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Car & Home Warranties

(PERPETUAL MOTION MACHINES) Seems like we are bombarded with entreaties, lures and overly generous promises of salvation and an end to our troubles by reason of Vehicle and Home Warranty systems, where for a pittance our tranquility and peace of mind will be forever protected. These hucksters bombard our airwaves and call in on local phone numbers with apocalyptic news that our warranty has expired and that their warranty is, indeed, the next best thing to divine salvation.

But just as we should be skeptical of enterprises and schemes that are akin to perpetual motion machines, we should be wary of such warranties.

First, consider the advertising budgets of these companies, like Car Shield that run and rerun expensive ads often hawked by those with instantly recognized personalities. They remind us that the cost for these warranty systems is nominal compared to the hordes of benefits they promise to bestow on us in times of trouble. Indeed, we can become “covered” without the Warranty company knowing the slightest about the history and repair record of our home and vehicle so long as they are informed of the make, model and year.

Next, these hot shot sales people attempt to convince us that they will use our own mechanics and vendors to complete the work in record time. Seemingly, they would have a much better relationship with our own mechanics we ourselves, who have been using their services again and again. Really? How so? But that takes us into the realm of the math and the matter of possibility. We are expected to pay for a warranty which operates as an insurance policy to pay hefty repair bills that we cannot afford.

So if “all goes well”, the money pours in from our memberships. These companies would then, of necessity, pay our mechanics and service people to undertake the repairs seemingly as much as we would pay them. Why would our mechanics and service people grant giant discounts to the warranty companies i.e. what's in if for them to grant such giant discounts —i.e. equal or more than to permit the Warranty Companies to spend hundreds of millions for advertising; to make profits on their own; and to deal with thousands of repair companies nationwide? The magic of the operation is that our seemingly “trifling” monthly payments—which ostensibly save us thousands of dollars--are expected to fund the repairs, the advertising and the profits. Something does not compute. It's a bit like a casino suggesting that we invest our money in them as they reel on a long list of big winners such that we might become one of them. But if our common sense ever kicks in, we realize that gamblers need to contribute a whole lot more than casino's pay out to cover the overhead of gambling establishments, profits and taxes imposed by states and municipalities. How dumb must we be to “fall” prey to such nonsense?