[shiner]

Not in bold to me. THIS is bold.

You are correct, just pot luck. You may never need to claim. Or you may make £20000 worth of claims in year one if you had serious engine/gearbox problems.

That's the nature of insurance.

[HighlandPete]

Originally Posted by shiner

You are correct, just pot luck. You may never need to claim. Or you may make £20000 worth of claims in year one if you had serious engine/gearbox problems.

That's the nature of insurance.

Absolutely.

I could self-finance for small items and breakages in my home, the insurance is really there for the big 'disaster' claims. A big claim is the lower risk, but for most home owners is a financial disaster if it happens.

I recall a wise insurance broker from my younger days. When insuring a car he'd say. "if you can afford a write off, you only need third party cover, if you can't afford it, you need comprehensive cover". So true.

Typically those who can afford the write off, have comprehensive insurance, (share the risk). Those who can't afford the loss, only have third party cover, take the full risk.

[MrPogle]

Originally Posted by HighlandPete

Absolutely.
"if you can afford a write off, you only need third party cover, if you can't afford it, you need comprehensive cover". So true.
.

I worked in insurance for a long time and I heard similar quotes from actuaries. Here's another..

Insurance is like roulette, the house has an edge and the only way to make money in the long term is to be the house. Just because you can sit down for a period at the roulette table and walk away a winner doesn't mean playing roulette is financially prudent. Roulette is a sucker bet and so is insurance. However, if you can't afford not to play you just have to be the sucker.

I read about an American poker player (in the 1960s I think) who was an oil-baron and very keen on gambling and the psychology of it. When explaining the human-element vs the maths of gambling he used to offer people 2-to-1 odds on a coin toss. This is an incredible offer and you would be mad not to take advantage except the condition was you had to stake everything you owned. He reckoned he had made the offer dozens of times and nobody had ever accepted.

[mob17]

Ok so i think i might get it after reading all these comments. It was a very smooth process when my 335d had it. Had £0 excess and stuff would just get sorted out no hassle, but part of that is the dealership service.

I do agree a 3 year warranty is ridiculous for a car of this quality/price. Are Audi and Mercs also 3 years?

[Martin2C]

They both offer a 3 year warranty, but Audi only cover the car for 60,000 miles, which would mean I'd only have 2 years cover. When I looked at a new A8, upgrading to a 5 year / 90,000 warranty, which would only cover me for 3 years (or the same as BMW), was £2,500!

[shiner]

Yes the German marques are all three years. Many other brands do 5 years.

I think this is because the extended warranties are a lucrative and ongoing revenue stream, as I discussed before. So rather than offer five years, by them offering only three years they get two years of premiums for what is probably not a lot of payout on a car in years four and five of its life. I see dozens of 5 series E60's about every single day. At least seven years old and up to 12 years old now ad still going strong. These cars are robust and reliable.

However, do YOU want to be the one holding the baby when the numbers don't work out one day and you need a £10000 repair? Insurance is entirely based upon this fear. You may have an extended warranty and never need to claim. OR maybe you need three claims per year......

[MrPogle]

Originally Posted by shiner

So rather than offer five years, by them offering only three years they get two years of premiums for what is probably not a lot of payout on a car in years four and five of its life.

I'm not sure about this. It may well be true to a degree but if BMW (Mondial) were genuinely raking in massive premiums for very little claim liability, people like Warrantywise etc would be hugely cheaper and they don't appear to be. From what I have read, the third-party companies fully justify their reduced premiums by covering less and being tighter on pay-outs.

Having said that, though, BMW clearly recognise a significant risk rise at 60,000 miles in their premium structure which corresponds to 5 years of average mileage. They could just offer a 5 year warranty and stick 2 grand on the price of the car but I suspect buyers wouldn't be that keen because a lot of people won't keep the car that long and I think people buying new BMWs, Mercs etc are not the kind of people who worry about bills in 3 years time. BMWs and Mercs are not "value for money" in the same way KIAs are.

Highland Pete's comment about the flat premium structure is very interesting and news to me. It does rather suggest that the vanilla 520d owner is subsidising the 535 owner who's night-vision system starts playing up. I would imagine that blown engines are pretty rare but misbehaving toys burn a lot of claim money.

[Fox530]

The 5 Series warranty has always been about 50% more expensive than the 3 Series warranty, seemingly for no reason other than 'because 5 Series'. The engine, gearbox and electronics are after all the same. The 7 Series is even worse.

It's always struck me as unfair that a 520d manual costs rather more to warrant than a 335 xDrive but sadly thats just the way it is.

Mine was £87 a month on my last 530d - I opted for the £100 excess to keep it under £100 a month.