IF YOU OWN A LUXURY VEHICLE AND WANT TO KEEP IT, YOU SHOULD CONSIDER AN EXTENDED WARRANTY

The typical factory warranty on a new luxury car, for example, a BMW, is 4 years/50k miles. It means, if something significant breaks before 4 years or 50k miles (whichever comes sooner), it would NOT cost you a penny.

However, after the factory warranty runs out, when something breaks with your Audi or BMW, it is going to cost you significantly more to fix than a non-luxury vehicle, because luxury cars are more complex to fix and parts are typically shipped from overseas.

To minimize the repair costs after the original warranty runs out, it makes sense for people to consider an extended warranty, so people don’t need to cough up thousands of dollars for a repair.

DEALERSHIPS’ EXTENDED WARRANTIES ARE EXTREMELY EXPENSIVE, STARTING AT $2,000

Each car dealership has its own programs, which vary by coverage and pricing. But in general, the barebone plan will cost $2,000 at the very least. It could easily cost $4,000 and more depending on your vehicle and the specific coverage.

In terms of the coverage options, BMW offers a mix and match between 5-7 years and 75k/100k miles. The max is 7 years/100k miles. Audi offers a mix and match between 7-10 years and 70k - 120k miles. Audi’s max is 10 years/ 120k miles.

In terms of pricing, let’s use a 7 years/100k miles as a benchmark. For a BMW, it costs between $2,300 and $7,400 depending on the car and warranty tier. For an Audi, it costs at least $3,000.

Old BMW data, but it gives you an idea on how much it costs

You get the idea, car dealers’ extended warranties plans are very very expensive.

GEICO’S EXTENDED WARRANTY PLAN IS 80% CHEAPER

No, you did not read it wrong. And it is not too good to be true. How do I know for sure? I am a customer myself.

Geico’s extended warranty plan beats everyone else by a long stretch. It’s significantly cheaper and more comprehensive.

Geico’s extended warranty program, mechanical breakdown insurance (MBI), literally obliterates all of its competition in terms of pricing and coverage. For example, it only costs around $50 every six months on a BMW X3 or X5, so it basically costs you $100/year. For 7 years/ 100k miles, it will only cost about $700, whereas it will cost about $4,000 through BMW’s own extended warranty. That’s at least 80% off.

SIGN UP AFTER THE 1ST YEAR OF YOUR NEW CAR

Geico’s MBI program only works for new vehicles that are less than 15 months old and with less than 15,000 miles. In other words, you can’t wait too long, but it’d be smart to sign up towards the end of the 15 months/ 15,000 miles to maximize these benefits.

Why? Once you sign up you can’t stop.

In reality, you really don’t need this warranty for the first 4 years because you have your original factory warranty. Basically you are throwing money away until the original 4-year factory warranty runs out, so you can take advantage of the low rate for the portion that’s between years 5 and 7. Since the first few years are essentially a waste of money for you to pay into, you might as well pay towards the tail end of the deadline, which is 15 months/15,000 miles.

EVERYTHING YOU NEED TO KNOW ABOUT GEICO’S MBI PLAN

7 Years/ 100K miles: Once you've purchased MBI, you can renew it for up to seven years or 100,000 miles.
$250 Deductible: After a $250 deductible on a covered loss, MBI covers repairs to all mechanical parts of the car (except for maintenance and wear and tear).
Comprehensive Coverage: The plan includes all parts and systems not just the specific list of items covered by most dealer warranties.
Cheaper Than ALL competition: You are likely to pay $600 to $700 (maybe even cheaper) for the protection of 7 years/ 100k miles, instead of $2000-$7000.
Repair by the Dealership: You can actually repair at the car dealership instead of a random shop. In practice, the repair can be done by the same shops a dealership’s extended warranty uses, so you know it’s being worked on trained technicians.

GEICO’S STRATEGIC GOAL WITH ITS ULTRA-LOW PRICING: CUSTOMER RETENTION

Geico is not stupid. The reason Geico offers a comprehensive extended warranty option is that it improves customer retention.

Once you sign up, you need to renew the MBI coverage for the next 7 years, in order to fully take advantage of it. In other words, you have a strong incentive to stay with Geico for the next 7 years. In the meanwhile, Geico is making money off of your insurance premium. In the end, it is a win-win situation for the car owner and for Geico.

GEICO’S MECHANICAL BREAKDOWN INSURANCE IS THE ONLY OPTION YOU SHOULD CONSIDER, PERIOD!

Literally, if there’s any takeaway from this article, it is the following statement.

If you want to protect your luxury vehicle, go straight to Geico’s Mechanical Breakdown Insurance. It trumps all competition because it is at least 80% cheaper, it offers more comprehensive coverage than a dealer’s extended warranty, and you can take it to the dealership for repair.

The only reason I can see anyone would purchase an extended warranty from a dealership is due to a lack of access to information. In other words, people just don’t know. Again knowledge is power. In this particular case, power is thousands of dollars in savings.

Ep.83- Geico's Extended Warranty is 80% Cheaper Compared to the Dealership

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