It’s acknowledged among boat owners that boat engines have improved in quality and reliability over the years, and backing that up are recent surveys from J.D. Power reporting a steady decrease in the number of reported problems in marine engines. So is buying an extended service contract – also known as “extended warranties” – worth the money today? The Boat Owners Association of The United States (BoatUS) Consumer Affairs looked at the issue and has these tips:
An extended “warranty” really isn’t a warranty: An extended warranty (service contract) is not a warranty at all but rather an insurance policy that pays for repairs if the breakdown, failure, or failed component is specified as covered by the policy. On the other hand, a new boat warranty covers much more, is included in the cost of the boat, and offers legal protections to the boat buyer.
Not everything is covered: An engine extended service contract covers specific items only. One BoatUS member found this out the hard way when his third-party extended service contract left him $1300 short after paying out of pocket for an engine control unit (ECU) replacement job on his 30-foot powerboat. The ECU was deemed consequential damage – and not covered – as a result of the original problem, an overcharging alternator.
The real cost of repairs could be higher: Extended service contracts typically come with deductibles, some don’t cover engine removal, and they often limit haul out coverage or, in the case of manufacturer-backed programs, will only pay if you purchased higher levels of coverage. Check the contract’s details on how the company handles deductibles and consequential damage.
Kill the overlap: If you decide to buy an extended service contract, find one that begins after the manufacturer’s warranty expires and never be pressured into buying one the same day you buy the boat. You’ve usually got up to at least nine months to make a decision. It should also be transferable, which adds to the boat’s value.
Manufacturer benefits: Consumers often get a better deal on engine service contracts that bear the name of the manufacturer because the dealer’s markup is limited. And while these service contracts take their name from the engine’s manufacturer, independent companies could underwrite them. However, you still are likely to get a better deal regardless because “manufacturer” programs often have substantially better coverage and more flexibility. Don’t forget prices are negotiable, and some engine manufacturers sell contracts direct, bypassing dealers.
Approval needed: While it is an extra step, extended service contracts require preauthorization before work begins. However, avoid those that will require work to be done only at a network of “approved” shops, or require you to use the selling dealer.
The gamble: Most defects in new boats and engines appear within the standard warranty period, so you may not get a return on the money you paid for an extended service contract.
How many problems will I have?: Some engine models that have higher than average rate of problems may benefit from an extended service contract. BoatUS members can use the BoatUS Consumer Protection Database that contains thousands of first-hand reports on boats and engines at www.BoatUS.com/consumer. For membership information visit www.BoatUS.com or call 800-395-2628.