ABOUT RV EXTENDED SERVICE CONTRACTS
Revised 10/2011
Foreword: We have no case "for" or "against" the protection offered by extended warranty coverage for RVs. Some years ago we opted to obtain coverage for a new diesel pusher. And in general our experience was favorable. However, we this is a controversial topic -- one about which reasonable minds can and do differ. We've limited our discussion here to extended warranty policies covering new RVs. Policies available for used RVs are not discussed here, though many of the considerations are likely to be the same.
One of the most common topics of discussion among RVers is whether it is a "good idea" to purchase one of the several insurance products available that will "extend" warranty coverage after the manufacturer's warranty has expired. Typically an RV manufacturer extends its guarantee for a specific time (e.g. one or two years), or until a fixed number of miles has been driven (e.g. 24,000 miles) -- whichever occurs first. There is no industry standard for the number of years or miles covered by such policies. Components such as appliances (e.g., a refrigerator or water heater) are typically covered by a separate warranty; and the RV buyer usually will have to deal with the component manufacturer directly for warranty service during the term of the warranty for that product.
After the RV (or component) manufacturer's warranty period has expired, the RV owner will have to foot the bill for all parts, freight, and labor when something goes wrong. Things like engines, transmissions, and even refrigerators can come with a hefty price tag; and often the amount of labor associated with RV repairs can result in staggering costs. But like most things in life that entail the risk of significant financial loss, this risk is one that can be covered -- at least in part -- by insurance. The policies that offer coverage once the manufacturer's time and/or mileage limit(s) have been exceeded are called extended warranty policies. There are a number of companies offering these policies, all with differing policy terms, time and mileage limits, exclusions, and premiums.
In the abstract, the potentially high cost of RV repairs, once the manufacturer's warranty has expired, would seem deserving of serious consideration. This is especially true for RV owners for whom a large, unplanned out of pocket expense could create serious financial problems. For those who feel they could absorb this type of financial setback without upsetting their financial apple carts, "self insuring" this risk may make more sense. Most RVers will probably feel somewhere in between on this issue, and will seriously consider whether an extended warranty policy on their RV makes sense for their particular circumstances.
We frequently see the same questions in our "RVers Mailbox": Should I buy an extended warranty policy? If so, what coverages should I get, and what company should I buy it from? We've seen reader comments that were at best luke warm in relating to experiences in settling claims; and we've seen others that found extended warranty coverage worth every penny of the premium they paid for it.
We've been listening to these questions and comments for some time, and also doing a bit of research into what protection extended policies offer. We had hoped to be able to put together an article that would provide some answers to these questions. However after several attempts to get answers did not uncover the information we were looking for, we concluded that writing an article with "all the right answers" is, at least for us, not possible. However, in going through this process what we've concluded is that many of the questions we've posed are very likely the same questions individual RV owners might wish to ask of those companies offering to sell them an extended warranty policy. These are more correctly entitled "Extended Service Contracts" for the reasons described below. Thus rather than abandoning our efforts to "explain" these policies, we'd like to share what we've learned in the process of our investigations.
What's Covered?
While vehicle coverages are often referred to by the manufacturer as "bumper to bumper" protection (presumably meaning everything is under the warranty), the extended warranty policies we've seen list everything that is included, describing them variably as "systems", "assemblies", or the like. The enumeration of the various systems covered is extensive, and at first blush sounds like "everything" seems to be included. But is it? Are there additional component coverages optionally available for an additional premium? While chassis and house "systems" indeed comprise a long list, there is often a gap between what is listed and the RV that the manufacturer created from basic materials. A large number of repair issues RVers will face as their vehicles age relate to the basic manufacturing process. Walls can delaminate, ceilings can leak, and floors can deteriorate. Likely these are not among the enumerated "systems" specifically covered in the policy. You may also find a list of "exclusions" -- those parts, components, and service procedures that are specifically outside of the coverage offered by the policy, such as tires and batteries. Since there is no standard form of policy, the only way you will know what IS and is NOT covered is to set aside some quiet time to read the policy coverage sections carefully and completely.
Basis for Denying Claims?
Even if it is an enumerated "system" that fails, was all of the maintenance prescribed by the manufacturer accomplished? Do you have all the supporting documentation that proves you changed the oil at the prescribed interval? Or had your refrigerator serviced annually as recommended by the manufacturer of the unit? Does the policy contain its own specific maintenance schedules on major items that are even more stringent than the manufacturer recommends (and are you willing to follow them)? Probably few RVers are aware of the manufacturer recommended maintenance on each and every "system" or appliance in the newer, high tech RVs. Yet the failure to know them, follow them, and document their having been accomplished may give rise to the denial of a claim under the terms of the policy. Are there "causes" of the failure that are not covered? Surely where a failure is due to owner abuse or neglect we would not expect a claim to be honored. Yet we know of one case where a radiator heater core was covered only because the repair shop was able to confirm the failure was not due to "rust".
What Deductibles Apply?
If you have occasion to submit a policy claim, you will probably be responsible for the first $50 or $100 dollars of each claim. Some will offer senior discounts, but that should be agreed upon and documented at the time you purchase the policy. If you have several items that qualify for repair or replacement under the policy when you take your RV in for service, will the deductible only be charged once?
What's the Standard of Repair?
