RV Insurance & Extended Warranties, What’s the Difference?

I understand some RVers confusion regarding RV insurance and warranties, but, RV insurance and warranties are completely different and should never be mistaken for each other. If you are traveling in any motorhome, you are going to be required to have a vehicle insurance policy just as you would for a car or truck that you own for everyday use.

This policy will include the same things as any standard motor vehicle coverage such as liability, personal injury and collision coverage. While it’s required that RVs powered by a motor to have insurance, it’s a good idea for an RVer to have insurance on their towable trailers as well. In fact, if you’re financing a trailer, it will almost be a certainty that your loan holder will require your RV to be insured for its replacement value at the very least.

In a previous column, I explained the different types of insurance for RVs and what may work for you. I recommend that you review that article before you purchase any insurance or warranties for your RV. While certain types of insurance are mandatory depending upon the type of your RV or whether it’s financed, others are not compulsory and that would include the purchase of warranties.

Are warranties insurance?

A warranty plan can be considered an insurance insomuch as it may cover costs of certain components that malfunction through no fault of yours and would not ordinarily be covered by a motor vehicle insurance. When purchasing a new RV, manufacturers routinely include basic manufacturer warranties on such things as the transmission, engine, emission systems and some components like slide-outs and appliances. For motorhomes, some warranties are based upon mileage and others will be based upon the age of RV.

It’s also important to note that certain parts and appliances have warranties from various manufacturers. For example, refrigerators, air conditioning, furnaces and other appliances may have a separate warranty and may have to be serviced at locations other than RV dealerships. That said, I highly recommend that when buying a new RV, you have a complete understanding of all the basic manufacturer warranties included with your purchase as to what they cover, the limitations of their coverage, and their expiration dates.

What are extended warranties?

As a rule, extended warranties are offered through 3rd party companies that specialize in offering replacement or repair coverage for certain components of your RV longer than that of the manufacturer’s warranties. These warranties will cover the cost of the replacement parts, labor, and any diagnostic costs associated with the repair of your RV. However, extended warranties will not cover repair or replacement costs for repairs caused by weather, accident, or physical damage caused by others such as vandalism. For this type of coverage, you will need to rely upon collision or liability coverage in your automobile or RV insurance policies.

Are there different types of RV extended warranties?

Yes. However, while there are numerous 3rd party companies that offer extended warranties based on the age and/or mileage of your RV. That said, most of these companies will offer three different types of contracts that are either based upon listed components, powertrain only, and the exclusionary contract which is always the most expensive.

Listed component contract

This type of contract will only cover certain components of your RV and can vary in cost based upon what is or what’s not listed in the contract. For example, if you own a 5th wheel or towable RV, then you won’t need a powertrain warranty because you have neither a transmission nor an engine. Usually, the listed component contract will cover your air conditioning unit, furnace, appliances such as the stove and refrigerator, your generator, slide motors and hydraulic jacks and even some components involving electrical and plumbing issues.

Powertrain only contract

This type of contract is usually the most inexpensive and is designed for those traveling by motorhome. This warranty will usually cover repairs to your engine and transmission beyond the manufacturer’s warranty and I recommend it for people that have large class A motorhomes regardless of whether they travel full-time or just occasionally.

Exclusionary contract

An exclusionary contract warranty is always the most expensive warranty that you can buy. While its coverage will cover most repairs to your RV, it will always have some exclusions that will apply that may or my not be covered by your RV insurance policy. For example, repairs to a closet door with a broken hinge, a drawer with a loose slide bracket, or frayed carpet will not be covered and it’s a good idea to examine this type of warranty thoroughly before you purchase it to determine whether it works for you.

I’m thinking about buying an extended warranty, what should I consider?

As a rule, I would consider cost, timeframe, and coverage of components to be the most important aspects of whether I would purchase an extended warranty. For example, your motorhome may have little mileage on it because you drive it less than a thousand miles a year. Despite its low mileage, it’s now three years old and the powertrain and engine warranty by the manufacturer has expired. Do you purchase the extended warranty?

