Is an Extended Warranty (Service Contract) worthwhile?

 The short answer: It depends…

Rachel Olson

(Rachel Olson first started in the Folsom Lake RV Service Department in 2011and worked as a Service and Parts Advisor for several years.  She currently works as the Administrative Assistant for dealership.  Her favorite RV at the moment is anything with a bunkbed or loft.)

 

Now, the long answer:

First, you need to know, I personally believe in them. Having come up in the dealership in the Parts and Service side, I have had first-hand experience with them. They can be a huge financial safety net, if you have the right one.
I have them on both of my cars. And although, I don’t have an RV yet (WAIT! I have a growing family, and eventually, we will. We do have family members that own RVs-from motorhome, travel trailer, and residence style-that they generously let us use from time to time.), but when I DO get an RV, I will get an Extended Warranty on that, too! I even have a warranty on my house. But each time I consider an Extended Warranty, I ask certain questions. I have detailed them below.
But enough about me.

So, you’ve decided on your RV. Congratulations! You’re investing in your quality of life and vacation time! There are many ways to protect your investment, including the obvious of carrying insurance on your RV (a requirement here in California), in case of an accident. All new RVs come with a manufacturer’s warranty and the length of time and warranty itself depends on the manufacturer of the brand you select. There are other products and services that are available to cover you, such as Tire and Wheel Replacement coverage, Paint and Fabric Protection with warranty, Roadside Assistance Plans with Towing, etc. These all deserve time and attention separately. Today, we are going to talk about Extended Warranties (Service Contracts).
To start with the basics, an Extended Warranty is a contract between the underwriting company and you, the RV Owner, to cover expenses related to the repair of your RV. They cover a certain number of years, with a selected deductible amount, on certain items covered in that individual contract.
Each company has different policies and procedures, but every Extended Warranty company requires that the repair facility contact them for authorization prior to any work being performed in order to cover a repair. Repairs that are completed at a repair facility and then submitted to an Extended Warranty will not be covered under the service contract.
There are many options when it comes to selecting an Extended Warranty provider. But the first choice you need to make is if you want to purchase one. The answer will be different for every person. You will need to ask yourself a couple questions, weighing the costs and benefits:
1. Does the potential cost of repairs for the RV outweigh the cost of the extended warranty?
2. Am I a handy person, and can I and do I enjoy fixing things like replacing a water pump, replacing a circuit board in a RV refrigerator (12volt/110v/LP), replacing slideout or landing gear motors if they fail?
And, you need to understand the details of the contract itself:
1. What is covered? This should be outlined in detail. Most service contracts will not cover wear and tear of the RV. In other words, if it is a cosmetic issue, or you caused the damage, it won’t be covered.
2. How is it covered?
a. What are the details of the deductible? Some contracts have one deductible per visit, other companies have one deductible per repair item. So you could be spending $100.00 on a visit for two items, or $200.00 on one visit depending on who you have for your service contract.
b. Is the diagnostic time covered under your contract? Some companies will only cover the cost to repair the item, not to diagnose it. So you could spend $130.00 in diagnosis time, plus the deductible (or more). So, if your Extended Warranty company doesn’t cover diagnostic time, and there is a deductible for each item on the repair order, you could be pulling some serious dough out of your pocket, even with an Extended Warranty service contract.

3. Where is it covered?
a. Is it a dealership only service contract? Or can you take it to any repair facility? Some dealers sell warranties/service contracts that are valid only at the selling dealer’s repair facility. Other Extended Warranties will work with ANY repair facility.

4. Can the warranty contract be cancelled by the Extended Warranty company for too many repairs on your RV? What is the limit, if any?

However, don’t let this deter you from considering an Extended Warranty!
There are companies that make it simple, straightforward and easy, as long as you follow their procedures. For instance, Easy Care and American Guardian Warranty Service both offer service contracts that have one deductible per visit (not item), and include the diagnostic time and repair time in their coverage. The service facility just needs to obtain authorization from them prior to doing the work.

Ask questions at the dealership about the Extended Warranties they offer, ask about the details. Weigh the pros and cons of your options, including expenses of buying the contract, or paying out of pocket for full cost of repairs.
Some people have purchased their contract, used it, and been so happy with it, that when their term expired, they renewed their contract for another term (typically 3 – 5 years). And honestly, I know of customers who have never needed to use the service contract after the manufacturer’s warranty expired. Just remember, you need to do what is right FOR YOU.
If you want to purchase one, but don’t want to come out of pocket right away for the expense of its purchase, often times the Extended Warranty contract can be put into the financing of your RV. There are usually incentives available at the dealership for you to purchase the Extended Warranty at the time you purchase your RV, rather than adding it later. If you do decide to wait on the Extended Warranty, be sure you have all the paperwork completed before the expiration of your Manufacturer’s Warranty, so you don’t have to pay expensive rates to have your RV certified prior to the Extended Warranty being issued. In other words, you can’t have something break, and then buy an Extended Warranty to have it fixed. The RV has to be certified in good working order first!

 

In summary, if you think an Extended Warranty is right for you, then make sure you are getting the right kind of coverage for your needs and expectations. If you would like more information, please contact our Finance Manager, Melinda Miller at 916-635-4545 to discuss pricing and plans that are available, with no pressure or obligation.
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Piggy bank photo: By Ken Teegardin from Boulder, Boulder (Hand Putting Deposit Into Piggy Bank) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)%5D, via Wikimedia Commons
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