To buy or not to buy BMW Tire Protection?

[ard]

Originally Posted by Karin156

I was told by my dealer that if I replaced the tires with something else than what was stock, then the warranty would not work. Seemed like a lot of retrictions, so I declined as well. However, I did end up getting the extended maintenance at a discount! I calculated the costs of oil changes, services, and brakes and it already covered the costs so it seemed to work well for me.

1. The "calculation" only "works" when you put in the outrageous charges that dealers use. You really MUST find an indy for the car once the BMW warranty is done.

In fact the maintenance plan is great because it makes people come to the dealer- so that should other issues come up, they are more likely to just get them all fixed at the dealer- dealer gets to rape you on the 'out of warranty' repairs.

2. The calculation assumes you will get brakes in there...you may not! Then you've grossly overpaid.

3. If you crash the car, or someone crashes into you and totals it, you threw away the money.

4. You could have bought that plan up to 4 years and 50k miles from now. Of course they probably told you "one time offer, you'll never see this discount again". You do know that every dealer makes up their own prices for this- there is no 'msrp' like there is for the car.

[kck7]

ard's reply above should be THE guide for anyone considering any of these "add-on" insurances. I was about to say what he said in his points 3 and 4 but he bettered it by adding 1 and 2, which together and in the long run mean you have paid FAR more for this seemingly innocuous and beneficial plan than you ever imagined.

Some equations:
Warranty = Insurance
Insurance = Gambling
Gambling = The House Always Wins (in the long run)
The House Always Wins = You Lose!

Another truism is that insurance is bought more by the less-well-off sections of society than the other way 'round. Repair warranties on TV sets etc are the most obvious example, the majority of which are sold to lower-income people (who, one may argue, should not be buying that fancy tv to begin with, but that's another story).

Similarly, if you can afford a $60k car then surely you must have some $1-2K socked away that you can spend on brakes, tires or whatever. If you don't then you really shouldn't be buying such a car to begin with.

People with means self-insure a lot. We have a local consumer guru (Clark Howard; you can look up his site) who is always lamenting the evils of extended warranties and such things.

An example, somewhat related to this: the Bugatti Veyron, a hyper-car that costs between 1.7 and 2.2 million US dollars... last I heard this car is NOT insurable! (as in collisions, etc, because of its performance it represents too much of a risk to the State Farm types). Yet, they sell every one of them before they are built. I don't think the people who can afford $2m to spend on a car worry too much about these things.

From what I know, F&I people in dealerships (the guys who close your paperwork and attempt to sell you this stuff) are likely the highest-paid individuals there next to the GMs and owners. Back in the '80s these guys made in the six figures (what the poor showroom salesman makes is a fraction of their pay -- ask me how I know). They don't get paid that kind of money for giving away "good deals". If they get paid that much as a commission, think of what the dealership makes, then think of what proportion of that dollar goes to (maybe) benefit you, the buyer.

[GoVols!]

Originally Posted by blondboinsd

Or calling AAA?

I agree. Joining AAA would be cheaper than the upcharge on RFT's. I intend to do just that once my factory tires wear out. 21k and counting. Should be able to get another 15 on them.

[GoVols!]

Originally Posted by BGM

Not sure on yours if you have a full size spare--again, the main issue of going non-RFT after having RFT with no spare is the safety benefit especially with having kids in the car, etc. Some have suggested going non-RFT and putting a can of Fix-A-Flat in the car.

Here is my thought on this. I am making the decision to get rid of runflats once they wear out and go without a spare other than the can of fix-a-flat.

I am fine with risking the inconvienence of being stranded waiting for AAA.

Now you say, what if the wife and kids are in the car themselves?

Well, my wife isnt one to change a tire on the side of the road in the first place, so if she gets a flat, she is either calling me or AAA anyway.

[kck7]

Also for those who are so inclined, you can buy (albeit at higher cost than if purchased as a vehicle option) the inflatable spare and keep it in the cubby.

