get a bill for $80.00. You would not believe how people scream at that, and I don't know if that does any good, especially if they're told that up front, but at any other dealership, when something is under warranty, you don't get any bill.
To be fair, we have a GMC dealership and a Cadillac dealership that are very reputable and do not pull stunts like this, but it's something you'll want to know up front. We used to also have Ford, and four or five import dealerships that were also very customer-friendly and reputable, but the Chevy dealer took them all over and their reputations have plummeted too. Luckily we have competing dealerships for most of those brands not real far away, and they get a lot more business now.
The bottom line, I guess, is for your $1400.00, don't think you won't have to spend another dollar on repairs. Some of your repairs will be taken care of, but you'll be limited in where you can go, you likely won't get to decide between multiple repair options, and you may obligate yourself to paying for a diagnosis and / or repair after it is determined it's not covered by the policy. If you save $1400.00 on covered repairs, you'll break even, AND rest easy knowing you have coverage for the rest of the term.
By the way, if you did the math, you spent $300.00 at the repair shop in my sad story, but I listed $350.00. If I were to show you my list of expenses dealerships and independent repair shops incur, you would wonder how they manage to stay in business by charging only $100.00 per hour. One way is to add on an "environmental charge" to cover some of the recently-new regulations they have to comply with. This industry is so heavily-regulated and taxed, and, sorry to say, you're paying for it.
Sunday, August 31st, 2014 AT 10:54 PM