Bruce M

At a significant risk to my mental health, I am going to try another warranty group purchase. I have eight "stragglers" from the last group buy (3 Audi, 3 BMW, 2 MB) waiting to see if I can put together another group purchase. The GP discounts start at $100 off per warranty for 10 people, and goes up to a $300 discount per warranty for 20 or more people.

There's a bunch of generic information in the post below (sorry if you read this a while back), but if you are interested, just send me an email with the words "Extended Warranty GP" somewhere in the subject line, and your car's model, year, current approximate mileage, engine, and trans (manual or auto) in the email body. I will reply with a detailed quote for available coverages, as well as a contract PDF if you want one. No form letters, no spam, and I will only send you the one email and then leave you alone (unless you reply with additional questions). You can send to brucem105@comcast.net, or click on my user name above.

The rates, terms, and available plans are determined by year, trans, and mileage. I am happy to post general concepts here (see below), but unless two cars are nearly indentical in all details, there will be differences. So you need to email or call and let me know model, year, mileage, engine, and trans.

Now, take everything below with a grain of salt, because I rep a few different warranty companies, and make 9% of the selling price as profit. So I am biased. I encourage everyone to do their own homework.

1. There is always a risk calculation to do when considering an extended warranty. What is the overall reliability of the car, what would the ROI look like if you put the warranty money into a savings account and used it for repair when needed, what is peace of mind worth to you, what if you don't keep car the length of the warranty, what do typical repairs cost whe a failure occurs, etc. There's a lot of pieces to the puzzle.

2. I have personally owned over 17 Audis. Most recently, I have been into ARs, D2 S8's, B5 S4's, and C4 S4/S6's. On the ones I kept longest, I had extended warranties (before I became a rep, when I was hunting for good deals and fair companies like you guys are now). I "lost" money on two of them, around $800-$1000 over the term. I was reasonably happy to pay $800-$1000 over 4 years for catastrophic failure insurance which I wound up not using. Not a bad deal overall. On the other 3 or 4 I either broken even or "made" money. I'll explain more below.

3. No matter what anyone tells you, there are only two types of warranties. Exclusionary, which is as close as you can get to factory new-car coverage, and excludes stuff like metal, glass, tires, upholstery, wear items, etc. The contract spells out only what is specifically excluded, and if it's NOT listed as excluded, it IS covered.

The other type is named component. As it sounds, this type's contract calls out the specific components covered. So if it's NOT named as covered, it is NOT covered.

For rough guide, a good component warranty (there are many levels, from engine only, to powertrain, to powertrain plus electrics, etc) will cover a maximum of about 70% of the coverable items on a car, and a max of about 85% of the expensive stuff. A good exclusionary will cover over 90% of the coverable items on a car, and over 95% of the expensive ones.

Even within these two types, the devil is in the details. So depending on what's excluded, what the definition of a "failure" is, labor/part allowances, etc one exclusionary can be a great deal, and the other can suck.

4. There are a few important things to look for when warranty shopping, and the best coverage is a good mix of these items that works best for you (these are in no particular order of importance):

A. Price of warranty
B. Term and mileage allowance of warranty (all of these plans start on the warranty purchase date, not in-service date of car, so a five year plan expires five years from today in 3/2013)
C. Reputation and claims paying history of warranty company
D. Financial solvency of warranty company, and protection of assets
E. Coverage provided by warranty
F. Extras included like towing, rental car, lodging, etc.

5. For Audis, exclusionary is the way to go in my humble opinion. It gives you the peace of mind on the big stuff in the event of a major catastrophe. But those are rare. What it does give you, for not much more than a good named component plan, is coverage for all the annoying things that go bad on an Audi, that while minor, are stupidly expensive to fix. Instrument cluster, coil packs, seat heaters, suspension air bags in Allroads, basic MMI, ECU, etc.

I also recommend, since the company I work with allows you to transfer the warranty for only $50 even after claims have been paid, to go for the longest term that's within your budget, even if you do not plan to keep the car that long. Here's why (these prices are ballparks, but reasonable):

A. Plan A is 4/75K, and costs $xxxx. Plan B is 5/100K, and costs $xxxx +250. Plan C is 6/100K, an costs another $200 on top of that. So for $450 more, you get two more years of coverage. You can't lose. If you wind up keeping the car two years longer than you originally thought, you're covered. And the odds of you filing claims totaling more than $450 in the 5th and 6th year of an exclusionary plan are nearly 100%. If you sell the car in the 4th year, for a $50 transfer fee you can sell the warranty to the buyer. He or she is going to have the exact same concerns you did when you bought the warranty to begin with, except worse because the car is 4 years older with ~40K more miles. You can EASILY sell a two year exclusionary plan for $1000...so you just made a minimum of $550 on your $450 invesment. If you had $2500 or so in claims in the first 4 years, which is a reasonable number for a 7 year old Audi with an exclusionary warranty, and then sell the last 2 years for $1K, your net cost is zero, or you made money. Because almost any plan you can get from me is less than $3500.

6. There are LOTS of warranties out there that are cheap, and for good reason....they fight you on every claim, deny claims without cause, do not reserve properly and go out of business, etc. Also, be careful, a lot of places (including Audi's CPO plan) call their best component plan a bumper-to-bumper warranty, when that term really refers to exclusionary policies only.

The stupid sounding part is, warranties that are incredibly cheap are time bombs. A good warranty company is an insurance company...they rate risk, reserve accordingly, price the plans, and that's it. If they reserve and price properly, they have enough to pay claims, stay solvent, and still make money.

But a plan that is super cheap is a problem. There's only two ways to make money;

A. Price a profit into the warranty after reserving (assuming it's a reasonable profit, we're not talking $6K for a two year plan here)

B. "Give" the warranty away cheap knowing claims will outpace the warranty reserves, and then either go out of business if no profits (bad), or make money on the "back-end" by denying claims, fighting labor prices and forcing non-dealer service, using used parts, etc. (also bad)

Item B above is the dirty little secret of the warranty industry, and is really impossible to explain to anyone. I mean, how bad does it sound for me to tell you to buy a plan from me for $2500 when the same plan down the road is $2000? It sounds like I am a rip-off artist. But until you file a claim midway through the term on the cheap plan, and have to reach into your pocket for 1/2 the claim amount, wait three weeks for a check, get used parts, etc., you can't know that.

That's not to say just because it's cheaper it's worse, I am not the best deal in the universe I am sure. But there is a line in the sand that is hard to define.

7. I like to sleep well at night, and not have people f-bomb me in the forums. So I only rep legit companies, and even then I put the right comnpany with the right car. For example, I rep Great Lakes, and they are a decent outfit, but for Audis and MBs and BMWs they are very tight for labor ans part prices, and much better for domestic or older foreign cars where it's not as much of an issue. So I only quote INDS here. They've been around over 20 years, over $500,000,000 in paid claims to date, good D&B and BBB files, etc.

8. That being said, no warranty company is your friend. So they're not going to give out a ton of goodwill repairs like the car manufacturer might during the new-car warranty. They pay what they are obligated to pay in the contract, and don't pay what they are not obligated to pay. But they pay direct with credit card to shop, act quickly, and don't hassle you about dealer labor or part prices within reason. That's as much as you can ask.

Any questions, feel free to email me.

Bruce
brucem105@comcast.net

beaudawg

YGM, thanks.

Imola Ghost

I'm interested in info on my wires Mercedes abd my B6 S4. I'll email you later today.