My 2002 Honda Odyssey has a transmission failure 5 years after I bought it. My 8 year plan covered the replacement. Odyssey’s were known for having bad transmissions so that’s why I got the plan. That car went to the graveyard last year (16 years old) when the transmission went again. After that long I guess it’s ok. I haven’t bought other coverage since then until I got the Clarity. I figured the Clarity was just too new to take the chance for just $1300 for 8 years.
Why NOT to Buy that Extended Warranty?
neal adkins
Active Member
Agreed. When you know of a common problem or have serious doubts best to get coverage.
One other thing that helped is the plan includes roadside assistance for up to 5 Honda’s in a household - which I happen to have. Dumped AAA and saved $150 per year! Obviously not everyone will see those savings.
neal adkins
Active Member
Thats the way to do it. Great when you wind up paying very little and decreasing your liability in the event of an expensive covered failure.
I never bought warranty with cars because I mostly buy Honda Toyota Lexus which are considered more reliable than others. It never made sense until my odyssey's transmission failed back in 2012. I could not trade it and ended up paying 4000.
I bought Clarity Touring 2018 last night at a really good price 34500 on road after all said and done. So when he sold me warranty for 1500 I was not ready to give up on my savings that I made in the great deal.
But then he extended it to 10 years 100k bumper to bumper except tires, wheels, brakes and paint. At 27 a month for 60 months I could not resist considering its a car full of features and many new. And 10 years is long time. I normally keep my cars 10 years or beyond and drive mostly 10-12k per year.
Does it make sense or is it too solid a car to not buy warranty. I imagine if infotainment goes bad after 5 years it alone will cost 4k.
I bought Clarity Touring 2018 last night at a really good price 34500 on road after all said and done. So when he sold me warranty for 1500 I was not ready to give up on my savings that I made in the great deal.
But then he extended it to 10 years 100k bumper to bumper except tires, wheels, brakes and paint. At 27 a month for 60 months I could not resist considering its a car full of features and many new. And 10 years is long time. I normally keep my cars 10 years or beyond and drive mostly 10-12k per year.
Does it make sense or is it too solid a car to not buy warranty. I imagine if infotainment goes bad after 5 years it alone will cost 4k.
4sallypat
Active Member
If you are keeping the car for 10 years, then it make sense to get that peace of mind.
But remember you are paying for the Years 4-10 as the basic warranty covers the car for the first 3 years or 36K miles.
So doing the math, you are paying around $18 per month for the extended warranty.
I hope the warranty covers the battery for the extra 2 years after it expires ???
But remember you are paying for the Years 4-10 as the basic warranty covers the car for the first 3 years or 36K miles.
So doing the math, you are paying around $18 per month for the extended warranty.
I hope the warranty covers the battery for the extra 2 years after it expires ???
neal adkins
Active Member
Thats
Thats a good point. Not all extended warranties cover ev batteries and usually expire after the car is 7 years old or 100k miles. So nothing is covered after the 7th year from when the car was put in service in most cases.
Honda Clarity Battery is covered 8 years 100k anyway. And he mentioned this warranty will extend 8 years to 10.
But now I found out in other forums that I should have gone for Honda Care D80 (8 years/100k for $1300+) instead of this dealership warranty. I can still cancel this in first 60 days and get the D80.
the reason I am getting this warranty is mostly because of so much electronic is used in this car and if anything goes bad even minutely I will be paying 500 or more if not thousands.
Lowell_Greenberg
Active Member
Ramblings...
I think the prudence of purchasing an extended warranty is related to its price, the overall brand reliability and the model's repair history over time. To be honest, there are too many unknowns to make an intelligent guess with respect to the Clarity.
Intuitively, factoring in the "wash tub" effect, most predictable failures should occur within the first 60k-100k. And if the car is driven 12k a year or less, probably in the first 36k. Beyond this timeframe, it is probably far less predictable and often more costly to repair-and this is where most purchased extended warranties end. Still, a very reasonably priced extended warranty, on a car with complex tech- is not unreasonable.
Extended emissions and battery coverage in CA emissions states is helpful in reducing risk as well. Silent warranties for mileage under 100k are also helpful, but difficult to predict.
Pricing is critical. For example, few would argue that $300 for a manufacturer 10/100 warranty is a steal for a consumer? But 2k-3k? That's a steal for the dealer. In between? That's almost impossible to predict for a car with little track record across model years. The Clarity does have a high incidence of visits to the shop in its first year. But will this continue and are the issues serious or will they become so? Software updates are not water pump failures.
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I think the prudence of purchasing an extended warranty is related to its price, the overall brand reliability and the model's repair history over time. To be honest, there are too many unknowns to make an intelligent guess with respect to the Clarity.
