Buying a warranty or mechanical insurance?

Buying a warranty or mechanical insurance?

There has been a change in truck purchasing in the last few years. Some times it appears as though buying a truck includes the offer of extra support—to add fries with that hamburger—to “supersize” maintenance outsourcing.

These days, buying a new truck requires spending six figures for for a highly sophisticated, electronically equipped vehicle that needs to run all day—every day. Then the competitive trucking environment demands that we run this vehicle at 99% on-time deliveries, and that’s at the 14 hours on the clock rule: 11 hours behind the wheel rule and 30 minute lunch breaks for the drivers. Add in the CSA measurement tool and we can make a case for the fact that we do not do maintenance any more—we are asset managers who just happen to try to keep trucks on the road with oil changes. Does that mean that extended warranty is now the budget and repair answers?

A few years back, fleets started taking a look at letting the dealer stock the parts, fix the trucks, train the techs—let them own the brick and mortar—or let the leasing companies capture the business. The result has been, however, that some fleets are feeling like they are held hostage and have lost control. The problem may be that communication can fail. For example, phone communication has given way to email and emails, which aren’t always answered in a timely manner. Some fleets feel as though they have turned their asset management over to the service writers and that they have lost control over parts in the central warehouse, which may or may not get on the delivery truck to be delivered in a timely manner.

Because of this, some fleets are feeling the need to purchase an extended warranty option, which can exceed $8,000 per truck. When this option is considered, I advise fleets to look closely at the extended warranty terms to make sure it meets their needs and expectations. Some may not cover normal wear and tear, only major component failure, failures that these days are less likely to occur. I have found that extended warranties do not cover oil consumption from worn rings or injector, turbocharger failure from dirty fuel or oil, broken widow regulators, seat cushions or the foam under them.

Although the term bumper-to-bumper coverage is often touted, when some extended warranty terms are looked at closely you may find out that time or hours could dramatically change. For example, what is believed to be a 500,000-mile warranty may in fact not cover the total miles. Perhaps it includes an additional year or 100,000 miles above what you would normally receive could be included, which would mean a cost of one to eight cents per mile for extended an “insurance” period.

There is another caution regarding an extended warranty like the one I just described.
Fleets may flood the dealer with work, but if the work cannot be completed in the SRT times, some dealers will bill for the uncollected time because of the chain of delay.

To ensure that when you purchase an extended warranty it is what you need and expect, list all your components and failure experiences and ask if those items are covered under the standard and extended program. See how many miles, time or hours will affect the outcome of what the computer and registration date controls. Make sure policy and good faith adjustments are in the vocabulary.

For more information, visit www.darrystuart.com or email comments or questions requests to Darry at: [email protected]

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