By Gary Bunzer
RV manufacturers typically offer a limited warranty on their recreation vehicles. And while some dealers offer a lifetime warranty on the purchase of a new RV, people who want a more extensive plan or coverage after the manufacturer’s initial warranty period expires generally have two choices: pay out of pocket for any and all repairs or purchase an extended service contract. Many companies offer extended plans, and you may wonder whether you should consider buying one.
An internet search of aftermarket warranties, service agreements, and vehicle repair insurance policies yields numerous comments spanning the spectrum of the good, the bad, and the ugly. Talk about confusing! Even more confusing is deciphering some of the cryptic advertising and marketing lingo in brochures and on affiliated websites. Lacking a law degree, I struggled to understand some of the program descriptions.
Most “after the warranty” programs should not be construed as a true warranty, as proffered by the motorhome manufacturer, but as aftermarket service agreements or contracts. Think of it as an insurance policy of sorts, with defined coverage parameters that protect the RVer should an unfortunate occurrence happen. These occurrences can be extremely costly if a major repair, such as a new engine or transmission, is needed.
But is an extended service contract worth the cost? Opinions differ, of course, depending on how satisfied owners are with the plan they purchased (or failed to purchase). Only you can decide. So, rather than list the features of a certain policy, or provide a comparison of plans, or detail the cost/risk/benefit factors involved, I’ll focus on what to consider when deciding whether to buy a plan, beginning with who might be a good candidate to invest in this type of protection.
First, anyone considering a plan must be detail-oriented. When reviewing a plan and the many vague terms and potential ambiguity of what is and is not covered, it is crucial that all verbiage be explained fully. This requires strict attention to the written details and options that may be offered, as well as a full understanding of all costs.
Also, look closely at a plan’s exclusionary clauses, if they are present. Generally, it is understood that if a plan does not specifically state that an RV component or system is excluded from coverage, it is automatically protected. But this may or may not be the case, so be sure to verify what is covered and what isn’t before signing on the dotted line. In one case, a policy covered the RV absorption refrigerator, but buried in the fine print was the exclusion of electronic devices. Every RV refrigerator produced today uses electronics of some sort. If the refrigerator’s failure ultimately was caused by a faulty circuit board, for example, then the claim could be denied.
Pay special attention to consequential damage clauses. Depending on how a clause is worded, it may or may not protect against damage caused by a noncovered component. Using the electronics example in the paragraph above, let’s say a short circuit on a water heater’s printed circuit board caused a fire that ruined the RV generator mounted next to the water heater. Is the generator fully covered, even though the damage was caused by the noncovered electronic component? Better to ask first! (By the way, the water heater’s printed circuit board is used as a hypothetical illustration only. They are very safe and not prone to short-circuiting.)
Another example: What if a noncovered, rapid release of air pressure in a tire (some call it a blowout) destroys a holding tank and its waste plumbing components? Who pays for the new tank and fittings? Keep in mind that many policies do not have consequential damage coverage at all, although most experts agree it is a good idea.
It’s also vital to know the policy’s underwriter — the company that stands behind it. Is it a solid insurance company, able to stand on its own merit? Do some research in advance.
Never assume that an extended service contract absolves the owner of performing common preventive maintenance procedures. Quite the contrary. Regular maintenance usually is required just to keep the contract in place. And it’s important to know that the costs of normal maintenance procedures are never covered. Even if you can perform your own preventive maintenance, some policies and contracts may require the motorhome owner to hire a professional service shop and obtain valid documentation. If you choose to do it yourself, be sure to record all maintenance procedures. And stick to the regimen as outlined in the contract. Failure to do so could be grounds for denying a claim.
Consider the age of the motorhome. Some policies are not available for coaches over a certain age, or limitations may be placed upon them. Also, companies may refuse to cover motorhomes with high mileage, regardless of age. In addition, consider how long you plan to keep the motorhome. If you trade RVs frequently, you might not need to consider an extended service plan. The chances of a major claim are minimal with a coach only a year or two old.
If you are a skilled RV handyperson and can perform all motorhome- and chassis-related preventive maintenance, you might be better off self-insuring. That is, prepare financially to handle the repair costs yourself. The money you would have spent on an aftermarket service contract (and all its deductibles) instead would be directed into a dedicated savings plan. That way, you have enough cash on hand to take care of all repair costs. You would need to fund and replenish this account as needed. This approach takes careful self-evaluation, commitment, and discipline.
The phrase “peace of mind” is bandied about quite liberally in many descriptions of aftermarket service contracts, and certainly that has value for owners who simply want protection, no matter the cost. Some extended service agreements also offer added benefits, such as tech support; concierge services; a rental car, food, and lodging while the vehicle is being repaired; and even reimbursement for food that spoils should the refrigerator fail.
If you find yourself in the “peaceful easy feeling” camp, take your time, shop around, and avoid snap decisions at the close of the sale of a new motorhome. Do not be pressured into buying immediately. With your new motorhome waiting, you may not be in the right frame of mind to explore the details of the coverage being offered. That service agreement will still be there tomorrow. If not, plenty of other aftermarket service contracts are available following the sale.
With due diligence, decide whether an aftermarket service contract fits you, your family, and your motorhome. Just recognize that such a plan may not be necessary for every RVer or RV. Only you can decide.
And remember, RVing is more than a hobby; it’s a lifestyle!
- Ask an experienced insurance broker to help break down the gobbledygook into plain, understandable, layman’s English.
- If coverage is for a brand-new coach, make sure the policy starts at the end of the manufacturer’s warranty — not to run concurrently.
- Verify that repairs can be done at any RV service facility. If the selling RV dealer issues the policy, there may be a requirement to have all noncovered maintenance procedures and all repairs performed at that dealership or within a narrow network of dealers.
- Be sure a nonpenalty transfer or cancellation clause is associated with the plan, in case you sell the motorhome or change your mind about the contract.
- Obtain multiple quotes from multiple agencies.