Another (but different!) extended warranty question

Greetings, everyone. I bought my 2019 CX-5 Signature in mid-May of that year, so I'm coming up on my 36 months. (I'm a little over 34K miles.) I did not buy the extended warranty at that time -- actually, no one even tried to sell me one; I guess I'm THAT intimidating? -- but now I find myself thinking about it. I contacted the finance guy at my local dealership (where I bought the car new), and he gave me the following quotes:

*5 years from the contracting date ending at 100K miles on the odometer -- $2,163 + tax
*7 years from the contracting date ending at 125K miles on the odometer -- $2771 + tax
*8 years from the contracting date ending at 125K miles on the odometer -- $2871 + tax

All of these are bumper-to-bumper, not including oil changes, tires, rotations, wipers, battery, brake pads, rotors and bulbs.

OK, I know I said "question" in the subject line, but I actually have more than one:

1. Does my car already have a 5-year/60K miles power train warranty? (I'm in the US.) What does that cover?
2. The company issuing these extended warranties is called "Zurich." Is this Mazda's standard underwriter? Are they reputable/reliable?
3. Do these prices seem typical?
4. How much should I be able to negotiate them down?
5. Is the "contracting date" the date I purchase the extended warranty?
6. The guy at the dealership said that I could still buy an extended warranty after the original 3-year/36K runs out, but then my vehicle would be classified as "used," and the warranty would cost more. Is this true?

Oh, and while I'm not going to ask "Is an extended warranty worth it?" (I don't want to totally violate the terms of my subject line), I would welcome any feedback on that question, too. For what it's worth, I have already decided that this vehicle, which I love, will nonetheless be my last non-EV, so I will probably be keeping it for quite a while.

Thanks!
 
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Mazda CX-9 Signature
I think they're selling third party insurance which USUALLY is useless. I'd say no to the offer.

Ask for extended warranty by manufacturer (Mazda).
 
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Southwest Ohio
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'19 CX-5 diesel
For a point of reference, when I purchased my '19 signature diesel in Feb 2020, the dealership was down to $1300 (they started around $2700) on the 5yr/100k extended (and still making money on it). I declined.

As far as "is it worth it?" .... I think that's subjective. For some, the money isn't as important as the piece of mind knowing it's handled in the (unlikely) event of a repair. For instance, perhaps a person travels extensively and they want the assurance that their spouse and children are taken care of if an untimely repair occurs when they are away from home. Or you just don't want to risk a high dollar repair.

For a guy like me, who's pretty capable with repairs and spare vehicles to drive if one goes out of service it's not worth it to me.

Only you can decide what is right for your situation.

👍 for seeking counsel on the matter. That's how you make a great choice!
 
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Phoenix
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2021 signature
I think they're selling third party insurance which USUALLY is useless. I'd say no to the offer.

Ask for extended warranty by manufacturer (Mazda).
There is no actual extended warranty by any manufacturer. They are all service contracts. The Mazda one is now administered and sold through Toyota Financial. That said, if you do want one shop around, they can usually be sold for about half of what they are first offered to you
 
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2018 CX-9 GT
Question 1: yes. If you bought the car new you have a 5 year 60k powertrain warranty. You can google or ask the dealer what is included, but a common way to look at it is anything that concerns the propulsion of the car: engine, transmission, differential, etc.

Spark plugs are considered normal wear and are not included. Wheel, brake, suspension are not included. Anything inside the car or electronics is not included either obviously.

Read carefully the fine print of any extended warranty, some have deductibles, and some even have a maximum claim limit. Sometime, you end up buying a warranty for 2500$, with a 300$ deductible and a maximum claim of 5000$. You can do the math but these are not good at all.
 
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RL911

Member
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19 CX-5 touring
That’s very expensive, I’d pass on anything more than $1000 or so, but only if it were a Mazda warranty. I don’t trust third party.
 
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Phoenix
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2021 signature
Question 1: yes. If you bought the car new you have a 5 year 60k powertrain warranty.
Actually it doesn't matter if you bought it new or used, from a dealer of even used from a private party. On all cars, at least in the U.S., the mfg warranty is good regardless of whom you bought it from or if it was used. Any dealer service department can look up the VIN and tell you the in-service date.
 

