[BMWdav]

Precisely. That's why Lowe's and Home Depot push the extended warranties on anything they can. It's a business model that's worked in the auto industry for years and so others began to adopt it.

For the case that @BMWdav mentions, the headlight module's Mean Time To Fail (MTTF) is unknown, at least to me anyway. It's expensive to replace (astoundingly so!) but I'd wager that BMW knows the MTTF is much longer than 4 years. Their actuarians (the math whizs that come up with the cost factors that drive these policies) have all the cards. All we have is replacement cost which can be scary and that's exactly what they want you to look at. House rules win more than most of the time.

The only time I took an extended warranty was on a Dodge van. Dodge is famous for crappy transmissions. Extended warranty was $1400, exactly the cost to replace the transmission. I paid up front, the transmission went out 5 years later. Dealer still won because they had my money for 5 years!

Really doubt they hire actuaries at BMW to calculate these things, being one myself I’ve never heard of a car manufacturer doing that at least. The first party extended warranty that BMW sells isn’t considered an insurance product to begin with and it’s quite a basic estimation.

Honestly the value of the car after 2.5-3 years will probably be at least that $1000 higher just by having remaining warranty for piece of mind for the next owner.

 

[Anxious]

I did the windshield, dents, and key fob coverage for a similar reason. It was like $10/mo. I haven't decided if I'm going to keep it or not...

We did the windshield and maintenance warranties. Should have done the FOB coverage as I lost the FOB in the first month.

 

[JSH_i4M50]

Really doubt they hire actuaries at BMW to calculate these things, being one myself I’ve never heard of a car manufacturer doing that at least. The first party extended warranty that BMW sells isn’t considered an insurance product to begin with and it’s quite a basic estimation.

Honestly the value of the car after 2.5-3 years will probably be at least that $1000 higher just by having remaining warranty for piece of mind for the next owner.

I hear nothing but positive when I read you paid only a $1000 for 2 more years. That tells me that someone (whomever it is) believes not much is going to fail in that additional 2 years. If it were higher, say like $3500, I'd be really worried that something major is going to fail. Thus, in my simple mind, I'm better off keeping my $1000 and "self-insuring".

 

[BMWdav]

I hear nothing but positive when I read you paid only a $1000 for 2 more years. That tells me that someone (whomever it is) believes not much is going to fail in that additional 2 years. If it were higher, say like $3500, I'd be really worried that something major is going to fail. Thus, in my simple mind, I'm better off keeping my $1000 and "self-insuring".

Yeah we can all decide what to do ourselves, but since I’m selling the car within 4 years I’m guessing I’ll end up paying nothing for the extra warranty in either case due to cars with warranty generally collecting a higher price when selling.

But then again I am insuring the car for full coverage as well so I will be compensated in the event of a crash, even though I am expecting to actually lose money on the insurance so I am fine with paying a little bit extra for protection against expensive faults.

 

[jsv]

I was originally offered 3 years of additional full coverage warranty for $4800 which seemed high (7yr/100K miles). After balking at that price, it came down to $3600 7yr/75K miles. I decided to buy at that point. I have always kept cars way past their extended warranty and have always gotten my money back. The i4 might be different and they might have squeezed more money out of me. I decided to do the warranty because there is no history with the i4, so I don't know if it will behave like a typical ICE car, be better, or have more issues since this is the first model year (ok technically second...)

 

[3241]

With that mindset I guess you won’t be insuring it either? It’s the same thing there, you pay a small monthly fee to protect yourself financially, for most people insurance will also be a loss.

I got the standard 2 year warranty extended to 4 years for $1000 (directly from BMW so no third party) which seems fair given the risk. When things like one headlight module is $6500 plus labour these days it will be fun to have in case something breaks even if the expected total payout will be less than the cost.

insurance is important for catastrophic scenarios like i hit a patch of ice and take out a bus full of nuns. I would be liable for a lot of money. The asymmetry of insurance is what makes it worthwhile. Same for life insurance, fire insurance, etc. insurance that is not exploitative isn't guaranteed to be profitable on the individual for the insurance company, but instead profitable in aggregate.

on the other hand, the extended warranty best case is that it covers a couple of expensive repairs for you. Since the battery is already covered for 8 years 100k miles, on an EV that doesn't leave many likely candidates. Maybe the inverter.

but as i said, these programs are major profit centers. That's why they are pushed so hard. That tells you that they are not a good deal.

 

[JToddK]

I buy insurance (and that's what extended warranties are) for catastrophic events. Home or complete vehicle loss, liability protection, legal requirements, whatever. Although each of us has different tolerance levels, I don't consider replaceable parts catastrophic; expensive sometimes, but not financially disastrous. As @CheddarKungPao mentioned above, these are profit generators for the "insurance" company. It's within my risk tolerance and, statistically speaking, a better bet. YMMV

 

[A_Camera]

With that mindset I guess you won’t be insuring it either? It’s the same thing there, you pay a small monthly fee to protect yourself financially, for most people insurance will also be a loss.

