Toyota Extra Care Platinum or Gold

I feel this thread goes in circles. Over and over and over.

cossie1600 you clearly do not understand the differences between insurance and an extended warranty. Please read this post Andreuccio made. It is dead on.

 

An extended warranty will not cover devices from wear and tear. Brakes, tires, and lights bulbs have normal wear and tear.

The Prius does not offer HID so you do not have to worry about that. On models II thru IV they use $6 bulbs. If you go to the dealer they will charge $100 to replace it. If you go to Advanced Auto Parts or any of the places like that they will replace it for the cost of the bulb ($6).

 

The pertinent question is not how people made out on extended warranties - that will be but a small population. The pertinent question is how many people had repairs that occurred within the period that would be covered by the contemplated warranty.

That information, taken in concert with the more reasonable analytical method that Andreuccio has already set forth may indicate that the "Peace of Mind" premium is not so great as has been suggested by Judgeless throughout this string. (I have another 2 years or 16k miles before I have to decide).

To the point of selling as a used vehicle: If you plan on having a remainder of extended warranty at sale, I can tell you that - as a potential purchaser - when I was considering used Prius(es): that was a BIG plus.

 

Go to Gen I and Gen II forums and post the question. I bet you will have a hard time finding a person that made out.

If you are trading the vehicle in, the dealer does not care. If it is a private sale it might have a small amount of value. No were near what you paid for it.

 

Well, we all know Judgeless's position, now don't we?

 

My position has been the same from the beginning. When you buy an extended warranty you betting against all the research Toyota has done when the set the cost of the extended warranty.

If you feel your smarter then the group doing the research then go for it. Maybe you have some insight they are unaware of. Maybe out of the blue the Prius will become the most unreliable car out. Based on what you read in the forums this is far from the case.

 

OK - here's the problem - you're right - your position has been the same. Therefore, your useful contribution to this topic has diminished greatly following about 3 posts - in which you clearly, articulately stated your position. Yet, you have some hang up about convincing others that your position is the "smarter" one. Who knows, maybe you were overshadowed by a smarter older brother as a child? Maybe you were just never good enough to please your Mommy? At any rate, you continue to allege that one choice is the "smarter". The reality is that it has nothing to do with being "smarter" or having more "insight" - it has to do with a decision to limit one's allocation of risk. To change financial uncertainty into certainty. Some people value this. You've made it clear, repeatedly, that you do not.

Maybe you have someone at home whom you can convince of your "smartness"? It's not working here.

 

Not so much a question of whose smarter. It's that they have the information and we don't.

Even doing a new thread about repairs needed will only give us limited information. We really need a random sample, but anybody who answers are already self selected by 1. being members of PC, and 2. choosing to respond to the thread. I still think it's a good idea, and plan to do it at some point if it's not done already by the time I get around to it. It just won't give us anything conclusive.

One other thing to consider that occurs to me: It undoubtedly costs Toyota a lot less to make any repairs than it would cost me. Let's say I'm accurate that Toyota expects to lay out about $500 for the warranty. They're getting labor and parts at cost. It might very well cost me $1000 even at my local repair shop to get a job done that Toyota might be able to do at a cost to them of $500.

What this means is that there's the possibility we both might win.

While I doubt it's the case that we both win, I think it's likely that, while the warranty costs Toyota something in the neighborhood of $500, it's utility to me, just in terms of expected payout, is higher than that, maybe $700 or $800.

(This doesn't apply if, as in Judgeless's case, you're willing to sort through junkyards and can do the work yourself. In that case, you can probably do the work cheaper than Toyota. But then you have to ask yourself how much your time is worth.)

 

Once again, to the extent insurance companies are still "in business," i.e., have more money coming in (our premiums) than money going out (their costs: rent, utilities, salaries, etc.) and have enough left over to pay for our covered repairs AND make sufficient profit TO KEEP THEM IN BUSINESS... then it seems to me that, by definition, insurance against loss is actuarially a "bad bet" for the consumers.

That is, the sum of all the purchasers' premiums is necessarily greater than the sellers costs, payouts, profits, etc.

An approximate personal indicator of whether you should purchase an extended warranty might be, "Would I carry liability and/or collision coverage if it were not compulsory?" e.g., personally I have non-compulsory collision coverage (paid cash for the car) even though it's a "bad bet."

P.S. No doubt, a review of LLoyds of London, the history of pooling risk, Dutch shipping, etc. would reveal similar discussions... and thank God we're not talking about health "insurance."

 

Good points - but they seem to ignore the possibility above that a win-win may exist, based on the fact that the entity providing the insurance is the same as the entity that would be making the repairs. (Which is a bit different from "standard" insurance, where the insurer is a third party). The distinction being that when the insurer and manufacturer are the same, the insurer (as a signing party) has access to resources and discounts that would not be available to a third party.

Yes - at the end of the day, there must be a net profit, or the insurer would cease to offer the insurance.