7eregrine

The man, the myth, the legend
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Land of Cleve
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2016.5 CX5
These warranties are rarely ever worth it on the more reliable brands like Mazda. Anything that is truly covered under these warranties rarely fails because normal wear and tear items are not covered as they shouldn't be. The stuff that IS covered? Is usually the stuff that truly doesn't break that often.
Anyone here replace a water pump lately? The infotainment system? Starter? I can count on one hand the number of people I've seen with these issues. And have fingers left over. The stuff that WILL break and be covered is usually going to break in that first 3 years... and they know this.
Not to even mention none of the warranties go past... 125K?
Again, same principle... and they know it. Anything that they cover that will break is going to break early.... or later well beyond 100K-125K.
Save your money.
 

HardRightEdg

US 2020 CX-5 Touring AWD Soul Red
1. Does my car already have a 5-year/60K miles power train warranty? (I'm in the US.) What does that cover?
2. The company issuing these extended warranties is called "Zurich." Is this Mazda's standard underwriter? Are they reputable/reliable?
4. How much should I be able to negotiate them down?
5. Is the "contracting date" the date I purchase the extended warranty?
6. The guy at the dealership said that I could still buy an extended warranty after the original 3-year/36K runs out, but then my vehicle would be classified as "used," and the warranty would cost more. Is this true?
That's a lot to unpack.

I'll preface my comments by saying I never buy extended warranties / service contracts on anything. The claim payouts on these kinds of things is only about 50 - 65% of the "premiums" paid. So long as you have a prudent emergency fund and put reliability ratings of products as your first cut this approach pays off in the long run unless your are exceptionally unlucky. I like the odds of self-insuring.

Anyway, to your questions, except for pricing:

1. Yes. You should have done this most basic research on your own.
2. Zurich is a global multi-line insurance giant. I can't say if that's the best deal in this line of coverage. At least they are less likely to go bankrupt than some no-name outfit that specializes in this line. First thing to know about the extended "warranties" is some have their own list of authorized service centers. I'd avoid those. Others say you can use the manufacturer's dealer service centers or any ASE certified shop. Since a Mazda dealer is selling the product one presumes it allows for Mazda service but I'd ask to be sure. Google around for reviews. As with anything else, trust pages that have the look of independence. Some have the look of being sponsored. One name seems to keep coming up toward the top of the lists but I'm not making recommendation without doing more research which is up to you.
4. Not much if at all. The dealership probably only makes $200 give or take on a $2000 sale. That's probably why many dealers can't be bothered with selling these products after-sale or bother with sending a copy of the contract. Personally, I would not buy such a product without first reading the contract.
5. That's a question to be asked of the salesman or better yet read in the contract if you can get him to supply it.
6. There is a thing in any insurance underwriting called "adverse selection" and it's twin brother "pre-existing conditions" to go along with the time value of money. If you buy an extended "warranty" at the time of new car purchase the only pre-existing conditions came out of the factory and the manufacturer is on the hook for the duration of their warranty. The extended service contractor has free use of your money for that period of time. If you buy one of these service deals after expiration of the manufacturer warranty, how does the seller know you are not an "adverse selection" with a pre-existing problem that you're going to claim for as soon as the ink is dry? They don't for sure even if the car is inspected. If they don't inspect the cost of the coverage will be that much higher. So, yes, these factors indicate buying at the time of new car purchase would be less expensive.
 
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2022 CX-5 Turbo
If the MSRP of an ext warranty is $X for a package, a good price to pay is probably half of that.

To OP, the prices you quoted might not be MSRP. You should ask.

When I purchased the ext warranty from Toyota for our '05 Prius (1st yr of 2nd gen), I was worried about hybrid system reliability.... For 7yr/100k, the MSRP was $1540. I paid $710 for it thru a salesman at a remote (from me) Toyota dealer. He made more $$$ from selling ext warranties (Toyota/Lexus) than new vehicles. I doubt he lost money by doing that.

That is why I believe the profit margin is very high on ext warranties.
He made money even when he sold them at 50% off.

My Prius was bullet proof for 8 yrs. I did not use the ext warranty at all.
Big waste of money (ext warranty) on a Toyota.

