Market value and utility value are different things... If your car is 6 years old with 100k on it a $8000 repair may or may not make sense, but getting it repaired under warranty maintains both whatever market value it has AND keeps the utility value. While I certainly make a living because people want new cars sooner, the financially best option is to keep repairing an old car for far longer than most people do, and for far longer than the repairs cost more than the cars market value is.
Yes and no. Surely it's cheaper to maintain a vehicle than it is to purchase a new one. Rapid depreciation alone makes new cars a poor financial decision. Used cars have already suffered devaluation relative to their age and mileage. But the extent of repairs determines when to cut one's losses.
Like I said before, self insuring car repairs is much different than health, home owners, and car insurance. Expensive car repairs are statistically unlikely. This is why insurance companies sell policies and these policies are cash cows. The majority of people do not see a return greater than their investment. Which means putting that money into an investment or the bank makes more financial sense. As $3000 over an 8 or 10 year period could be invested and likely cover any failures. That's if any failures do occur.
As these policies get more and more expensive, they make less financial sense. Except of course, to people who have poor money management and where buying the warranty now guarantees repairs for the future. Whether they choose to roll it into their payments or pay upfront. For a segment of people, having the protection at purchase removes the uncertainty of having to save money down the road for repairs.
Per my 2 cents, the 8 or 10 yr unlimited are really the only true value. One can drive a CRAP LOAD in these periods of time, bettering their chances the policy pays out. But still, out of 10 people maybe 2 or 3 come out "ahead".
But I think you're looking at it a bit wrong. The insurance company won in your case as well, because they don't care about any individual vehicle or owner. They exist, as all insurances do, on the aggregate. If no one ever "won" they wouldn't have a value to sell. Sure they want the best profit margin the market can offer, but at the end of the day, the business model is just as effective if every single person claimed 20% of their premiums back or if one in ten has a single claim that costs what two entire premiums costs. The reality is somewhere in between.
Of course insurance is an aggregate, or the insurance companies would go broke. I cost Volvo more money than I paid ($1600 vs $6k Repairs) on top of whatever else has been paid on in the factory + CPO warranty. I'm that 1 o 2 out of 10 that exceed the cost of the policy purchased.
My mistake, buying the first model year of a redesign! So having that insurance paid dividends.
The expensive issues plaguing my car (consumption requiring piston rings, thermostat TJ, ECM, etc) are corrected. So the chances of failures that exceed the amount paid are lessened. Although, I do believe the XC90s have had problems with the air suspension, but that issue may be resolved, too.
All successful market based insurances are a losing proposition, or else they wouldn't be profitable. I'm the one that, for now anyhow, keeps others health insurance down. I don't go to the doctors, I don't get check ups, and I have been pretty healthy. I still pay a premium just in case I get some horrible illness or have a farm accident.. I last went to a doctor 10 years ago, only because I needed to get an antibiotic for pneumonia as I was coughing up blood. I didn't need to go to the doctor to get diagnosed, just because it was the only legal way to get what I needed. I probably should drop my insurance there realistically, but as I said, I like the peace of mind.
Health insurance for most isn't optional. Almost everyone gets sick and a single hospital bill can eclipse decades of insurance. I've been to the emergency room several times in my life. Admitted a few times. I've seen bills that were 6 figures. Course, I didn't pay that amount, but just imagine someone who was uninsured. Those bills would either destroy them financially or be left unpaid and destroy their credit. It doesn't take much in the way of illness to offset the price paid for health insurance.
FYI: Just because you don't go to the doctor, doesn't mean "nothing is wrong".
Far as pneumonia goes, been there done that. Had both my lungs fully engulfed in blood hacking up blood. My normal doctor was away and i saw 3 fill ins who kept telling me I was a hypochondriac and had the flu. Until of course, I got so bad I was hacking blood. Went to see my normal doctor who was shocked and asked if I'd been in his office at all. I explained yes and what happened. Sent me for an Xray. Double Pneumonia so bad, they wanted to hospitalize me, but I didn't want to go. Obviously I got better, as I'm here today, but wasn't fun. Took 6 weeks of downtime to recover. No, I didn't sue those crackpot doctors whose malpratice almost killed me.
We all know stories of families who lose their money due to old folks homes. People can buy insurance against that. Most people just drop dead, or, by the statistics, pass away within 6 months of entering the nursing home... yet the risk exists of long term stay and heavy expense. Many families buy insurance for this. They can afford the insurance, and they statistically can count on not really needing it, but they can not afford what happens if someone in the family needs long term care for a decade, fully depleting the families wealth.
Again, as a society, we are living longer than ever. Health issues often plague the elderly, making them a very expensive segment of society to insure. Long term care is costly, too. Meaning older people are far more likely to require expensive surgeries, treatments, and care. Your statistic is quite off. Average stay for an adult in a long term care facility is 835 days]:
https://files.asprtracie.hhs.gov/documents/aspr-tracie-ta-long-term-care-statistics-6-27-17-508.pdf
The average stay in a nursing home is 835 days, according to the National Care Planning Council.
Average stay in a nursing home was 13-14 months:
Social Support is Key to Nursing Home Length of Stay Before Death
Let me tell you, either of those figures means 100s of thousands of dollars. If not more....More than most people have saved and few being self paid!
Car warranties are the same thing, with generally smaller consequences. Most folks buying a new Volvo could afford if the car got destroyed by a volcano and their insurance said "sorry, not covered". Heck, as I said, most folks buying a new Volvo today probably don't plan to keep it past the warranty anyhow (though maybe not greatly represented on this forum). I know in my own experience, I've seen faster turn around and much higher brand loyalty than with any other brand I've sold (first luxury brand though for me though). But we're also talking about tacking on a cost that is likely less than the sales tax amount in many cases. I suspect you don't think that cars should have no warranty and all customers should simply add on what they want right? The reality is, all warranties have a cost. Of course the first 4 year/50 is a smaller risk than the 2nd... but it's still a cost and I don't see folks screaming that cars could be more affordable if only everyone had the choice of warranty starting from nothing.
Certainly cars have warranties! No one would buy a $30-60,000 product (Volvo) without one. Because even new doesn't mean devoid of problems. And the majority of issues are often addressed in the initial warranty period. Making extended warranties lucrative for insurance companies. The actuaries have done the math and know that X vehicles out of X sold will statistically fail. Gauging the price at which warranties are sold, to offset losses and increase profits. It's like a casino. The house wins far more than it loses.
I just think I've seen enough repairs to say, if you're buying a Volvo and plan to keep it outside of the warranty, it will not be a bad idea to consider a trusted warranty/service contract. I think that will go down as we switch to electric cars, but I also think it will go up until then.
I would certainly advocate early adopters to consider buying a warranty. I'm sure to hell glad I got one on my 15.5, being oblivious to the issue of oil consumption. Someone buying an SPA 2019 was taking a chance. Who knows what issues could crop up on a first year redesign. Early adopters are assuming the greatest risk. Thereafter, 2020, 2021, etc the fatal flaws are often known. Meaning a warranty makes less dollars and sense to purchase.
