Maggie and I have spent months searching for the perfect RV, and right now we are just days off finalizing our purchase. We should be excited and happy, but recently I have been thrown into a world of doubt and confusion regarding the issue of purchasing an extended warranty. In this post, I share what we learned during this difficult time. I trust that this post will help you if you are thinking of buying an extended warranty for your RV.
So I have done a whole lot of research, and discovered 12 interesting facts that I thought I would share with you. First I will explain how the wheels have started to come off at the dealership, and then I will share with you the facts I learned. If you don’t want to read our dealer horror-story, you can skip straight to the section called 12 Crucial Facts About Buying an Extended Warranty for your RV.
The way this all began will be a familiar story to most people who have purchased an RV. The sticker price looked reasonable, the dealership has a good reputation, and we liked the salesman. Our salesman listened to us, understood our needs, and didn’t try to push any products on us that would not serve our needs. All in all, we felt confident moving forward with a very expensive purchase, with a salesman and dealership we were learning to trust. Plus, our dogs liked the RV!
We had heard there would be additional potential costs before closing, but we are financially savvy, and we were not too worried about how we would deal with those. Turns out, we were wrong.
Our salesman referred us to the “business manager,” who apparently was going to tell us about warranty options. We thought that was good, because we wanted to know all the details about the warranty that would come with our expensive purchase. We assumed this would be a similar process to buying a new car, when the business manager tells you about all the protection packages for your new vehicle. No problemo, right?
Well, the interview got off to a terrible start. The “business manager” – let’s call him Jim, although that is not his real name – introduced himself by trumpeting his educational qualifications. As we sat down he pointed out some shortcomings with our salesman, while we were all in the same room. We were both appalled as we have both been executives, and would never have called out a colleague in front of customers. Strike one, Jim.
Jim immediately began trying to sell us a on a plan to mortgage our home, so that he could invest the proceeds on our behalf. He told us that the returns would be sufficient not only to pay for our RV, but also to pay for the mortgage. Hmmm … this sounded like 2008 all over again, when homeowners over-extended themselves and lost their homes. Strike two, Jim.
Fortunately Maggie is a very experienced accountant and is a real business manager. I watched her body language as she recoiled from this pushy man and started to do crosswords on her phone. Strike three, you’re out buddy. Jim was oblivious to Maggie’s obvious body language, and kept trying to persuade us to do something that would earn him a nice commission – while exposing us to the completely unnecessary risk of losing our brick and mortar home.
To make matters worse, we had not asked for any help with financing. This sales spiel was all about Jim trying to find a way to make money out of us. It had nothing whatsoever to do with our needs. In strong contrast to our salesperson who had listened to us carefully and respected our needs.
Just for the record – there is no investment we could afford that would pay out enough interest to finance an RV, and pay for itself. Instead, the interest on the loan against our home would exceed any earnings we would make on investing that money. We would incur financial strain and risk for no reason at all – except to make some money for Jim.
Finally, Maggie had had enough. She interrupted Jim with: “I’m an accountant.” Jim promptly backed down on his ridiculous “advice.” I was left wondering how many people he had fooled into making a bad decision.
But that was not the end of it. I kept asking about the warranty we would get, and Jim kept fobbing me off with, “It’s all in the brochures.” It wasn’t – I still don’t know the details of the manufacturer’s warranty we can expect to get from Denali.
We gained no useful information from that meeting, and walked out with some brochures about additional products we could buy to protect our RV and – of course – brochures about an extended warranty we could buy. Jim told us he would email prices.
When his email arrived, it was truly unsettling. I have been in business for 30 years, and I write for a living, so I know a thing or two about what business emails are supposed to look like. For starters, they should not be written in ALL CAPS and littered with spelling errors. My favorite was the reference to a “mouse shiled” to keep mice out. In case you were wondering, that should have been “mouse shield”. The “mouse shiled” has now become one of our favorite phrases.
Jokes aside, Jim’s incredibly unprofessional email really alarmed us. Who were we dealing with here? We were about to spend a LOT of money, and the “business manager” would have failed a junior level course in business communications and etiquette.
So there we were, comparing a very unprofessional email to a pile of glossy brochures. There was still no information about the Denali manufacturer’s warranty. Instead, there were quotes on a variety of protections we could buy for our RV, such as paint protection and of course, the “mouse shiled.” Plus, a quote for an extended warranty of seven years for several thousand dollars.
However, the quote for the extended warranty did not match the terminology in the pamphlets, so I had no way of knowing which warranty package was being quoted on. We tried asking questions by email, but Jim just confused us further. Feeling frustrated and confused, and starting to worry that we were making a mistake with our choice of dealership, we next dropped off a printed letter asking Jim to clarify what exactly what he was quoting on. Three days later, we have yet to get a response.
So of course, I have started researching, and have unearthed 12 interesting facts about extended warranties. I can tell from the Internet that many people wrestle with this issue, so I thought I would share what I have learned. This knowledge has made me feel a lot less worried. Knowledge is power!
12 Crucial Facts About Buying an Extended Warranty for your RV
#1: You Do Have Choices about which Extended Warranty you Buy for Your RV
First off, when you buy an extended warranty from the RV dealer, they will of course take a cut. This means it is not necessarily going to be the best price you could have paid for that warranty. It also means it is in the best interests of the “Jims” of this world to sell you that warranty, regardless of whether it is the best product for you. What was not apparent to me until now is that I don’t need to buy the specific extended warranty Jim is pushing. There are other products on the market, and we can just shop around and buy a warranty elsewhere – and not have to pay Jim’s commission.
