RV Warranty vs. RV Insurance: how to decide what you need

RV Warranty vs. RV Insurance: how to decide what you need

A lot can happen on the open road. Adventure, spontaneity, the unexpected—these are reasons many people choose to purchase an RV and see the country. Unfortunately, the unexpected isn’t always good. Sudden breakdowns or accidents can put the brakes on your travel plans and empty your bank account. 

That’s why many RV owners have insurance and extended warranties to protect against unforeseen expenses. But with all the different options available, it can be difficult to understand what covers what.

RV Insurance and RV extended warranties are the inverse of each other, providing separate and complementary protection based on the reason for repairs. Simply put, insurance covers damage caused by accidents and other events, while warranties cover mechanical failures and wear-and-tear. But there’s more to it than that.

RV Insurance

RV insurance functions similarly to car insurance. Motorhomes require the same amount of minimum liability auto insurance as a car to drive legally on the road. Liability insurance has a specific function: if you cause an accident, the insurance company covers the cost of property damage and bodily injury for the other driver. 

Generally, towable RVs and motorhomes require comprehensive and collision coverage if they are purchased through financing. Collision coverage offsets the cost of damage to the RV in an accident caused by the owner, and comprehensive coverage protects owners if the RV is damaged by events such as natural disasters, fire, or theft.

Liability, comprehensive, and collision are the most common types of RV insurance that owners purchase, but other coverages exist to cover things like personal belongings stored in the RV and damage caused by uninsured motorists. There is even coverage that, in the event of a total loss, replaces the RV with a similar model or reimburses the original purchase price to the owner.

RV Warranty

RV warranty coverage picks up where RV insurance ends, covering mechanical breakdowns and repairs caused by the everyday operation of the vehicle rather than repairs caused by accidents, weather, or theft. These warranties are technically RV extended service contracts since they are offered by a 3rd party instead of a manufacturer, but they offer protection against repair costs for just about any issue a manufacturer would cover.

RVs are complex machines—most homes stay in one place. RVs are subject to potholes, steep grades, high speeds and winds, and they require all the maintenance of a car and a house. While travel trailers and fifth wheels are not motorized, they’re still subject to the ravages of the road. According to Everything About RVing, 30% of RVs will have a major breakdown within two years of operation. By the end of five years that number rises to 80%.

RVs are also expensive to repair. RV Repair Co, an online RV service center directory, lists the prices of some of the most common repairs: diesel engines cost up to $25,000, generators cost up to $10,000, and a refrigerator can cost up to $2,500. Extended warranties can cover these repair costs and others, and there are several types of coverage offered.

Exclusionary Policy

The most extensive coverage can be found under an exclusionary policy, and the coverage is simple. The policy contains a list of noncovered items, typically including things like damage caused by collisions and weather as well as cosmetic items like paint and carpet and nonmechanical items like furniture and cabinetry. Anything not listed under the exclusions is covered by the policy.

These plans protect both functions of a motorhome, covering failures of its motor vehicle function, like engines and transmissions, as well as the appliances in the coach, such as refrigerators, water heater, televisions, wiring, and cooling systems. Often, they also cover luxury features such as slide-out mechanisms, leveling systems, and even solar panels.

Comprehensive Policy

A comprehensive policy, sometimes referred to as a listed component warranty, is the opposite of an exclusionary policy. This policy provides a list of items that are covered; anything not found on the list will not be covered by the plan. 

While the coverage isn’t as all-encompassing, comprehensive policies often cover many of the same failures that an exclusionary policy covers. They are also more affordable.

Drivetrain/Powertrain Policy

A comprehensive policy, sometimes referred to as a listed component warranty, is the opposite of an exclusionary policy. This policy provides a list of items that are covered; anything not found on the list will not be covered by the plan. 

While the coverage isn’t as all-encompassing, comprehensive policies often cover many of the same failures that an exclusionary policy covers. They are also more affordable.

Where to Purchase

RV extended warranties can be purchased through the dealership at the time of purchase or through a third party at any point. Buying from a third party warranty company instead of a dealer has a few benefits.

First, coverage is generally more expensive through the dealer, and coverage options are more limited. If the RV purchase is financed, then the RV owner will be paying interest on the cost of warranty as well as the cost of the RV. If the owner chooses to cancel the coverage, the monthly payments will not decrease Instead the payments will simply end sooner.

Purchasing with a third party allows RV owners to shop around and compare prices and coverage. Most companies provide coverage info online, and obtaining a quote is easy. Unlike extended warranties purchased from dealers, these warranties can be cancelled for a pro-rated refund.

When researching, use resources like the Better Business Bureau and Google reviews to find the companies with good reputations. There are also consumer resources like Today’s Best Company that compare different companies and plan features. When looking at a company’s policy, pay attention to who can perform repairs. Many companies allow any licensed repair facility in the US or Canada to perform repairs, making it easy to find RV services anywhere you want to travel.

Not all RVs are eligible for coverage. Most companies have mileage or age limits on the RVs they cover. Because older RVs are more likely to require frequent service, policies can be more expensive.

Which Do You Need?

If the RV is a motorhome or if its purchase is financed, some form of insurance will be required. Beyond that, purchasing additional coverage through insurance or an extended warranty relies on the owner’s desires. Some RV owners can afford an expensive repair without having to change their budgeting and lifestyle, while others prefer the peace of mind that coverage provides. 

Insurance covers you in the case of events like fire, vandalism, theft, and collisions. But even if you never have an accident, you’ll likely need major repairs at some point. Warranty coverage allows you to budget for those repairs and to be protected from the largest portion of the costs. It also protects your RV against rising repair costs over time, since the price for coverage and the deductible for repairs is set at the beginning of the plan.

 

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