re: Exactly how stupid am I: Car warranty edition.

quote:

---

once paid a lot of money for term life insurance but I didn't die, did I waste my money? The overwhelming majority of life insurance policies never pay out, we buy them because the cost to mitigate risk seems reasonable, the same analysis should be applied to extended warranties. Like life insurance just because extended warranties are very profitable for the seller and for most do not pay off is not a sufficient reason to say they are a waste of money?

---

You are an idiot, so is the guy about the flood insurance.

Insurance is for protecting yourself against an occurrence that you can not afford to happen without insurance. You buy term life insurance in case you do die if you have a wife and family to support after your death. You buy car insurance in case you wreck your car to replace it and for the liability of injuring someone else. You buy flood insurance in case your house floods and you can't afford a $100,000 fix.

The issue with extended warranties are two fold:
1.) Is it going to save you money? Statistically no
2.) Is it going to save you time/ hassle?

In my experience dealing with warranty issues are a HUGE pain. It is almost always easier to fix it yourself then have to deal with the dealer/ warranty provider. As said above, if you have an extended warranty its not as simple as dropping it off at the dealer and having it fixed free of charge no issues asked, or at least rarely is.