Extended Warranty

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SS130
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Extended Warranty

Postby SS130 » Fri Dec 08, 2017 7:49 pm

I'm considering purchasing extended warranty coverage on my new Merc 40 ELPT. Does anyone have a preference: Mercury or Brunswick?

frontier
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Re: Extended Warranty

Postby frontier » Fri Dec 08, 2017 9:18 pm

Extended warranties are rarely worth it. Whether it's an outboard motor , car, TV or washing machine. I read somewhere that 55% of people who bought an extended warranty never used it. Of the 45% who did use it, they spent more on the warranty than it paid for repairs. And they tend to have lots of loopholes and can be a hassle to use. Huge, high profit money maker for selling dealers. You have a 3 year factory warranty included with your Mercury anyway.

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Re: Extended Warranty

Postby jimh » Sat Dec 09, 2017 7:16 am

I read somewhere that you should generally ignore any advice that begins "I read somewhere...."

An outboard engine branded as a Mercury is a Brunswick engine. There is no company called Mercury Marine. They were taken over many years ago by Brunswick. Mercury is just a brand name of Brunswick. On that basis, I have no idea what constitutes the difference between an extended warranty offer from Brunswick or from Mercury. There is no company named "Mercury"--just Brunswick.

Insurance plans are often sold under the name "extended warranty." You are buying insurance. Insurance is a contract in which another party shares some of the risk that you have. In the case of an outboard engine, you are at risk for failure of the engine and the cost of its repair. If you want someone else to share that risk with you, then buy an insurance policy called an "extended warranty."

Like any insurance policy, the people underwriting the insurance are in the business of doing that to make a profit. They anticipate that, in selling you the policy they, the sellers, will in the long run and over many customers, be making a profit. The notion that you will buy insurance on your outboard engine and end up receiving more benefit from the insurance than you paid for the coverage cannot be true in the long run for most customers. If that occurred regularly and for all customers, then the company issuing the insurance would be out of business.

In general in any case of insurance of a mechanical object, you have to look at the amount of risk involved compared to the cost of the insurance, and then decide if you want someone else to share that risk with you by buying insurance from them.

In the case of the manufacturer of the product offering the insurance, it may be possible that they are doing this as a sales incentive, and, indeed, we often see extended warranty coverage or insurance bundled into the purchase of the engine as a free add-on sales incentive. If you are buying the insurance for an existing engine, separate from the purchase of it and not during some promotion period, you can more easily see the true cost of the insurance. Once you have purchased the engine, I don't see why a manufacturer would have a motivation to give you insurance on it below their estimated cost.

If you have been offered two different policies of insurance, it is IMPOSSIBLE to make a recommendation about which one is preferred based on the naming of them, that is, "Mercury" or "Brunswick." Those are meaningless terms in the evaluation of the insurance coverage and its cost.

SS130
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Re: Extended Warranty

Postby SS130 » Sat Dec 09, 2017 8:16 am

Thanks for the great info and opinions. Marine Max is offering me a CHOICE of extended warranties for up to eight years.(min price $484) Transferable. Seem like a no brainier esp. when it comes time to sell.

frontier
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Re: Extended Warranty

Postby frontier » Sat Dec 09, 2017 8:22 am

Good point, Jim. I should have documented it. Here it is:
"A recent Consumer Reports survey found that 55 percent of owners who purchased an extended warranty hadn’t used it for repairs during the lifetime of the policy, even though the median price paid for the coverage was just over $1,200. And, on average, those who did use it spent hundreds more for the coverage than they saved in repair costs."

SS130
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Re: Extended Warranty

Postby SS130 » Sat Dec 09, 2017 8:34 am

True. I've never used any past extended warranty for new car purchases. Don"t purchase them anymore.

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Phil T
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Re: Extended Warranty

Postby Phil T » Sat Dec 09, 2017 8:48 am

If one is to consider an extended warrantee, only review plans that are offered by the manufacturer and not by a third party vendor.

