The first one came in a white envelope made to look like it was from the government. "Final notice regarding your vehicle's coverage." The Silverado doesn't have any coverage. It's a 2014 with about 148,800 miles on it, and its factory warranty ran out years before I bought it. The envelope went in the recycling, but it got me thinking.
This year the truck has needed a 4WD actuator for $386 and a transmission fluid exchange for $289, plus the deer, which insurance mostly handled. Last year it was a water pump for $612. So for the first time I asked whether an extended warranty, which is really a service contract you buy separately, made sense for a truck this old. I got three real quotes, not postcards, and read all three contracts. It took most of two evenings at the kitchen table.
The three quotes
I'm not going to name the companies. Here's what each one offered for our truck:
- Quote one: powertrain only (engine, transmission, transfer case, axles), 24 months, $250 deductible per visit, $2,190.
- Quote two: a broader "stated component" plan covering powertrain plus the AC, steering, some electrical and the cooling system, 36 months, $100 deductible, $2,870.
- Quote three: a similar plan to the second, 48 months, $0 deductible, $3,410.
The middle one was the one I took seriously. $2,870 works out to about $80 a month over 36 months, plus $100 any time we used it.
What the contracts left out
This is where reading the actual contract pays off, because the brochures and the contracts did not sound like the same product. Here's what I found in the fine print of the $2,870 plan, and the other two weren't much different:
A waiting period. Nothing was covered for the first 30 days and 1,000 miles. Fair enough, but anything that failed in that window wasn't covered later either.
Pre-existing conditions. Any problem that "existed or was developing" before the contract started was excluded. Our transmission had a torque converter shudder in May, fixed for now with fluid. If the converter fails next year, which is exactly the repair I'd want a warranty for, I'm fairly sure that clause comes up.
Seals and gaskets. Covered only if they leaked because of a failure of a covered part. On a truck with this many miles, leaky seals and gaskets are one of the most likely things to go wrong.
Maintenance records. They could ask for proof of every oil change. I have the notebook, so I'd be okay, but a lot of people wouldn't be.
Wear items, diagnostics, fluids. Brakes, suspension wear parts, the 4WD actuator (listed under "wear-related electrical"), diagnosis time and the fluid to refill anything were all on the excluded list or partly excluded. The shop would also have to call the warranty company for approval before starting, and the warranty company decides what labor time it will pay.
I went back through my own repair list from the last year. Of the three truck repairs I paid for, I think one, the water pump, would clearly have been covered under quote two. The actuator and the fluid exchange very likely wouldn't have been. That's $612 of possible coverage against $2,870 plus deductibles.
What we did instead
I talked it over with Tina. She asked the right question: "If we put $80 a month in a savings account instead, what happens?" What happens is that if nothing breaks, we keep the money. If something breaks, we use it. And if something really big breaks, like a transmission, we'd be deciding whether the truck is worth fixing at all, warranty or not.
So in July we opened a separate savings account just for car repairs and set up $80 a month to go in automatically, the same as the warranty would have cost. Over 36 months that's $2,880, ten dollars more than the warranty price, and it's ours. It's not as tidy as a contract, and if the transmission goes in month two, I'll be eating my words. I accept that risk because I know what we can absorb, and with the van and Garrett's Civic also getting older, the fund covers all three vehicles instead of one.
I'm not saying a warranty is never worth it. For somebody who couldn't handle a surprise $2,500 bill, the monthly payment might buy real peace of mind. For us, with a little cushion and a good shop, the fund made more sense.
The second envelope arrived three days later. "Second final notice." I'm keeping that one. It's the funniest thing on the fridge.