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-----Original Message-----
From: Chris Noeske [mailto:CHRISN@...]
Sent: Friday, November 05, 1999 10:11 AM
To: 'ev_update@...'
Subject: [ev_update] Re: New owner; extended warranty question


In fifteen years of driving, used cars I've looked at the "risk to reward
ratio" of having collision and comprehensive, and never had it. Only once
would the insurance company had to pay. I paid for the repair out of pocket
and am still ahead. But I will NEVER delete the comprehensive on the van,
because of the risk of an engine fire. That coverage on that vehicle is
well worth it, and a bargain too!

-----Original Message-----
From: Charles Bragg [mailto:cgbragg@...]
Sent: Friday, November 05, 1999 8:48 AM
To: ev_update@...
Subject: [ev_update] Re: New owner; extended warranty question


At 06:19 AM 11/05/1999 -0600, Daniel wrote:

Any extended warranty is just a rip off. You should
understand that if it would not be the way to make additional money for

them

they would never offer it to you.

This is a bit unfair. *Any* insurance policy could be characterized
the same way. However, the real question is what the risk-reward ratio is
for *you*. If you can afford $1150, but a $5,000 bill would be a serious
problem, then maybe you should buy the warranty. If you did this 1000 times,
would you "lose" money? Probably. Obviously the *insurance* company is not
going to set rates so low that *they* lose. However, the spread is not huge
- insurance companies make their profit by investing the premiums until they
have to pay off. Direct profit from premium vs. payout is trivial.
So the deal is that *if* you could set aside the $1150, and invest
is as well as a professional investor with much more money could, then you
could cash your investment in when the tranny fails and have a little left
over (vast oversimplification).
If you're a real tiger, you might know more about your van, and
whether your particular transmission (or any other component) is likely to
fail. The insurance company is probably looking at *all* VW Vans as a group.
If you're at high risk, go for it.

-- Chuck (still doing research on *which* ext warr to get) '99 EVC

========
Chuck Bragg, Santa Monica Bay Audubon

cgbragg@...
fax: 209-671-6396
========

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