But: let's not forget that the profit is not NECESSARILY defined by: payments out < premiums in. In this case, WHEN the payments are made (and how the insurer invests the premiums) may provide some time-based profit. (Although, admittedly, in the present investment environment, I bet this is but a small factor of profitability for Toyota).

 

Not sure, but I assume this is in response to my previous post, so I'll respond to it.

I agree with you 100% that "the sum of all the purchasers' premiums is necessarily greater than the seller costs", and that, were that not the case, insurance companies would go out of business.

My point in the previous post was perhaps a bit more subtle. Let me try to rephrase it:

Toyota's cost, we agree, is necessarily less than the $1000 premium they charge us. Let's guess, just to have a number to work with, that it costs them $500 per car that's warrantied.

I believe I will get more utility out of the warranty than the $500 it costs Toyota.

(It might not be enough to make it a "good bet", but I think it gets us closer.)

Toyota makes the parts, so they get them at cost, and has a network of mechanics at dealers that they have undoubtedly negotiated some discounted rate for.

I pay retail for the parts. Toyota's cost for factory parts may very well be lower than my cost at an auto supply shop for non-factory parts. The same might be true for labor. So it's possible that a repair that would cost Toyota $500 might cost me $700, or $800, or even $1100.

Because Toyota is, in part, in the business of repairing cars, and thus can do it at cost, their expected payout for the warranty is different, and probably lower, than my expected return for the same warranty.


This is, btw, different from the case of fire insurance, life insurance, auto insurance, etc. The fire insurance company won't fix my house if it burns down, they just pay out money, so it's a straight bet.

 

Not once did I claim to be smart? The one that is smart is Toyota. They found a way to make money on Pease of Mind. It is all profit for them. A loss for the consumer.

 

You're right - 94 must be a typo on my part. Take a look at 30. You state that (distinct from yourself) uneducated people buy warranties for piece of mind- which clearly states that you believe yourself more educated (and hence, smarter) than those of us who might consider purchase of an extended warranty. You use such similar inferences and outright statements in other posts as well.

As for how "smart" you really are - like I said: go home and try to convince someone who respects you how smart you are.

You aren't convincing anyone here.

 

Sorry... per my post, I couldn't believe this was still being discussed... but you had moved on to more real-world considerations.

I agree with you 100%... Toyota Financial costs vs my costs.

Similar consideration, at one point Honda required you to inform them of the extended warranty prior to their starting the work... making me think there might be more "wrong" with my car if I didn't have the extended warranty. Of course there are many other considerations... the time-value of money... you pay your premium in current dollars, their payout is in future dollars, anticipated inflation, etc.

However, I'm not sure your point affects one's decision to buy an extended warranty... although I must say Apple's pretty good about keeping you happy with their AppleCare

In my opinion, an even bigger scam are Sears' Protection Plans, with dollar maxima and them WAY overcharging you for the labor and parts!!!!!

 

I agree 100%, they are both very similar products are solely created to generate a profit.

They should not be compared with auto or home insurance. These are created to protect you from catastrophic damage that would result in more than you can ever pay out.

 

AndreUccio,
Nice post, now let me post some contrary arguments:

1. Toyota does not price the warranty by its cost, but by how much the consumer will pay. Toyota's cost is simply a market bottom line.

2. Toyota does not repair the car, a dealer does. At least in some cases Toyota gets a discount on dealer pricing compared to say me, but it is still quite high. E.g, I bought an inverter coolant pump for $88 and installed it myself despite being a noob DIY'r. Now that the pump is part of a recall, we know that dealerships are charging Toyota >$300.

3. Self-insurance lets you DIY some things, choose independent mechanics for others, and if worse comes to worse, go to a Toyota dealership. No such choice with warranty work.

4. Warranty cost from the company side is not only cost of repairs and 'profit'. It is also advertising, administration, middle-man profit, risk, and consumer abuse.

5. Lastly, a peace of my mind [sic]: I don't worry about Toyota arguing with me whether a repair should be covered or not.

 

I know, you're not talking to me, but:

1. 'Would be interesting to know whether they go top->down, or bottom->up... I suspect both. Adjustments are made at the margin, as they go along... "what the market will bear" obviously varies... how else would I have been able to buy an end-of-year 2010.

3. I thought about the DIY, NAPA, etc., argument, but thought the computerized diagnostics, etc. probably outweigh it...

4. What's this "consumer abuse" of which you speak? I think Toyota's been far too forgiving of abuse going the other way, of consumers abusing Toyota. I am at a loss however, at understanding why Toyota seem so inept at handling the U.S. government.

Regardless, after all the graphs, the risk analysis, and jawboning... I usually buy the extended warranties... for, as you said, a modicum of peace of mind.

Which is to say I agree with SageBrush... I love say to Apple, "Yeah, I've got Applecare." Hopefully I'll win with Toyota, and be able to say, "Yeah, I've got the extended warranty." Oops, should I have said lose with Toyota if I have to use the warranty