This is always a hard decision to make, but if you’re financing your rig then you should buy an extended warranty. And even if you’re not financing your rig, this is especially true if you own a high-end class A motorhome such as a diesel pusher or even a gasoline powered motorhome. There are parts on these engines that give out over time and the last thing you want to do is be stranded in some place like northern Maine trying to get a turbo for your Cummings diesel engine replaced. While your warranty will probably not cover the cost of the motel room you have to stay in for five days, it will cover the replacement parts and labor and that could save you thousands of dollars.

Consider your needed coverage

Thing first thing to decide is what type of coverage you require. If you owe money on your RV and plan on taking long distance trips or living in it full-time, then you should probably consider buying an exclusionary contract where most components will be covered under your warranty. On the other hand, if aren’t making payments on your rig and you plan on using your motorhome or RV for weekend excursions or a few days now and then, maybe a powertrain only or limited component contract will work for you.

Age of your RV

Your RVs age play a big part in the type of warranty that you can purchase. Typically, 30-35% of all RV purchased new will need a major repair within the first three years of ownership. Those numbers will continue to rise and by its 8th year of ownership almost 50% will need a major repair. For this reason, the older your RV is, the higher the cost of an extended warranty.

Cost vs. benefits

Quite often, coverage may become more limited over time making the value of your contract considerably less than if your RV was brand new. Cost is a hard thing to determine as RVs have different values when they are new or used. For example, a diesel pusher top of the line motorhome may have a warranty that costs $1,800 annually while a small 24 ft. pull behind camper may only cost you $400 a year. It’s best to consult a professional when deciding on what best works for you and remember to shop around.

Frankly, I recommend taking a good look at Good Sam RV Club because they have a good range of coverage in their warranties as well as allowing sellers to transfer the warranty to buyers, travel expenses like hotels, meals, and rental cars while your RV is being repaired, and free of charge annual inspections that could prevent future problems. They also offer coverage for some components that may not normally be covered under other providers such as tires.

What are the pros and cons of purchasing an extended warranty?

Probably the biggest pro to purchasing an extended warranty contract is the peace of mind you will gain knowing that the most costly and important components will likely be covered by the contract you purchase. This is especially true if you own a large class A motorhome where and an engine and powertrain are concerned. Repairs at many shops can cost $250 to $300 an hour and changing out an engine or transmission on a luxury class A motorhome could take over two weeks to complete.

Another thing to consider when deciding to buy an extended warranty is whether it will affect the resale value of your RV. In most cases (especially when trading it in to a dealership) it will not make a difference in its value. However, when you are selling it privately, it is a good selling point to show the prospective buyers that the RV has had an extended warranty and that you have had yearly inspections and have replaced parts that were covered by your warranty.

It’s also important to note that with the purchase of an extended warranty comes some financial control. In other words, if your air conditioning or furnace suddenly quit working, are you in a position to pay that cost directly out of pocket? I have had to replace both of these components without the luxury of an extended warranty and each time, it took a big chunk of change out of my pocket.

As for some of the cons of an extended warranty, a major one to consider is that it will not cover pre-existing problems. If for example, your transmission suddenly fails don’t expect to purchase an extended warranty and have it immediately replaced. In some cases, warranty companies will require you to have the RV thoroughly inspected before they will extend coverage.

Weather, corrosion or accidental damage will not be covered by warranties. For these types of repairs, it’s likely that your RV or automobile insurance policy will have to cover these costs or losses. Also, keep in mind that an extended warranty won’t cover regular maintenance such as engine tune-ups or oil changes.

Final thoughts

Buying a warranty plan can be a difficult decision to make regardless of the age, make, model or size of your RV and of course, its value. I highly recommend shopping around and considering this purchase with as much or even more thought than when you were initially shopping for your RV. This is especially true if you are living a full-time RVer lifestyle and you are looking for some peace of mind regarding some of the financial control in your life.

As always, thanks for reading folks, and I hope to see you out there on the road sometime.

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