A month or so ago extended warranty provider Warranty Direct released claim rates by manufacturer. Since it was largely (or even entirely) based on UK policies, this study only received attention across the water. Then, yesterday, Mazda USA decided to tout its top ranking. And I’m being asked what I think of these results.
On the face of it, an extended warranty company should be a great source of reliability info. After people who might neglect to report a problem on a survey like TrueDelta’s are going to report it to the extended warranty company so they won’t have to pay for the repair.
Problem is, Warranty Direct has performed an especially shoddy analysis.
- Like J.D. Power’s public releases, they only provide stats at the manufacturer level, not the model level. Luckily, Warranty Direct provides more detailed results, including model-level data, here. Well, sort of. While Warranty Direct states that these detailed results will be updated quarterly, they appear to have last been updated in 2005 based on the date of the most recent article.
- Does the Warranty Direct study include only UK cars, or US cars as well? When these results were released in the UK last month, and every time they’ve been released in the pasts, no mention was made of US cars. Now that Mazda is touting the results in the US, the same results now supposedly include US cars. Be aware that some manufacturers offer very different models in the US and UK. Ford and GM in particular offer almost totally different product lines in the two regions.
- Warranty Direct lumps all cars from three years-old to nine years-old together, with no sign that they’ve weighted for different mixes (some makes may have a higher percentage of older cars). Looking at the detailed results for average age, the average age in many cases is about five, but in some cases is closer to four, and in one case is under three. How can the average age be under three in a study that only includes cars over three years of age?
- Answer: the Warranty Direct study most likely includes any problems that are not covered by the factory warranty but are covered by the extended warranty. Factory warranties in the UK generally run three years, but they also have mileage limits. If the mileage limit is reached first, then Warranty Direct can pay a claim before the car reaches its third birthday. If a part is not covered by the factory warranty, Warranty Direct could also pay a claim on a younger car. And factory warranties differ. Mazda appears to offer a bumper-to-bumper 60,000-mile warranty. Toyota also offers a 60,000-mile warranty, but only on mechanical defects. Honda’s warranty also only covers mechanical defects, but for 90,000 miles rather than 60,000. Surprise: Warranty Direct’s claim rates are nearly twice as high for Toyotas as for the other two.
- Warranty Direct offers multiple plans with different amounts of coverage. Is the plan mix about the same for all makes, or do owners of more expensive brands with more electronics tend to opt for more comprehensive plans? None of the plans could be terribly comprehensive, because the reported problem rates are much lower than they would be if they included all repairs. TrueDelta’s results, for much newer cars in most cases, suggest that Warranty Direct’s numbers do not include at least two-thirds of all repairs.
Even if Warranty Direct had performed a thorough analysis, they have no data on repairs under the factory warranty or on repairs that the extended warranty did not cover. Extended warranties do not cover everything. So their data are far from complete.
Overall, because of the limitations in Warranty Direct’s data and the shoddiness of their analysis, I see little value in the results of their study.
Note: TrueDelta is a Warranty Direct affiliate. But while I refer site visitors to Warranty Direct for an extended warranty, TrueDelta’s model information pages also note the limitations of their policies, which apply to most if not all extended warranties.