The third party plans tend to have significant restrictions on coverage and reimbursement, and have low payouts.
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jimh
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Re: Extended Warranty

Postby jimh » Sat Dec 09, 2017 8:50 am

As FRONTIER's quote from Consumer Reports (above) shows, the average buyer of an extended warranty loses money on the transaction. That is what the sellers of those warranties were counting on to allow them to make a profit and stay in business.

Today's outboard engines are covered by generous and comprehensive warranty protection by the original manufacturer for long periods. Typically any manufacturer's warranty only covers damages and repair costs that occur due to defects in the original manufacture of the product. Since the manufacturer's term of warranty is typically three-years or longer, if there were a defect in original manufacture and you have used the product an appropriate amount of time, the defect should probably shown up before the warranty period expired.

Of course, the warranty period is usually specified in terms of elapsed time since purchase. If you only use an outboard engine five hours per year, at the expiration of the warranty you might not have run the engine long enough to reveal any defects in original manufacture. But, if you have several hundred hours of operation on the engine, a defect in its original manufacture may have already become apparent, and perhaps fully covered by the original warranty.

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Re: Extended Warranty

Postby Jefecinco » Sat Dec 09, 2017 10:12 am

For those determined--despite the evidence--to buy this type insurance: shop around for the best price. You can buy the factory support insurance from any Mercury dealer and the dealers compete on price. David Wade Marine in Baton Rouge, Louisiana--can be found on FaceBook--is a competitively priced seller. There are many others.

Dealers in Florida are not allowed to discount these policies because they are considered insurance there and regulated like any other insurance. That is why some Florida residents purchase their policies on-line.

If you have not yet purchased a new engine, it may also be a candidate for an on-line purchase due to its relatively small size and low weight.

I believe MarineMax is a Florida based company, and it is not well known as a bargain-priced seller.
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Wweez
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Re: Extended Warranty

Postby Wweez » Sat Dec 09, 2017 11:57 am

The popularity of extended warranties matches that of gift cards, and coupons. They are offered on almost every purchase down to single digit. Managers, clerks, and cashiers are forced to push them hard. The only reason for all of it: a lot of money is made by the pushers.

Individual decisions are made at the risk of the decision maker as always. I do agree with Phil.

My best friend told me that 68-percent of all statistics quoted on the spot were made up. I asked him where he heard that. He looked down on me and said, “You are not listening.”

Good Luck.

SS130
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Re: Extended Warranty

Postby SS130 » Mon Dec 11, 2017 9:09 am

You guys sold me--no extended warranty will be purchased. Thanks for the great information.

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Re: Extended Warranty

Postby jimh » Mon Dec 11, 2017 9:40 am

Since the cost of the insurance and the benefits it offered were never presented in this discussion, and only general comments about the normal practice of insurance providers trying to make a profit were mentioned, I don't know how you came to the conclusion that you should not buy the insurance. Without knowing any details of the coverage and your cost to buy it, no one could make an objective assessment of the extended warranty. You may be passing up a very good deal.

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Dutchman
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Re: Extended Warranty

Postby Dutchman » Mon Dec 11, 2017 1:47 pm

If you want extended warranty on an outboard buy an Evinrude; they give a 10-year-warranty which would be worth it.

My Brunswick engine had a three-year warranty and warranty paid for three new coils five-years after purchase.

What I'm trying to say is that dealership is most important when buying a mechanical piece of equipment--car, boat, airplane, motorcycle, bike--as the dealer is the one that must fight its supplier to recoup their cost.
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Re: Extended Warranty

Postby jimh » Mon Dec 11, 2017 4:10 pm

Dutchman wrote:...the dealer is the one that must fight its supplier to recoup their cost.


Dutch--I don't understand what you are trying to say here. Anytime you buy a product from a dealer that the dealer is reselling as a representative or agent or dealer for a manufacturer, the dealer can decide what price to charge the customer (within some reasonable or perhaps contractual bounds). The cost to the dealer is usually fixed by their purchasing arrangement with the manufacturer. The dealer does not enter into a dispute (a "fight") with their supplier over the cost of every product at every sale to every customer. Please explain a bit more what you are trying to describe as it relates to buying an extended service contract from a boat dealer. Thanks.