I got the standard 2 year warranty extended to 4 years for $1000 (directly from BMW so no third party) which seems fair given the risk. When things like one headlight module is $6500 plus labour these days it will be fun to have in case something breaks even if the expected total payout will be less than the cost.

You can't compare warranty with insurance, but sure, personally I regard insurance an unnecessary thing also, except for very expensive things, like homes and expensive cars. The problem is that even if I am generally and historically a very good driver, even I can make a mistake and an accident can cost far too much without an insurance. Warranty is totally different. Historically, during my almost 50 years of driving, I only had one single warranty very expensive claim on a car, and that happened on it's virgin trip. My 2 weeks old car broke down in Slovak Republic. It turned out to the the gear box. I left the car there and let the (free) insurance cover the rest of my holiday plus my trip home plus a car for three months before I could get back my car. I had another car in my life which constantly broke down (Citroen C3) during the warranty. I dumped that car before the warranty was out. My point is that according to my experience, most problems will turn up during the first two years, after that it is very unlikely that a manufacturing issue will pop up, so I doubt your headlights will need to be replaced after 3 years or more. Anyway, who knows, it may hold for four years and break down after another week... then what...?

 

[A_Camera]

Precisely. That's why Lowe's and Home Depot push the extended warranties on anything they can. It's a business model that's worked in the auto industry for years and so others began to adopt it.

For the case that @BMWdav mentions, the headlight module's Mean Time To Fail (MTTF) is unknown, at least to me anyway. It's expensive to replace (astoundingly so!) but I'd wager that BMW knows the MTTF is much longer than 4 years. Their actuarians (the math whizs that come up with the cost factors that drive these policies) have all the cards. All we have is replacement cost which can be scary and that's exactly what they want you to look at. House rules win more than most of the time.

The only time I took an extended warranty was on a Dodge van. Dodge is famous for crappy transmissions. Extended warranty was $1400, exactly the cost to replace the transmission. I paid up front, the transmission went out 5 years later. Dealer still won because they had my money for 5 years!

Yes, that's the point. They KNOW for sure that the likelihood of having to replace ANYTHING during the warranty is very small, like winning the lottery, otherwise they would not offer such long warranties. But we have a whole new generation of people who are scared of taking risks and they are easy target. The only thing which made me actually consider buying extended warranty for the i4 is that it's new technology and who knows... but I'd be more concerned about the motor or other EV related parts then the head lights, since the technology behind head lights is not new and basically the same is used not only in every BMW, but also in the whole car manufacturing globally. I mean, yes, there are some differences, but anyway, the technology is not unique for the i4 or BMW, as opposed to the motor or other EV specific i4 parts.

I remember when I was young, the TV always (quite often) broke down, but at that time nobody offered extended warranty. Now I have 3 TV screens in my home and the oldest is over 10 years old. None of them ever needed a repair, but all the dealers offer extended warranties...

 

[BMWdav]

You can't compare warranty with insurance, but sure, personally I regard insurance an unnecessary thing also, except for very expensive things, like homes and expensive cars. The problem is that even if I am generally and historically a very good driver, even I can make a mistake and an accident can cost far too much without an insurance. Warranty is totally different. Historically, during my almost 50 years of driving, I only had one single warranty very expensive claim on a car, and that happened on it's virgin trip. My 2 weeks old car broke down in Slovak Republic. It turned out to the the gear box. I left the car there and let the (free) insurance cover the rest of my holiday plus my trip home plus a car for three months before I could get back my car. I had another car in my life which constantly broke down (Citroen C3) during the warranty. I dumped that car before the warranty was out. My point is that according to my experience, most problems will turn up during the first two years, after that it is very unlikely that a manufacturing issue will pop up, so I doubt your headlights will need to be replaced after 3 years or more. Anyway, who knows, it may hold for four years and break down after another week... then what...?

Both extended warranty and insurance is the same thing risk wise, you pay a premium now to be covered later. Both are bought with the expectation to be compensated in the event of something happening, the difference is that warranty has a value when selling the car, paid insurance premiums does not. Which is good, I might actually keep this car longer then 2 years for once but most definitely won’t keep it for more then 3.

insurance is important for catastrophic scenarios like i hit a patch of ice and take out a bus full of nuns. I would be liable for a lot of money. The asymmetry of insurance is what makes it worthwhile. Same for life insurance, fire insurance, etc. insurance that is not exploitative isn't guaranteed to be profitable on the individual for the insurance company, but instead profitable in aggregate.

on the other hand, the extended warranty best case is that it covers a couple of expensive repairs for you. Since the battery is already covered for 8 years 100k miles, on an EV that doesn't leave many likely candidates. Maybe the inverter.

but as i said, these programs are major profit centers. That's why they are pushed so hard. That tells you that they are not a good deal.

There is no difference when it comes to what the seller expects between the extended warranty and insurance, neither is expected to be profitable for a majority of the buyers and as an aggregate the seller of the product is expected to make a profit.

Since cars with remaining warranty seems to be selling for a higher price than those without extending the warranty is an easy choice in my mind, you get it more or less for free since it seems you make back the cost of it when selling. Economically I am expecting the ROI to be better on the warranty than other insurance on the car.

