Quote:
|
Originally Posted by mikefocke
Understand that only about 20% of the $ you spend of an extended warranty for any item is planned by the insurer to go towards future repair costs, the rest is selling, administrative expense and profit. Now why go into a deal like that?
|
Wow, 20% can't possibly be right. So in the above deal the company expects to pay $400 in repairs per Box over 5 years, on average? I also think 80% is just too much for administration and profit. Warranty companies would be mushrooming on every corner trying to get a slice of that pie.
We've discussed warranties before here and the conclusion is that it depends on the owner's financial situation and/or ability to take on risk (no warranty) for the expected better average payout (not giving the profit to the insurer). Alleviating risk, however, does not come free, and the mentioned deal in particular looks like a good one, indeed.
Z.