Warranty Question

[Brucelee]

Originally Posted by bmussatti

Glad it worked out for you, Chris. It was also worked out great for Warranty Direct!

For example, there are over 13,800 members on this Forum. What if they purchased an "engine warranty" from Brucelee for $1,000. And just 1/4 of us signed up for the policy.

In the years I have been a member, I can only remember a handful of expired engines. I can't even think of 10. But let's just exaggerate the number to 100.

Here are the potential financials:

3,450 "policy holders" (13,800 x 0.25)
$1,000 policy premiums
$3,450,000

-$1,500,000 for failed engine claims
-$50,000 (my business plan fee! )

$1,900,000 potential profit.

Now imagine the profit if more members agreed to the policy and we did not exaggerate the number of failures.

I think you analysis is flawed. Assuming that if the insurance company wins, the individual policyholder loses is not the way to analyze this issue. If that were true, there would be, on balance, no insurance industry.

The real issue is that each person has a different risk apptetite and a different ability to ASSUME risk. So, for some folks, the warranty is appropriate and for others (maybe you), not.

That is fine. No one HAS to purchase insurance on a used car. Many do. The ones that file a claim and WIN, seem happy. The ones who never had a claims have still received something, the protection against a claim.

All in all, a good system.

PS-I think your math on the 10 engines failed is WAY OFF.

I have been around for 4 years and this issue is not an aberation.

[jhandy]

I paid 2600$
2002 boxster S

3 RMS
2 CV joints with boots
Window regulator
2 valve cover leaks
1 spark plug oil leak
Something with the horn
Ignition switch
2 rear passenger wheel bearings
both front bearings
New convertible top due to rear window tear

Cost to me- $200 co-pay paid 4 times.

Cost to WD- I did not add all of this up but I would guess @12,000$

I bring the car in to porsche when they send me the service notice, and I change the oil myself in between services @5k miles. That way they cant say it was not serviced by a qualified person and deny a claim if the engine blows.

I think I am ahead so far.

Originally Posted by Brucelee

PS-I think your math on the 10 engines failed is WAY OFF.

I have been around for 4 years and this issue is not an aberation.

Richard, I used 100 engine failures in my math, not 10. How many engine failures have you heard of on this Forum in the past 3-4 years? The number is much-much closer to 10 than it is to 100.

[Brucelee]

Originally Posted by bmussatti

Richard, I used 100 engine failures in my math, not 10. How many engine failures have you heard of on this Forum in the past 3-4 years? The number is much-much closer to 10 than it is to 100.

Lets be rigorous. Neither of us know the experience failure rate or cost per failure on a Boxster. To be fair, if the Boxster was such a winner in the warranty dept. these companies would be all over it. In fact they are not.

As of two years ago, many warranty companies would not touch a Porsche of any kind. That in some sense, tells you something about the profit on this type of coverage.

Having said all of that, I refer back to my earlier post. To some, the warranty is the best thing they ever did. To others, it is waste of money.

That is what is so cool about capitalism. CHOICE>