P.S.
He (Troy ?) was very famous at PriusChat.com (a popular Prius forum at that time). Many bought from him. Before you question it, yes, it was genuine Toyota ext warranty. Even the salesman who sold me the Prius heard of him.
 
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2018 AWD GT Premium Red/Black
If the warranty underwriter has been around for a long time, they are in the business of profiting from getting more money, on average, for these warranties than what they are worth. If they don't, they won't be around for long.

If you can afford to self insure, you get to take/keep this profit, plus any additional overhead or price premium they would have extracted from you over the bottom line they would have settled for. If I couldn't afford to self-insure, I'd consider myself unable to afford the car, and buy something less expensive.

Self-insuring gives the added benefit of not being beholden to anybody else to prove they owe you something, or that you've jumped through their hoops (aside from the original manufacturer warranty conditions).

You can't be cheated or fooled if you don't give them your money.
 
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Phoenix
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2021 signature
General number, just my rough estimate, but still close enough to give you an idea. Of the sales retail sales price of an extended warranty (service contract)

50% goes to marketing and administrative costs
30% goes to commission
20% is paid out in claims

So they know that for that on a sale of a $1,000 contract it will on average cost them $200 in claims. Though I can't tell you what your peace of mind is worth. But how many have you had to pay major out of warranty work for a repair? Yes, there's stories of "I'm glad i had it because my engine blah, blah, blah.", but most of us have never had one of those occurrences
 
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2018 CX-9 GT
The key is also to try and consider what kind of repairs would cost you more than the 2000$ the warranty would cost. Other than engine failure (which is kind of rare unless you have a turbo), i can’t think of a lot of common warranty repair that would cost more than 1000$. And you still have your 5 year powertrain warranty that covers the engine. On all the cars i have owned, there haven’t been a lot of repairs that i have done that would have been covered under extended warranty.
 

HardRightEdg

US 2020 CX-5 Touring AWD Soul Red
50% goes to marketing and administrative costs
30% goes to commission
20% is paid out in claims
No way. Claim costs run in the 50 - 65% range. The self-insurance argument still holds.

You seem to be basing that on your example from 2005 in post #12. If your 20% assumption were correct then the average payout per vehicle on those Prius on a $710 contract out to 8 years / 100,000 miles would have been was $142. Does that in any way make sense to anybody? No vehicle model is that bulletproof.

Perhaps the salesman made money under a gross sales commission schedule with his dealereship. I would not assume the dealership was making money on what that guy was selling. Are you sure he wasn't rogue and eventually fired? Or perhaps Toyota was taking the hit to promote Prius sales for some period of time.
 
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2021 CX-5 GTR
Actually it doesn't matter if you bought it new or used, from a dealer of even used from a private party. On all cars, at least in the U.S., the mfg warranty is good regardless of whom you bought it from or if it was used. Any dealer service department can look up the VIN and tell you the in-service date.
While this is the case with most the Hyundai/Kia 10yr/100k warranty is limited to 5yr/60k beyond the initial owner. Pretty lame IMHO.


I will suggest my usual and tell the OP to take whatever would have been spent on the extended warranty and put it in a dedicated car service account at your bank (or with your investment company) to make sure you get full use of the money whether, or not the car needs it within the coverage period.
 
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2017 Mazda 6 Sport
The key is also to try and consider what kind of repairs would cost you more than the 2000$ the warranty would cost. Other than engine failure (which is kind of rare unless you have a turbo), i can’t think of a lot of common warranty repair that would cost more than 1000$. And you still have your 5 year powertrain warranty that covers the engine. On all the cars i have owned, there haven’t been a lot of repairs that i have done that would have been covered under extended warranty.
replacing the infotainment screen out of warranty costs just under $1k
 
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2018 CX-9 GT
Exactly, so if you replaced your screen under a 2000$ extended warranty with a 100$ deductible then you still paid 1100$ too much.

Everyone has a different risk tolerance, and some prefer the peace of mind, but just showing how at that price point the odds are in favor of the insurance company.
 
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Phoenix
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2021 signature
From phones to cars, the (lack of) value/wisdom of extended warrantees are well know. That said, if someone finds its value in peace of mind, I don't beat them up about it.