Does the policy provide a clue as to whether, when repairs are authorized, you'll be getting the job done to the highest possible standard? The case of the failed heater core referred to above gave rise to a secondary question: Should the heater core be simply patched by a local radiator shop? Or should it be replaced with a completely new unit? If replacement parts are needed, can they be used or remanufactured parts? Most of us want to ensure that when repairs are needed, they'll be done in a manner that is calculated to ensure we won't have to deal with that same problem again. This may not be evident from the policy wording, but rather reflected in the internal claims adjusting policy of each company. Except for conversations with RVers who have had experience with specific companies, this may be one of the items most difficult to ascertain in advance.
What about Claims Procedures?
It's late Friday afternoon on the west coast, and your rig limps into a service center with obvious repair needs. It's now early evening on the east coast, where your insurance carrier's claims office is located. They've gone home for the weekend, and all you get is a recorded message. The repair shop says they're ready to get your rig fixed in the morning -- but you note that the only repairs that will be covered are those which are authorized in advance. This is not just a theoretical possibility. Does your policy provide you with a way to deal with these "emergency" situations? And just how efficient will your company's claims staff be even in a routine situation? Maybe it's Monday morning when you limp in for needed repairs. You provide the repair shop with a copy of your policy, and the toll free number to call. They call, but the line is busy -- or they say they'll call back soon. As a practical matter you didn't want to be here, and the only thing you can think about is how soon you can get out of this place and back on the road. Does the call come back quickly? Or are you -- and the repair shop -- just shut down at this point because you haven't had a call back yet? Meantime three more rigs come in, and all the available mechanics are now assigned to other work. Frustrating? You bet. Could it happen to you? Maybe. Here's another example of where the answer won't be found in the policy -- and you'll want to talk to RVers with claims experience to learn how their problems were handled.
RV service centers may also have an opinion of interest here. Increasingly repair centers will refuse to perform service covered by extended service contracts; or if they do, they may express a preference for dealing with certain companies. If so, is this because they know they'll be able to charge their normal hourly rates for the proposed repairs, and will receive timely payment? Where a service center agrees to work with an extended service provider, they are most likely to do so under the condition that you pay them directly, and then seek reimbursement from the contract provider.
What are the Time and Mileage Limits?
While providing coverage presumably after the manufacturer's warranty has expired, it will only last for the lesser of the number of years or mileage stated in the policy. Likely many RV dealers will propose an extended warranty policy, for which they will act as a commissioned selling agent, of a "fixed" term, such as 3 years or 50,000 miles. But most companies offering extended warranty policies will have a broad range of time and mileage limits. We know our own driving patterns make us "high mileage" RVers. So when we opted to purchase extended warranty coverage , we took a 5 year/100,000 mile policy. That works well for us. Our thought is simply that you should be sure to select the time/mileage limits that will best suit your RVing needs -- and not assume the product offered you at the time of purchase is the only time and mileage limit available -- or that there is only one company that issues such policies.
When, and from whom, should you purchase?
Now here's a question we can ask -- but not answer. By its very terms "extended" warranty coverage doesn't kick in until after the original manufacturer's warranty will have expired -- either because the prescribed number of years have passed, or you've exceeded the miles covered. It hardly seems essential that you commit to it before that time, unless you're convinced the premium is likely to go up. When closing the purchase of a new RV at a dealership, this is likely a "product" that can bring in added revenue for the dealer (because of the commission the dealership can garner) incident to the sale of a new RV. We don't fault the dealers for offering this option at a time when our wallets are already open, and our thoughts are on protecting our investment over the next several years. And if we've done our homework in advance perhaps this is indeed the time to buy the added insurance. But we wonder whether this is the optimal time to fork over the extra cash when the original manufacturer's warranty is just beginning its term of duty. Would it be better to deal directly with the issuer of the policy at a later date, when the issue of a third party commission may no longer be germane?
Perhaps the key here is to realize that just as you have hopefully done your homework when you shopped for an RV, you'll do the same when it comes time to consider an extended warranty policy. There are a number of companies offering the coverage, each with its own coverage inclusions, exclusions, time and mileage limit ranges, claims processes, and premiums. And there are a variety of sources for purchasing a policy. An internet search on "RV extended warranty" will bring up a long list of choices for you to investigate.
Summary and Conclusions:
A note about the cost of coverage: While beyond the scope of what we've intended to cover here, we'd note we see extremely large differences in the cost of what on the surface appear to be similar coverages. Thus while cost is not here discussed, we'd caution any purchaser to carefully compare cost, as well as the features discussed above, when considering this type of coverage. And be advised -- the costs and coverage options are both "negotiable", so don't assume what the dealer offers is the only option. And to avoid any surprises at closing, ask about what coverages they will offer BEFORE heading into the back room to close the deal. That's the last place for you to be making such an important choice.
We conclude where we began: We have no case "for" or "against" extended warranty coverage for buyers of new RVs. Our own experience has been positive. The claims process has been efficient, and we were easily able to make alternate arrangements on one occasion when we were facing a weekend repair situation. The service centers where we've had work done have all reported satisfaction in dealing with repairs covered by our policy. We have the peace of mind that is provided by the added protection offered by the policy; and we have an asset that is transferable to a subsequent owner should we sell our coach (which we happily have no plans to do!).
However we find the world of extended warranty coverage for RVs one that is not easily understood by most RV owners; and we wanted to share both our experience and observations here. Hopefully some of the questions, comments and observations will be helpful to others who will be making a choice about purchasing such coverage in the future.