986 Forum - The Community for Porsche Boxster & Cayman Owners - View Single Post - Warranty Direct

Bob O · 11-17-2006, 07:29 AM

Of course warranties are priced to give the company a profit over the expected pay-outs. (If the company doesn't make a profit, they won't be there when you file a claim...there are LOTS of examples around of this very thing happening) They're dealing with averages and statistics. For all those Boxsters that have NO repairs during the coverage period, there are those that incur claims well above your cost of the warranty... hence the concept of "average". Do YOU have the average Boxster?

There appears to be three possibilites with purchasing a warranty. One; you incur repair costs less than the cost of the product. Company wins. Two; you incur repair costs exactly equal to your cost. Company wins (slightly), due to investment gains on your premiums (assuming you don't incur those costs in the first month or so of coverage) Three; you incur repair costs higher than your premium. You win. That looks to me like a 1 in 3 chance of you winning and a 2 in 3 chance of the company winning, from your perspective. (From the company's perspective its a totally different analysis.) So the company has 2 to 1 odds of winning. How much of a gambler are you?

I'm a CPA, and I did the math before purchasing Warranty Direct in November, 2005, just before my factory warranty expired, taking into account some of the more frequently reported potential repair costs. Could I invest the average expected repair costs somewhere, and maybe (big maybe) be money ahead. Sure. Is my car "average"? Who knows.

I don't remember the cost exactly, but it was somewhere around $2400 or so for complete coverage for four years up to 100,000 miles. You have to weigh the odds of your car suffering a catastrophic failure of something, (or, more likely, several smaller issues which add up to quite a large repair bill over time) and you being on the hook for it, versus the peace of mind the warranty gives you to cover those potential biggies.

So far, I haven't had to use the warranty (knock on wood). (Maybe I have a better than average Boxster!

) BUT... if something DOES happen, I'm covered, and, for me anyway, that's more important than going bare. It's just one less thing in my life to have to think about. But that's just me

Bob

11-17-2006, 07:29 AM	#11
Bob O Registered User Join Date: Aug 2005 Location: Kansas City Posts: 319	Of course warranties are priced to give the company a profit over the expected pay-outs. (If the company doesn't make a profit, they won't be there when you file a claim...there are LOTS of examples around of this very thing happening) They're dealing with averages and statistics. For all those Boxsters that have NO repairs during the coverage period, there are those that incur claims well above your cost of the warranty... hence the concept of "average". Do YOU have the average Boxster? There appears to be three possibilites with purchasing a warranty. One; you incur repair costs less than the cost of the product. Company wins. Two; you incur repair costs exactly equal to your cost. Company wins (slightly), due to investment gains on your premiums (assuming you don't incur those costs in the first month or so of coverage) Three; you incur repair costs higher than your premium. You win. That looks to me like a 1 in 3 chance of you winning and a 2 in 3 chance of the company winning, from your perspective. (From the company's perspective its a totally different analysis.) So the company has 2 to 1 odds of winning. How much of a gambler are you? I'm a CPA, and I did the math before purchasing Warranty Direct in November, 2005, just before my factory warranty expired, taking into account some of the more frequently reported potential repair costs. Could I invest the average expected repair costs somewhere, and maybe (big maybe) be money ahead. Sure. Is my car "average"? Who knows. I don't remember the cost exactly, but it was somewhere around $2400 or so for complete coverage for four years up to 100,000 miles. You have to weigh the odds of your car suffering a catastrophic failure of something, (or, more likely, several smaller issues which add up to quite a large repair bill over time) and you being on the hook for it, versus the peace of mind the warranty gives you to cover those potential biggies. So far, I haven't had to use the warranty (knock on wood). (Maybe I have a better than average Boxster! ) BUT... if something DOES happen, I'm covered, and, for me anyway, that's more important than going bare. It's just one less thing in my life to have to think about. But that's just me Bob __________________ 79 911SC Targa.. gone but not forgotten 2001 Boxster Black/Savanah Beige RoW M030 suspension 7/15 mm spacers Deambered Desnorked SS door sills Debadged Clear tails Technobrace Technobra I'll never own another black car!