 

[ssh]

We did the windshield and maintenance warranties. Should have done the FOB coverage as I lost the FOB in the first month.

It was one offering for all three, and the fob is what pushed it. I lost one in the snow at Breck spring 2021 and never did find it. $350+ paid out at lease return.

 

[A_Camera]

Both extended warranty and insurance is the same thing risk wise, you pay a premium now to be covered later. Both are bought with the expectation to be compensated in the event of something happening, the difference is that warranty has a value when selling the car, paid insurance premiums does not. Which is good, I might actually keep this car longer then 2 years for once but most definitely won’t keep it for more then 3.

No, warranty and insurance are not the same thing at all risk wise. Also, the warranty you pay for has no value when selling the car unless you sell it to a private individual. If you trade in the dealer don't care about it.

 

[BMWdav]

No, warranty and insurance are not the same thing at all risk wise. Also, the warranty you pay for has no value when selling the car unless you sell it to a private individual. If you trade in the dealer don't care about it.

Actually they are more or less the same thing, both from a seller perspective as well as a buyer perspective. Especially here in Sweden when full coverage insurance even contains the exact same risk event coverage as an extended warranty does but for a limited amount of parts instead of bumper to bumper as the warranty has.

And of course all dealers won't necessarily pay more, except if you are selling to non brand specific dealers, they will usually pay a bit more for one that has a decent amount of warranty time remaining compared to one without any. And as you say you always have the option to sell privately as well.

 

[3241]

Both extended warranty and insurance is the same thing risk wise, you pay a premium now to be covered later. Both are bought with the expectation to be compensated in the event of something happening, the difference is that warranty has a value when selling the car, paid insurance premiums does not. Which is good, I might actually keep this car longer then 2 years for once but most definitely won’t keep it for more then 3.




There is no difference when it comes to what the seller expects between the extended warranty and insurance, neither is expected to be profitable for a majority of the buyers and as an aggregate the seller of the product is expected to make a profit.

Since cars with remaining warranty seems to be selling for a higher price than those without extending the warranty is an easy choice in my mind, you get it more or less for free since it seems you make back the cost of it when selling. Economically I am expecting the ROI to be better on the warranty than other insurance on the car.

like i said already, the difference is with insurance the upper bound is much higher. Which is what makes it more worthwhile. Extended warranties the maximum benefit isn't a very high multiplier of the cost.

 

[Variable430]

Extended warranties are a huge profit center. That fact tells you they are not a good deal in general. On an EV there's much less to go wrong. If you want to do it anyway coz it gives you peace of mine, that's fine. It's just important to know it's like buyint a lottery ticket; the math is simple and it's not in your favor.

For me it was the combination of new brushed motors, expensive electronics/oled, and the price wasn’t prohibitive. $1,200 a year (excluding service contract)!plus coverage for another 50,000 miles for tail risk insurance when I’m not sure what the repair costs could be seemed alright. I can estimate what repairs will cost in a ICE car is one thing, this is a black box.

 

[BMWdav]

like i said already, the difference is with insurance the upper bound is much higher. Which is what makes it more worthwhile. Extended warranties the maximum benefit isn't a very high multiplier of the cost.

Since the cost is more or less zero when we account for the higher resale price it fetches after 3 years I would say the maximum benefit is a really high multiplier of the cost.

 

[3241]

Since the cost is more or less zero when we account for the higher resale price it fetches after 3 years I would say the maximum benefit is a really high multiplier of the cost.

it fetches zero resale price in the US.

 

[david594]

An extended warranty is like some types of insurance.

Its kind of like pet insurance. You pay $50-100 a month so if/when your animal has a major crisis you don't have to panic at a $5000-10000 estimate. A modest cost now so you don't have to worry/panic about it later.

For a car. An extra $200 a month for an extended warranty is much cheaper peace of mind that I wont be stuck with some insane repair bill that if I were to trade in and buy a new car to have the same peace of mind.

 

[Variable430]

An extended warranty is like some types of insurance.

Its kind of like pet insurance. You pay $50-100 a month so if/when your animal has a major crisis you don't have to panic at a $5000-10000 estimate. A modest cost now so you don't have to worry/panic about it later.

For a car. An extra $200 a month for an extended warranty is much cheaper peace of mind that I wont be stuck with some insane repair bill that if I were to trade in and buy a new car to have the same peace of mind.

Agreed. I have a 6yr old 911 that is just coming up on end of the warranty. I haven’t had any issues but I’m not willing to go naked on an asset that still has considerable value when the cost to replace the PDK transmission alone can run $20k. It’s about risk tolerance.

 

[Harlaquin]

well for the insurance argument here in the USA you dont have a choice insurance is the law you have to pay or they cancel your tags and you can get fines and or jail time. Its basically legalized theft. You DO NOT HAVE A CHOICE on paying for insurance so there really is no argument there if money is wasted on it because mostly it is with the overcharging. The stuff pushed by dealers are snake oil and mostly worthless and YOU HAVE A CHOICE so Im not sure the comparisions there.