Xoutpost.com - View Single Post - To buy or not to buy BMW Tire Protection?

JCL · #52 02-17-2011, 11:28 PM

Reading this thread (which is a direct repeat of several previous threads on the subject), it strikes me that there are two very different issues.

If you think that insurance is going to pay out more than it cost you, and that you will beat the house (in advance, not in hindsight) then you are dreaming. Insurance companies are generally pretty smart. They know what the percentages are. If this is the limit of the analysis, ie "Will I win more than I spend", then it is definitely gambling. And the house wins more often than not. That is why they are called the house.

The second and sepate issue is that insurance does buy peace of mind. You pay a premium, in exchange for not having surprises. You shouldn't expect to get more than you pay out, but at the same time you don't have to stay awake at night worrying about your RFTs (if that is what keeps you awake at night). It is a sunk cost at the time of purchase, for the peace of mind over likely cash outflows. If you can't afford to replace a tire unexpectedly, or if you worry a lot, then you should buy it. Just don't expect to get more tires than you paid in premiums. This part of insurance isn't gambling, it is risk management.

And if all the above is too complicated, then just go with the basic rule about anything sold by the dealer finance manager. Don't buy it. Ever. They have you at a disadvantage, because you are anxious about getting your shiny new car. You tend to rationalize. They make a killing, whether it is on Scotchguard on the fabric, tire insurance, undercoating, perma-wax, lease payment insurance, lease return insurance, or whatever. Don't buy it on principle, because all of those products can be purchasesd for far lower markups later, if you decide in the cold light of day that you really need them. And you probably don't.

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