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Re: Extended Warranty

Postby jimh » Mon Dec 11, 2017 4:14 pm

Dutchman wrote:If you want extended warranty on an outboard buy an Evinrude; they give a 10-year-warranty which would be worth it.


Dutch--I am assuming by "give a 10-year-warranty" you mean give for free. It is hard to evaluate the cost of free stuff. Since you don't have to pay for it, anything that has some value seems to have intrinsically met your criterion of "worth it."

Evinrude does not provide a 10-year-warranty on its engines except during certain promotion periods. As I mentioned earlier, extending the warranty coverage is often used as a sales incentive. That is exactly what Evinrude does; at certain times of the year they offer warranty extensions as inducements to buy their outboard engines.

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Re: Extended Warranty

Postby Acseatsri » Tue Dec 12, 2017 10:15 am

Last year when my friend's 2006 225 E-TEC engine blew, the $400 Geico insurance policy he bought covered all but $250 of the $8,000 cost, including the $1,200 towing bill. You may want to check into your insurance policy to see what coverage you may have included in the cost, or see what it would cost to add this type of coverage.

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Dutchman
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Re: Extended Warranty

Postby Dutchman » Tue Dec 12, 2017 4:11 pm

I as a dealer/re-seller of mechanical and electrical equipment I quite often have to "fight" with the manufacturer in order to convince them that it was a warranty problem, but in the meantime I service my customer by keeping him/her happy with a replacement and/or workable item as I want the customer to come back and buy again from me the dealer. Therefore a better dealer will make the customer happy before waiting on a resolution from the manufacturer.

Going back to better dealer in regard to warranty; here is a sample:

Customer A bought an outboard 5 month before the promotional extra warranty period offered. Customer B bought the same OB during the 10 year warranty offer. Five years from now both customers come in with the same problem on the same motor.

A better dealer will fix and warrant both and try to recoup his time and materials from the manufacturer.
EJO
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Phil T
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Re: Extended Warranty

Postby Phil T » Tue Dec 12, 2017 5:24 pm

Dutch--You are hyperfocused on customer service.

Most authorized dealers will get approval/authorization before starting any warranty repair work first. They will not take on any risk. If the repair is denied they will shift the resolution to the customer making contact with the warranty department and step out of it.
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Re: Extended Warranty

Postby jimh » Tue Dec 12, 2017 6:09 pm

Dutch--I think your new topic is outside the scope of this discussion. How a dealer is reimbursed by a manufacturer for work performed by the dealer to satisfy the terms of the manufacturer's warranty coverage is not under discussion in this thread. Conflicts between a particular dealer and the manufacturer he represents don't really affect the decision for an outboard engine owner to buy an extended warranty or insurance contract. Whether or not a particular dealer is willing to expose his dealership to the risk of not being compensated by the manufacturer or by the insuring agency for work he performed for a customer is a concern for the dealer, and I don't see exactly how it would affect me, as a customer, from deciding to buy an extended warranty or not. If you think it does, please explain it from a customer's point of view, not from a dealer's point of view.

I do recognize that the relationship between a dealer and a manufacturer might have an influence on the willingness of the manufacturer to pay for repairs that the dealer represents as being due to defects in original manufacture. But such a relationship would affect the customer only on the decision of where to buy his engine and where to seek service under warranty. Just as the relationship between manufacturer and dealer can affect the warranty coverage, in an exactly similar way the relationship between customer and dealer can affect the warranty coverage.

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Re: Extended Warranty

Postby Dutchman » Wed Dec 13, 2017 8:57 am

Phil T wrote:Dutch -

You are hyperfocused on customer service.


Phil, Good customer service gets repeat business, repeat business gets you long run profits. Hyper focused or not this is probably why my business is still in business 90 plus years after its inception and representing certain manufacturers for over 50 years, because my customers know where they can get "service".

And Jim we know extended warranty offerings aren't worth buying so that is not even in the equation or needed to talk about in your last posting above. All I was trying to say that if a customer wanted a longer warranty period Evinrude was running a promotion (from the manufacturer and not an insurance company). And again nothing is free so even with a promotion you still will pay for it somewhere (included in the sales price) as the manufacturer wants to recoup its cost.
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Re: Extended Warranty

Postby jimh » Thu Dec 14, 2017 9:26 am

Dutchman wrote:nothing is free so even with a promotion you still will pay for it somewhere (included in the sales price) as the manufacturer wants to recoup its cost.


