Aftermarket warranties require careful attention
Cars are frequently replaced rather than fixed, but independent warranties can still make sense
The average Irish car is now eight and a half years old, a figure that has risen significantly since the recession began its inexorable zombie bite into the wallets of Ireland’s motorists.
From 2000 to 2008, we had almost become a nation of drivers that didn’t bother to service their cars anymore. If you changed cars every year or two years, you probably didn’t even need to do basic things such as replacing the tyres. Increasing service intervals meant that many owners didn’t need to do anything more than bring their cars back in for a quick oil and filter change before it was time to move on to their new purchase.
Times have changed, and we are now clinging on to our expensive purchases for much longer. Even as carmakers and importers strive to bring down the all-important “cost of change” figure, and launch ever more tempting personal contract plans and other finance offers, the bald fact is that you are almost always financially better off to keep an old car going than to spend money on buying a new one.
The downside is the cost of maintenance. While consumable items such as brake pads, oil and air filters and the like have come down significantly in price in recent years, bigger mechanical and electronic parts have rocketed in cost.
Worse still, modern cars are designed effectively as a kit of components, often arriving at the factory in part-built form. Which means that, as with so many domestic goods now, they’re simply not designed to be fixed, but to be replaced. If a major mechanical component goes pop now, there’s not a lot of point in getting out the Haynes manual and a bag of spanners. It’s going to cost you.
Unless of course you have purchased an aftermarket warranty, or a mechanical and electrical breakdown insurance (MBI) policy. Such policies, as the name suggests, are a way of insuring your car against major mechanical failure, meaning that you can treat your old or used car much the way you treat a new one. If something goes wrong, simply bring it to the garage and get it fixed and your pocket will remain un-picked.
But as with any such purchase, you not only need to do your homework and your sums carefully and correctly, you also need to make sure you read the fine print.
James Ruppert is a former used-car dealer and now a columnist for British magazine Autocar. He says that a self-bought warranty is a good idea. “Modern cars may be more reliable but when they go wrong it is the end of the world. Diesel particulate filters and dual clutches are a financial nightmare to sort out. Compared to the old days the consequences of a breakdown are horrendous, which is why I think a modern car should be covered.
Oddly I was talking to some of my colleagues at Autocar and they agreed that they wouldn’t like to run some of their long termers as personal cars because of the sheer mechanical complication and cost of servicing.
“If a car is over 10 years old and has covered over 100,000 miles (160,000km) then in most cases it can’t be covered. The trouble is all the cars I buy are easily over that limit so I have never bothered with a warranty. My reasoning is that if I get a year or two out of the cars I buy then a big bill kills the car and I start again,” he explains.
Clearly if something does go expensively wrong, you’re going to be glad you paid for the warranty, just as if you have that minor fender-bender, you’re going to be glad you paid for fully comprehensive insurance. But there are some pitfalls.
Some warranties don’t cover knock-on damage, eg if your alternator fails, that will be covered but if the alternator failure causes damage to other components, then those may not be. As with any policy, it’s a case of making absolutely sure you read the paperwork before signing on the line.
Mapfre is one of the companies offering aftermarket warranties in Ireland. It’s a Spanish-owned company, and as well as offering its own-branded policy, it also handles warranties for some carmakers and dealers. Last year, it sold 12,500 such policies. Nigel Buttner from Mapfre says buying a package from them is just like buying a regular insurance policy; it’s all about the level of cover you want.
“A lot of factors come into play when considering if a warranty is cost effective for you, such as what mileage per year you are going to do and what is the age of the car you’re buying. There is a direct correlation between high mileage or high usage which results directly in the higher probability of component failure.
“There are no statistics to back up the supposition that cars are becoming more reliable. To the contrary, cars are much more complex today than they were even ten years ago, with an array of electronic gadgetry such as onboard computers, sat-nav systems, complex emission control systems, etc that can be prone to spontaneous failure for no apparent foreseen reason.”
Obviously some brands have a higher reliability index than others but, if you are unfortunate to suffer a problem regardless of the brand, the cost to repair in most circumstances far outweighs the original cost of the warranty.
Buttner says: “We offer the option to purchase at an additional premium extra component cover such as in car entertainment systems cover, ICE, catalytic convertor and diesel particulate cover, unlimited mileage cover, etc. So yes, would I recommend that someone buying a used car buys warranty cover? Certainly.
“There are some obligations the person buying the warranty needs to adhere to in order to keep it valid such as servicing within manufacturer intervals, timing belts changed as per manufacturer and the like. Obviously, service items or parts that require periodic replacement as per the manufacturer would not be covered under a warranty policy.”
Calculating the cost
We used the Mapfre website to calculate the cost of a warranty for one of our family cars, a 2009 Mini Clubman 1.6 diesel with 88,000kms, and it came out at €399 – not an insignificant amount of money and one which is comparable with the cost of fully comprehensive insurance for the driver. Then again, a new radiator for the same car would cost around €345, and that’s before the cost of labour and fitting.
Essentially, the advice is the same as it is for any product like this.
Shop around. Buy with your eyes and ears open. Make sure you know what you’re getting in to before you sign up for it.