Is repair coverage from a life insurance company viable?

Dear Car Talk

Dear Car Talk | May 01, 1990

Dear Tom and Ray:

My 1986 Cadillac has 25,000 miles, and my warranty just expired last month. I have a brochure from a life insurance company that will give me full repair coverage for two years at a cost of 750 dollars. I have neither the intention nor the means to purchase a new car. I've been treated very well by my dealership, and I've never had any major problems with the car, but I'm worried about the future. Do you think this policy will be a good investment?

RAY: Normally, if someone wrote to us with a car with 25,000 miles, we'd say "take your chances." But two factors make this case different. One is that your car is an '86 Cadillac--not exactly the zenith of reliability. But more importantly, Vern, you don't sound like the kind of guy who likes to take chances. You sound like you'd rather budget the 750 dollars and then not worry about it for the next two years, right? So we're going to recommend you get the policy, with one proviso.

TOM: We want you to do some investigating and find out if this policy REALLY covers everything. Ask the service manager at your dealership whether he's had any experience with this company. Ask him--even pay him a few bucks--to look the policy over. Call AAA and ask them for their advice. See if the Better Business Bureau has received any complaints about this company. Extended warranties (which are actually insurance policies) are notorious for their "fine print." This one may say "full coverage," but don't be fooled into thinking that it's going to provide the same coverage as your original warranty.

RAY: Nevertheless, if the coverage doesn't have any gaping holes in it, it's probably a good investment . 375 dollars a year is a cheap price to pay for peace of mind. But just to be safe, see if you can add the "fruit basket option" to the policy. That's where they deliver a bunch of fruit once a month to your dealer's service manager to keep you in his good graces.

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