Intuitively, factoring in the "wash tub" effect, most predictable failures should occur within the first 60k-100k. And if the car is driven 12k a year or less, probably in the first 36k. Beyond this timeframe, it is probably far less predictable and often more costly to repair-and this is where most purchased extended warranties end. Still, a very reasonably priced extended warranty, on a car with complex tech- is not unreasonable.
Extended emissions and battery coverage in CA emissions states is helpful in reducing risk as well. Silent warranties for mileage under 100k are also helpful, but difficult to predict.
Pricing is critical. For example, few would argue that $300 for a manufacturer 10/100 warranty is a steal for a consumer? But 2k-3k? That's a steal for the dealer. In between? That's almost impossible to predict for a car with little track record across model years. The Clarity does have a high incidence of visits to the shop in its first year. But will this continue and are the issues serious or will they become so? Software updates are not water pump failures.
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Somebody is making money on extended warranties. You can be sure that it isn't the consumer. There is no such thing as a car manufacturer or 3rd party warranty company that is doing this as a charity.
Having said that, there are things more valuable than money. If spending a thousand dollars on a warranty helps you sleep better at night, then go for it. But just realize that it is not a sound financial decision.
You can say the same thing about health insurance. Are you willing to walk around w/o health insurance?
The problem with modern cars is that they don't fail often, but when they do repair can be cost prohibitive. Think of extended warranty as an insurance, not an investment.
The most likely failures on these cars will be infotainment and adaptive cruise control sensors. These are not covered by the power train or California extended warranties. For pwoertrain there is no need for extended warranty.
Insurance is there for catastrophic incidents that would cause financial hardships if you were faced with an unexpected cost. We typically insure our most expensive liabilities (house, life, health, collision).
I suppose you could look at an extended warranty as a form of insurance, but I would argue that anybody spending this much $ for a brand new car wouldn't incur a true financial hardship if they had an unexpected $3k repair bill. If you would be significantly impacted by this type of repair bill then you should be buying a much cheaper used car.
Timothy
Active Member
This is not the same as health insurance. First of all, the car already has a warranty. Secondly, most folks who can buy a Clarity can likely afford a repair on a Clarity (even though they might not be happy about it). The conventional wisdom is that insurance only makes sense in cases where the loss would be catastrophic (e.g., I could not afford to rebuild my home if it burned down, so I have home owner's insurance). Medical cost can easily run in the hundreds of thousands of dollars, so health insurance makes sense for most of us. You definitely should not buy the extended warranty on the new toaster. Purely in terms of numbers, it does not make sense to buy an automobile extended warranty. Studies have shown that even the folks who end up using them usually do not get their money back. If I asked you to give me $3k for a small chance that in the next ten years I might give you $4k, would you do it? If you put aside the $$ you were thinking of spending on the extending warranty, you would already have softened the blow of an unexpected repair (and if the unexpected repair does not materialize, well, happy birthday).
https://www.consumerreports.org/car-repair/get-an-extended-warranty-for-your-car/
But as @KevinW stated, "there are things more valuable than money. If spending a thousand dollars on a warranty helps you sleep better at night, then go for it. But just realize that it is not a sound financial decision."
Apparently I type much slower than Kevin.
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This has been posted before but for those of us in ZEV states the Honda coverage is pretty extensive. I did get the warranty anyway:
http://owners.honda.com/Documentum/Warranty/Partslist/2018_Honda_Clarity_PHEV_-_EWPL_APL06769.pdf
http://owners.honda.com/Documentum/Warranty/Partslist/2018_Honda_Clarity_PHEV_-_EWPL_APL06769.pdf
KentuckyKen
Well-Known Member
I may have to respectfully disagree with you on that last opinion. Just because I buy a product or service from a for profit insurance company does not necessarily mean it is not a sound financial decision.
I bought the Honda D80 for $1,304 for 8 years or 5 years after the factory warranty. So from a purely financial point of view, basically I’m betting that there is going to be a repair or repairs in the 5 post warranty years. You are betting that there won’t be, assuming we are both keeping our cars for 8 years. For the sake of brevity, I will ignore the time value of money considerations. Now let’s do some math.
Since the D80 also includes roadside assistance for me and any family members driving Honda or Acura products, I subtract the cost of purchasing 5 years of AAA or it’s equivalent for 3 drivers. (5x$125 = $625. So with canceling AAA, now the warranty portion is costing me just $680. (May not apply to some who are young enough to handle their own roadside emergencies but it does for me.)
