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Originally Posted by trey100
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Originally Posted by RobbyMack
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Originally Posted by boss2k
So you are saying for 200 bucks the insurance company is providing extended coverage on a BMW that costs around 3-4k in market, how is the Insurance company making money? Even if u don't file a claim they are making 200 bucks for a risk of thousands of dollars if there is a claim? How is that possible?
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The market for those aftermarket extended warrantees you are comparing is totally different. The risk pool is different as is the take rate. That's why they are expense. That being said they are also underwriting at an enormous profit because the actual risk is very low for a catastrophic failure. Basically once you drive a modern car off the lot and it doesn't break on your way home the risk for any type of serious malfunction for the next 100k miles or 7-10 years is essentially near zero. The manufactured risk based in anecdotal evidence in this forum and the internet as a whole creates the market for those aftermarket warrantees. That all being said anyone driving a car like a M3 or other luxury vehicle is better off with a insurance company not geico because their offered limits of insurance and available umbrella are not enough if you have decent income and assets to protect. That liability risk is way more important than some mechanical breakdown insurance. |
But there's a lot more that can break on a car before 100k Miles. One NAV/electronics failure could be expensive, or any other minor components. Just seems like $30/year is so low, I just assumed it wouldn't cover anything. Lesson learned it seems! |
I wouldn't assume electronics would be covered under mechanical breakdown without reading the policy language.