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Is Extended Coverage worthwhile?

Discussion in 'Gen 2 Prius Main Forum' started by gene4655, Jul 21, 2007.

  1. gene4655

    gene4655 Junior Member

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    We have a 2003 and a 2006 Prius. Today we received two letters urging extended warranty coverage on the 2003, one from DS Dealer Services, the other from Toyota "Service Protection Direct." The one from Toyota warns us that the average cost for a transmission replacement on the '03 is $1968, and for engine replacement is $2326. Due to "the nature of this program" (?), the Toyota offer is good for only one week after receipt of the letter. They don't tell in the letter how much the extended coverage is. SO THE QUESTION, have any of you taken this coverage, and what do you think about it? Would appreciate any opinions. GENO
     
    #1 gene4655, Jul 21, 2007
  2. IsrAmeriPrius

    IsrAmeriPrius Progressive Member

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    Service Protection Direct is NOT a Toyota issued or authorized extended service plan.
     
    #2 IsrAmeriPrius, Jul 21, 2007
  3. FL_Prius_Driver

    FL_Prius_Driver Senior Member

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    Does buying a lottery ticket make financial sense. No.....but they sell like hot cakes.

    Does buying an extended warranty make financial sense. No, not over a lifetime. But it is a booming business anyway.

    Is the motivation a feeling of security? Obviously this is the fuel that makes it such a money making business. No way I can win that discussion since that belongs to the person making the decision.

    Is the motivation strickly financial? A little clear thinking will answer your own question.

    I have spent around $1100 fixing all the things on my 2001 Prius over the years. An extended warranty would probably cost around a $1000 dollars but would not provide for all the repairs (read the fine print). The vast majority of people on here have had much lower repair bills over the Prius extended warranty period.

    When I look at the money lost on repairs ($2000) and the money saved by rejected all extended warranties (over $5000) over many cars, the answer is clear to me.
     
    #3 FL_Prius_Driver, Jul 21, 2007
  4. bankshot

    bankshot New Member

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    I've just bought my Prius, so I have no experience with any Prius breakdown/warranty issues personally. However in general insurance is a sucker bet. Whoever sells the coverage must charge more than the average policy's claims will be otherwise they lose money. And where data is lacking the seller will usually increase the price to cover themselves against a higher than expected number of claims. So it really all boils down to two questions:

    Do you feel lucky? If so don't buy it.
    If you are unlucky can you afford the loss? If not then do buy it.

    If you think you will have an average or below-average repair bill for your Prius, then take the cash and put it in a money market fund as a hedge against repairs. IMHO the only reason to get insurance/extended coverage is if you cannot afford to be without it - Insurance and warranties put a cap on your loss in a catastrophic situation.

    Odds are you will be better off investing the cash than you will buying a warranty. But that is cold comfort if you are the unlucky one who winds up footing the bill for a huge repair. Sorry to give elvish counsel here but ultimately it's your call.
     
    #4 bankshot, Jul 21, 2007
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