How usefull are the 10-year extended warranties for new furnaces, such as
for Trane, Carrier, Lennox, etc. My gut instinct is that I don't want to
spend $4500 on a new furnace that is likely to break down in under 10
It may help if you realize that that warranty is nothing more than
My own rule is never insure what I can afford to loose.
I can't afford to loose my home so I insure it.
I can afford to replace the furnace so I would never insure it.
Your average loss on a furnace is a few hundred dollars, not the
I see your point. Like extended warranties on cars or appliances: Not really
worth the money, but makes the "insurance companies" rich...
I was thinking more along the lines of the way we do warranties:
2 years labor, 5 years parts, and then whatever the manufacturer offers (10
years on compressor, limited lifetime on heat exchanger, etc.). We offer
"extended labor" policies (for the remainder of the 5 years) for $100. If
you look at the mnimum cost on a service call, that's a bargain.....
Well, look at it this way:
You have an OIL furnace and it cuts off on the coldest night of the winter.
Let's say you just got a delivery of fuel earlier in the day. It stirred up
trash in the tank and clogged up the nozzle on the burner. Parts are all
covered, but after year number 2, the service call is not. So, do you pay
that extended labor or do you pay for a "night service call" at twice the
You may want to check to see if that insurance plan covers that night
In any case it does not change one thing. The insurance company is
making big money from these policies. That means people on average are
paying far more for the insurance than they would pay without it.
If you could not afford the loss of the cost of that service call
(assuming it was really covered) then you should insure it. For most people
that un-affordable cost is the cost of replacing their home or paying out
for a large liability case in a traffic accident. Most people may find the
cost of a night service call inconvenient but doable. (Frankly I would go on
my standby alternatives and have someone come the next day)
Consider that they way most of them are sold is to list the total time
you will be insured, including the original warrantee that you will already
have from the manufacturer.
Also consider that extended warranties (really add on insurance policies
not warranties) are sold by insurance companies that make lots of money from
them, usually about 40 - 60% of what you pay. You will almost always come
out ahead by putting the money you would spend on it in the bank.
If I purchased all of the extended warranties I've been offered in the past
20 years or so, the total cost would have been several thousands of dollars-
at least $5- possibly more. In the same time period I have not spent
anywhere near that amount on getting those items repaired. So I'm thousands
of dollars ahead by not buying the warranties. Insure against what you
can't afford to replace- self insure for what you can afford. Insuring
against relatively small losses is just a waste of money. Who can't afford
to pop for even a $1000 furnace repair bill? (In 20 years of home ownership,
I've never had to call for furnace repair).
Lucky? Or are furnaces made pretty well? I live in the snow belt, to they
get a good workout.
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