Should we buy any additional insurance offers by dealer?

Zaggeron · 03-22-2010, 09:31 PM

With all these sorts of coverages the chances are you will lose money in the long run if you always buy them. This is statistically certain -- otherwise they would not be a source of income for the companies who provide the coverage. With any sort of insurance think in terms of risk vs. cost vs. benefit -- you are willing to pay for medical coverage or automobile insurance because even though risk is low the cost of a serious medical condition or serious car accident is tremendous. But the cost benefit of fixing a scratch or small dent or a broken wheel or tire is quite different. Look at it this way, if the tire and rim insurance costs $400 and it costs $800 to replace the rim and tire, then you are paying 50% of the cost of the replacement. Now consider if the chances were a whopping 50% that you would lose one wheel and tire during the life of the insurance. So you are willing to bet $400 that you will win $400 (since the replacement will only cost the $400 you payed for the insurance. This is more or less even odds ... If you did this with every car you own, the chances are you'd break even in the long run. But, of course, the chances are way less than 50% that you will lose a tire and a wheel .... so draw you own conclusions

In general, these sorts of things are only a good idea for people who wouldn't have the cash to fix something that went wrong. They will end up paying more for the car and upkeep in the long run, but at least they can keep the car in working order

cossie1600 · 03-22-2010, 09:52 PM

It's not buying the coverage, you have to see how good they are in honoring the coverage!

Zaggeron · 03-22-2010, 10:05 PM

Quote:

Originally Posted by cossie1600

It's not buying the coverage, you have to see how good they are in honoring the coverage!

lol. Even if they honor it perfectly, you'll still lose out in the long run.

Look at it this way, if you can't afford to replace a wheel and a tire, then pay the $6 a month for 5 years.

If you can afford to replace a bad wheel and tire, then put the $6 a month in the bank. Maybe on this car or the next you'll go into the red -- have a tire/wheel repair bill greater than the money you put in the bank, but in the long run you will be in the positive.

o0javi0o · 03-23-2010, 09:54 PM

Gap insurance and nothing else.
And when you reach a BE in the value of the car vs the amount due on your loan, call your dealer and tell them you want to cancel your gap insurance.

Zaggeron · 03-23-2010, 10:26 PM

I don't know about gap insurance ... I guess it's the right call for some folk. I've always put enough down on my cars that I'm already past the break even point so I've never even considered it.

It's easy to invoke mathematics in decision theory -- deciding whether to buy optional insurance invokes this if only at the intuitive level, but I guess peace of mind is a variable that's hard to quantify

d02808045 · 03-24-2010, 08:58 PM

Should have bought my dent zone insurance, got door ding less than a week. d@mm whoever did this: look at my baby scar!

03-22-2010, 09:31 PM	#16 (permalink)
Zaggeron A True Z Fanatic Join Date: Jan 2010 Location: Austin, TX Posts: 1,951 Drives: '10 370ZR '13 BRZ Rep Power: 18	With all these sorts of coverages the chances are you will lose money in the long run if you always buy them. This is statistically certain -- otherwise they would not be a source of income for the companies who provide the coverage. With any sort of insurance think in terms of risk vs. cost vs. benefit -- you are willing to pay for medical coverage or automobile insurance because even though risk is low the cost of a serious medical condition or serious car accident is tremendous. But the cost benefit of fixing a scratch or small dent or a broken wheel or tire is quite different. Look at it this way, if the tire and rim insurance costs $400 and it costs $800 to replace the rim and tire, then you are paying 50% of the cost of the replacement. Now consider if the chances were a whopping 50% that you would lose one wheel and tire during the life of the insurance. So you are willing to bet $400 that you will win $400 (since the replacement will only cost the $400 you payed for the insurance. This is more or less even odds ... If you did this with every car you own, the chances are you'd break even in the long run. But, of course, the chances are way less than 50% that you will lose a tire and a wheel .... so draw you own conclusions In general, these sorts of things are only a good idea for people who wouldn't have the cash to fix something that went wrong. They will end up paying more for the car and upkeep in the long run, but at least they can keep the car in working order __________________ 2010 Platinum Graphite 370z Roadster:Touring/Sport 2013 Subaru BRZ Limited Last edited by Zaggeron; 03-22-2010 at 09:49 PM.

03-23-2010, 10:26 PM	#20 (permalink)
Zaggeron A True Z Fanatic Join Date: Jan 2010 Location: Austin, TX Posts: 1,951 Drives: '10 370ZR '13 BRZ Rep Power: 18	I don't know about gap insurance ... I guess it's the right call for some folk. I've always put enough down on my cars that I'm already past the break even point so I've never even considered it. It's easy to invoke mathematics in decision theory -- deciding whether to buy optional insurance invokes this if only at the intuitive level, but I guess peace of mind is a variable that's hard to quantify __________________ 2010 Platinum Graphite 370z Roadster:Touring/Sport 2013 Subaru BRZ Limited

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03-22-2010, 09:52 PM	#17 (permalink)
cossie1600 A True Z Fanatic Join Date: Jun 2009 Location: californee way Posts: 5,380 Drives: 370, Leaf Rep Power: 29	It's not buying the coverage, you have to see how good they are in honoring the coverage!

03-23-2010, 09:54 PM	#19 (permalink)
o0javi0o Enthusiast Member Join Date: Nov 2008 Location: Dallas, Tx Posts: 458 Drives: '15 ///M3 6MT Rep Power: 16	Gap insurance and nothing else. And when you reach a BE in the value of the car vs the amount due on your loan, call your dealer and tell them you want to cancel your gap insurance.