DUTCH--I don't agree with your declaration that all sales incentives with extended warranty coverage are something that the customer is secretly or deceptively made to pay for with a higher total sales price. If the sales price of the engine were raised during the time the extended warranty offer was being made to promote the sales, I am sure that informed customers would notice the change in price.

Also, if all customers of new outboard engines were to behave according to your description, then an offer of extended warranty that is being made as a sales promotion would be universally considered by those customers as a forced-purchase of an add-on warranty. In my experience there are NO customers who look at sales promotions periods in which an outboard engine manufacturer offers an extended warranty as being a forced-purchase situation. On that basis, I think your analysis is completely wrong.

In almost all promotions, the customer is presented with a choice of accepting the extended warranty coverage or choosing some other incentive, often for a actual added component (such as rigging) at no added costs; that clearly has an established cash value.


Dutchman wrote:...we know extended warranty offerings aren't worth buying so that is not even in the equation or needed to talk about...

I also reject your notion that all extended warranty coverage is without value. As I said, extended warranty coverage is a form of shared risk. If you own a boat with an engine whose replacement cost is $25,000, you might want to purchase some extended coverage of the engine to reduce your risk of having to pay for repairs to the engine. The decision to buy added warranty should be made on the basis of the cost and the coverage, and your willingness to take on the risk of engine repair costs.

Your assertion that we cannot or should not discuss the value of extended warranty--you say they are all without value--means that this entire topic is considered by you to be unnecessary and beyond discussion. I don't agree with that. The topic stands and is under discussion.

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Re: Extended Warranty

Postby jimh » Sat Dec 16, 2017 2:22 pm

Regarding the promotional extended warranty coverage offered by Evinrude on certain E-TEC engines, I want to clear up what they usually offer. Evinrude's promotion of extended coverage is typically made in the form of two sets of "warranty" coverage. The original factory warranty of the engine remains as it was during the non-promotional period. During the promotional period, Evinrude typically extends the warranty coverage by use of a B.E.S.T contract. "B.E.S.T" contract means BRP Extended Service Terms Contract. The period of coverage for the B.E.S.T contract is defined in terms of elapsed time AND by accumulated engine running hours. The terms of the B.E.S.T contract explain the particulars. As in any warranty or extended warranty contract, there are many stipulations, exclusion, and qualifying terms. For anyone interested in learning what a typical Evinrude B.E.S.T contract says, you can find one at

https://www.evinrude.com/content/dam/evinrude/Global/MY2017/Documents/Owners/BEST_Contract_Terms_and_Conditions.pdf

Generally these offers are made only in the United States, and often exclude the State of Florida. As far as I know, the reason the State of Florida is excluded from these offers relates to some laws in that state regarding how insurance contracts must be sold. Evinrude usually works around that problem by offering residents of the State of Florida a different form of coverage, often just extending the factory original warranty period. The length of the total warranty period varies. At some time there may have been an offer that provided for as many as ten years of coverage, but by no means is that offer always available. More typically the total period of coverage might be around seven years, consisting of a mix of factory warranty and B.E.S.T contract coverage.

ASIDE: after the recent hurricane damage in Florida, Evinrude has made a special offer to Florida residents to give them even more promotional consideration, such as throwing in free rigging and other incentives, to help persuade customers in Florida to buy Evinrude engines to replace ones damaged in the 2017 hurricanes there. I also doubt that anyone in Florida thinks they are being deceived and are actually paying for those incentives themselves when they buy an engine.

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Re: Extended Warranty

Postby jimh » Sat Dec 16, 2017 2:29 pm

SS130 wrote:...Marine Max is offering me a [choice] of extended warranties for up to eight years [and]...[t]ransferable. Seem like a [no-brain-er]...when it comes time to sell.


If you are planning in a few years to sell the new 40-HP outboard engine you are buying now, then having the engine remain covered under some form of pre-paid post-factory-warranty service contract could be an asset in making the sale.