3rd Party Extended Warranty not in CA?

[carcassone]

I'm in the market for a good 3rd party extended warranty for my 2002 X5 with 35K miles. After doing a search, 1Source and WarrantyDirect are the winners. I started with 1Source web site and got this response:

Due to new state insurance regulations, effective July 1, 2004, 1SourceAutoWarranty.com is temporarily unable to offer vehicle service agreements to California residents.

I vaguely recall there is a lame law in CA where it is illegal to see extended warranties over the internet/phone. Is this right? Anyone in CA bought one over the internet/phone?

Thanks.

[AutoXer]

I think 1Source is going out of business. Check out this thread:

http://www.xoutpost.com/x5-e53-forum/...ghlight=source

I asked for a quote from their web site two days ago, and even got an email from a rep there asking if I was interested. When I wrote back about the fact that they are not paying any more claims, I did not get a response back, so stay away.

My thinking on extended warranty have shifted 180 degrees since this happened. I never buy extended warranties on any product I owned until I got a MBZ 560SEL, and paid about $6,000 in repairs each of the last two years I owned it. And so started buying extended warranties on these high end cars.

The first one cost me $1500 on a 1995 BMW 740i, I probably claimed about $4,000 over a three year period, so it was well worth it. The costs of the warranties have gone up, so I had to paid $3500 for a policy on a 1999 BMW 740il. I have claimed about $2500 on it in the past two years. I still have another 3 years to go on the policy and would have been better by having the policy. But not if they are out of the business.

I have two good friends whose auto warranty company also went under in the past two years. So it is no wonder that California passed a law where an extended warranty has to be associated with a dealership before they can sell policies in CA. I think so that if the warranty company goes under, perhaps there is someone else there holding the bag and kind of responsible for doing the repairs.

I did my research also when looking at what company to go with. 1Source had good financial backing and I think some agency must have rated their financial strength as in the A range.

I am not in insurance, but the math does not make sense with the amount they have to paid out versus the premium I paid. The only way they can stay in business is if they continue to get lots of new business to pay for claims like mine. If new business slows, they run out of money to pay claims and have to go under.

Of course, there are cases where they make money, but I don't see it as a long term business. So my thinking now is not to buy any extended warranty because I just don't know if the company will be able to stay in business. I rather gamble on the repairs then lose my money.

Sorry this is so long, but I hope it helps you in deciding to get a warranty or not.

[carcassone]

Wow, this is really scary and I appreciate the "heads up". I've been talking to local dealers and see what they have to offer. I asked one of them what happens if the after market insurance company goes under, she said that had actually happened a couple times while she was working at another dealership. But since the dealership sold those defuncted policy, the dealership actually ended up picking up the repair tabs. I'm not sure if they have to, by law. She said other than finding a solid insurance company, also be careful "who you buy it from".

Of course, she insisted that whatever she sells me will be back by her dealership. I'd like to see that in writing!