#2: There is No Such Thing as an Extended RV Warranty that Covers Everything
Jim has insisted that an extended warranty will cover “everything from hitch to bumper” – but all the experts insist that there is no extended warranty on earth that will cover everything in your RV.
#3: You Do NOT Have to Buy an Extended RV Warranty on Day One
There are several experts who advise that you don’t need to buy an extended warranty on the same day you buy your RV. If you are buying a new RV, you will be getting at least a one-year manufacturer’s warranty, so you do not need an extra warranty during that year. And most experts agree that most of the “breaking-in” problems will occur during that first year, anyway, and are likely to be covered by a good manufacturer’s warranty. Many of these experts advise that you start off with the manufacturer’s warranty, and then consider shopping around for an extended warranty when that first warranty is about to expire.
A big argument in favor of that approach is the fact that selling extended warranties is simply another way for dealers to make money. Paul and Nina on the blog Wheelingit state:
“Dealer-sold warranties are typically much more expensive (often twice the price) and less comprehensive than any warranty you can get externally. Avoid the trap and shop around on your own.”
#4: Delaying the Purchase of Your Extended RV Warranty May Increase the Cost
To be fair, there is a counter argument that holds that you might as well take the extended warranty offered with your new RV. The reason being that you will not be able to get as good a price when shopping for an extended warranty for a one-year-old RV. So you might as well buy it up front for a better price. There are some pretty fierce arguments about that on various Internet forums. I plan to test this for myself by phoning some of the extended warranty companies and getting quotes.
#5: You Can Choose to Self Insure Your RV
On the other hand, there are also some people who strongly advocate that you should not buy an extended warranty at all. They suggest that you “self insure,” that is, that you put that money in savings, and use it to pay for problems if and when they occur. Backing up that argument are countless complaints on the Internet from people who spent thousands on extended warranties, only to find that when they put in claims, the companies found ways to refuse to pay. Or had gone bankrupt. I noticed in particular a lot of complaints about Good Sams’ extended warranty – basically that it is very expensive, and that the company is incredibly skilled in finding ways to not pay out claims.
#6: Some People Have Great Experiences with Extended RV Warranties
On the other hand, there are also people on the Internet who attest to good experiences with Good Sams, or who have been well served by other extended warranty companies, or who feel the money spent was well worth the “peace of mind.”
#7: Exclusionary Contracts and Listed Component Contracts for Extended RV Warranties
If I do decide to shop around, I have learned a very important distinction that I will keep in mind. There are two kinds of warranty contracts: Exclusionary Contracts and Listed Component Contracts. An exclusionary contract is better. It will cover every mechanical aspect of your RV except for what it specifically excludes – which will be explicitly listed in the contract. Listed Component Contracts list only what will be covered. So if it is not listed, it is not covered. The danger here for newbies is that you don’t really know what could go wrong, until it does go wrong! Of course, it is a less expensive option, but it might not buy a whole lot of peace of mind.
#8: Find Out About Consequential Damage in Your Extended RV Warranty
This refers to damage caused to a covered part of your RV by a part that is not covered. For example, an un-covered gasket blows and destroys your transmission. Even if the transmission was covered, your claim will most likely not be allowed if you are not covered for consequential damage.
#9: Check Who is Backing Your Extended RV Warranty
If a company sells you a warranty for seven years and then goes bankrupt a month later, you will have just spent a lot of money on nothing at all. To prevent this unpleasant outcome, find out who is backing the warranty. It ought to be an A-rated insurance firm.
#10: Check for Fine Print that Could Exclude You
The most likely fine print could be about full-timing. Some contracts will exclude you if you are full-timing. And bear in mind that some such contracts define “full-timing” in unexpected ways – for example, they might stipulate that spending more than three months per year in your RV constitutes “full-time”! In that case, it is safest to find a different insurer. It’s never a good idea to lie to insurance companies.
#11: Find Out Who Can Carry Out Repairs
Make sure that there are a reasonable number of repair centers in the areas in which you will be traveling. This should preferably be nation-wide, or even better, include the USA and Canada.
#12: Check Up on the Transfer Policies for Your Extended RV Warranty
One complaint I have seen a few times is from Canadians who found they could not transfer their policies to Americans. This is a problem because the biggest pool of potential buyers for your used RV will be in the USA, not Canada. So find out in advance what the policy stipulations are for transferring your policy if you sell your RV.
The Decision: To Buy, or Not to Buy, an Extended RV Warranty?
So at the end of all this research, and armed with all these facts, I am left with a choice: do I just shell out thousands of dollars right now to the dealership for an extended warranty I will not need for at least a year? Or do I shop around and independently buy an extended warranty right now – which I still will not need for at least a year? Or do I wait and run the risk that if I buy an extended warranty in a few months’ time, or in a year’s time, it may be even more expensive? I am leaning towards shopping around, because at least with that option, I can do my own research, instead of just blindly trusting the recommendations of Jim, who apparently sees us as nothing but an opportunity to earn commissions.
One thing is for sure – I will be reading all the fine print on any contract we consider buying! I have never really bothered too much about fine print, but I think this is an excellent to start.
I will keep you updated!
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