View source for Should I pay for the "extended warranty"?

[[Category:New Riders]]
Your Kawasaki is a well-made machine, and there is little chance that anything major will go wrong with it, short of rider error. Although we refuse to think for you, it is highly unlikely that you will get your investment back on one of these policies. And be assured that it is a policy; it is not a warranty and is almost never sold by the company that makes the product (in this case, Kawasaki). Here's club member [http://www.ninja250.org/alann1438 alann1438] to tell you how it all works. 

For several years I worked for a very large automotive aftermarket warranty company. I will let you in on the big secret of "Extended Warranties". They're just insurance policies. My high school economics teacher explained insurance in a very simple manner. You (the gambler) are betting that something will go wrong with your purchase and the Warranty Company (the casino) is betting that nothing will go wrong. Just like in Las Vegas, the casino wins lots more than they lose. Insurance companies are also like casinos in that they set the odds, ''and'' the rules of the game.

These things have to be gone over very carefully. Each one is different, and there are lots of different companies that offer these kinds of policies. While you are reading the warranty contract, be on the look out for the phrase "like kind and quality". That is legal speak for used or aftermarket parts. What this means is that if you have a vehicle with 30,000 miles on it, and the engine needs to be replaced, the replacement engine can be a used engine with less than 30,000 miles on it.

Also, you need to pay close attention to the clauses concerning maintaining the vehicle. Most warranty contracts specify that the vehicle must have all of its specified maintenance performed at a licensed repair facility. Furthermore, you may be required to provide proof of the maintenance before repairs are authorized. If you are unable to provide records of the maintenance, your warranty claim can and in most cases will be denied. So now you have to consider the cost of having a dealer or shop do all of your maintenance versus you doing it yourself. When you add all of the differences in servicing costs, it may cost you a lot more to meet the warranty's requirements than you could possibly save by having a repaired covered.

Another thing you should look for in the warranty contract is the "limit of liability". That is a clause where the warranty company states the maximum amounts that they will pay for a claim, or all of the claims. In most cases the warranty company will cap their limit of liability to the current retail value of the vehicle. Basically, if the vehicle has an established current retail value of $2000, then that is the most that they will pay for the repairs. If the cost of the repairs exceeds the retail value of the vehicle, you (the consumer) will be responsible for any costs beyond the limit of liability. Remember that the longer you own the vehicle, the lower the retail value becomes.

One last thing: Remember how insurance companies make money. They charge more in premiums than they expect to pay out in claims. In the long run, insurance policies or warranties are money-makers for the insurance company and money-losers for the consumer.