So for you and me to break even all there needs to happen is a single repair (or repairs) of just $340 during those last 5 years. As in you spend $340 out of pocket vs me having paid the $680 up front and having no out of pocket. We would both end up having spent spent the same amount. Except I am still covered up to 8 years with no out of pocket and you are sill on the hook for additional repairs.
So I would argue that there are some cases like mine, where even not taking into account one’s level of risk aversion, it can be seen to be financially sound. With the high level of electronic parts in the Clarity and their high cost (one post put the infotainment screen at $1,500), I think it’s very reasonable to “bet” that there will be $340 (or more) in uncovered repairs over 8 years. This is especially evident to me taking into account the new design and lack of repair history of the Clarity. So I’m very comfortable with my decision. However, if I were not keeping my Clarity long term or could not get Honda Care so inexpensively, I would not see much advantage in it. I self insure for small, affordable potential losses, but for high risk and/or potentially catastrophic losses that would financially ruin me, I always pay for insurance.
Insurance has to be seen for what it is. All you’re doing with insurance is paying to spread out your risk over a large number of participants in order to prevent ever incurring a large loss (think homes, life, car). The insurance companies calculate actuarial tables to ensure (play on words intended) they will make enough profit on the averages while offering a competitively priced product. This is the same thing casinos do when they set the odds/payoffs. And yes, the house always wins in the end, otherwise they would go broke or in the case of insurance companies, insolvent.
In the final analysis, you have to factor in your level of risk aversion vs how much the coverage costs you. To me it’s more than just a “sleeping well at night” consideration as you put it. It is also a financial decision that can be calculated and protected to be advantageous if you do your due diligence. Or a financial waste if you don’t.
I will admit that none of us like paying insurance premiums but the one time you use your policy, then they look dirt cheap and you feel like a genius.
You pays yo’ money; you takes yo’ chances. Nothing in life is free. You get what you pay for. The trick is to get as much as possible for as little as you can. Caveat emptor. And as always, YMMV.
Gentlemen, place your bets!
And in 8 years we’ll tally up the winners.
Timothy
Active Member
I love your persistence, I have a feeling you sleep very well at night. But that all seems like a bit of rationalization. We all do that (i.e., I love this Clarity, imagine all I will save on gas). How about another scenario. Let's say I don't buy the warranty and I don't buy road side assistance. I am starting out $1.3k ahead. Chances are I won't spend that $1.3k. If I have an issue chances are that it will be less than $1.3k including the tow. But instead of just stating my scenario and yours and wondering 'what are the chances?', it would be great if someone had just crunched the numbers. Oh, wait, I think they folks who sell the service contracts have likely done that. I wonder how it came out?
Please, don't take my sarcasm wrong Ken. I do believe the piece of mind the service contact has bought you is worth something. But I am quite certain that most folks who pay for a service contract will be worse off. Some will not. The payoff for those who make out on the deal is likely not enough to have been worth the risk. Numbers are still numbers (they don't lie). If in 8 years we tallied up the winners, and those who bought the plans came out on top, there would be some unemployed Honda actuaries.
"No matter the exact type, extended warranties are an investment in peace of mind that limits financial risk for a set period of time. But beware: A CR member survey conducted in 2013 showed that car owners typically paid more for the coverage than they got back in direct benefits. This isn’t surprising, because extended warranties make a lot of money for those who sell them."
thecompdude
Member
This is insurance! It is a business and companies end up making profit on this, if they have done their math right.
Most customers will end up using nothing or very little. Others may end up using lot more. At the end of the day after adding up the warranty payments and interest on it, companies end up making a profit!
You can choose not to buy one and hope to be in the first group, and that is indeed a majority of the folks. But the biggest unknown here is a new car with new components like the Clarity.
MNSteve
Well-Known Member
I am not replying to this thread to get into the debate about whether purchasing an extended warranty is a good or bad idea. It's a bet; it's insurance; the warranty issuer will make money overall. All of these are true. We all make our own decisions using our own set of parameters and priorities. Frankly there is no wrong answer. I bought the warranty; I will be amazed if I end up ahead financially, but that's not why I bought the warranty. I am comfortable with my decision and the two of you are comfortable with yours; that's all that really matters.
But I am not following something here and KentuckyKen's logic must be simple and sound; I'm just not following it.
None of this changes the basic logic, and we could debate this forever, and everyone would be right. I just want to understand the $340/$680. It must be staring me in the face.
But I am not following something here and KentuckyKen's logic must be simple and sound; I'm just not following it.
Where did this factor of two come in? Why wouldn't the repair have to be $680 to create the break-even point?
None of this changes the basic logic, and we could debate this forever, and everyone would be right. I just want to understand the $340/$680. It must be staring me in the face.