[BGM]

Originally Posted by kck7

Some equations:
Warranty = Insurance
Insurance = Gambling
Gambling = The House Always Wins (in the long run)
The House Always Wins = You Lose!


Similarly, if you can afford a $60k car then surely you must have some $1-2K socked away that you can spend on brakes, tires or whatever. If you don't then you really shouldn't be buying such a car to begin with.

You can't equate insurance to gambling. So, why insure your house, your car (other than be required to carry certain coverage), your homeowners's insurance, etc. It's for peace of mind. It's for the convenience of not having to shell out a lump some of money at one time if you don't have coverage and something happens. Obviously not everyone has claims hence why insurance companies are still around. Most people aren't going to sock away $2K for their "tire replacement fund" to be used 2 years from now--most likely other expenses come up that you will be use that money for.

[kck7]

Originally Posted by BGM

You can't equate insurance to gambling. So, why insure your house, your car (other than be required to carry certain coverage), your homeowners's insurance, etc. It's for peace of mind. It's for the convenience of not having to shell out a lump some of money at one time if you don't have coverage and something happens. Obviously not everyone has claims hence why insurance companies are still around. Most people aren't going to sock away $2K for their "tire replacement fund" to be used 2 years from now--most likely other expenses come up that you will be use that money for.

Actually, insurance IS gambling. You, the buyer, are betting (gambling) that there will be a claim (ok, you are concerned there will be a claim. This is the same thing and is only semantics).

The insurer is betting that you won't have a claim, or that your claims' value will fall short of the cost of the policy (overhead etc) and still leave a reasonable profit.

There's nothing wrong with that; it's the way of business. When we buy life, car etc insurance it is because we judge that we (or our family) could not afford to bear the cost of any potential loss, hence we shift the risk to the insurer and pay them a premium for their risk. They, in turn, profit by spreading the risk around and paying out less than they take in. The day they pay out more, guess what happens? The House Has to Win the Game, or there IS NO Game.

Ever try being 80 years old and getting a new life insurance policy? Ever been dropped for too many claims? Ever been denied because you're 18, male and a poor student who maybe got booked for possession once? It's all about the betting, as there are no certainties in life, only that the past is the only indicator of the future, however imperfect that indicator may be. Enter: gambling.

Most if not all the insurances above are taken out to avoid catastrophic losses, such as a home, a breadwinner's life, etc. IOW, losses which the insured cannot reasonably pay from out of pocket. Insuring $1-2K worth of tires on a $60k car (ie it's all about proportion) is crazy, and digs deep into the most basic of human psyches - Fear of the Unknown, and the argument completely breaks down in the face of logic. For me anyway.

[BGM]

I know what you are saying-- everybody knows you might never file a claim on any insurance or warranty but to say it's "gambling" is a stretch--gambling is wagering money or material goods with the intent of winning add'l money or material goods.

[kck7]

Originally Posted by BGM

I know what you are saying-- everybody knows you might never file a claim on any insurance or warranty but to say it's "gambling" is a stretch--gambling is wagering money or material goods with the intent of winning add'l money or material goods.

Point taken but not conceded. Reading further on the wiki page where you got the above, is this:
"Nonetheless, both insurance and gambling contracts are typically considered aleatory contracts under most legal systems, though they are subject to different types of regulation."

The way I read this, the significant distinguishing feature between gambling and insurance is how they are regulated. In practical terms, there is that other aspect of interest level of the parties on the outcome, etc, which appears just above the line I quoted above.

It's not too cool btw, to quote sources without accreditation, even if you edit the material for conciseness. But if you wrote the above on your own, my apologies in advance.

[GoVols!]

Originally Posted by BGM

I know what you are saying-- everybody knows you might never file a claim on any insurance or warranty but to say it's "gambling" is a stretch--gambling is wagering money or material goods with the intent of winning add'l money or material goods.

Isnt that exactly what insurance is? You're looking to "win" goods that would have cost you more than the price you paid for the policy?