That Aftermarket Warranty May Be Worth It

I just spent roughly 20% of my car’s purchase price on a third-party warranty. Yes, you read that correctly; no, my math is not wrong—although I could hardly blame you for being suspicious.

First off, a bit of background information: The car in question is a 2012 BMW 135i DCT coupe with M Sport package and approximately 40,000 miles. It’s the eighth BMW I’ve owned, and it is without question the fastest as well. It could easily put my nearly identical 2011 six-speed 135i in the rearview mirror, and the high-tech twin-clutch automatic is an integral part of what makes it great.

The car has been in my possession since 2016, and due to its production date, the roughly thirteen months of CPO coverage that came with it will have expired by the time this column is published.

Aftermarket warranties proportionately increase in cost as a car ages in terms of years and mileage, and something with more technology and costlier parts—like a BMW—factors into the price equation as well. My 135i is not a particularly complex car, but it is by no means immune to some of the common mechanical failure points of our beloved make. I hope some of the math is making a bit more sense now as well.

Those reading this column and writing me off as a fool for even bothering with an aftermarket contract like this have reason to be suspicious. A quick Internet search using the name of any of the big players in this sphere yields page after page of one-star gripes on consumer-review websites. I can sum up most of the complaints quite effectively: Some individuals are blown away when they realize that common wear parts aren’t covered, or that claims can be denied if the manufacturer’s service schedule was not followed. Other people seemed not to have bothered to read their contracts at all, and were utterly shocked to find that their coverage had expired before they expected it to.

The number of one-star reviews is pretty overwhelming, but above all, it’s important to remember that people rarely feel compelled to share their experience when things simply work as they’re intended to. Review websites like Yelp are all too often victims of their own success, when the negative-reporting nature of voluntary reviews results in only the bad stories getting attention. Whenever I find myself on one of these websites, or am shopping for something on Amazon, I try to sort the reviews by their ratings; as for aftermarket car warranties, after I had given myself a few good laughs by reading complaints authored by the ill-informed, I sorted the reviews to display the most positive ratings first. The results gave me hope, because they were clearly written by people just like me.

Before unexpectedly purchasing my current 135i, I owned the aforementioned nearly identical six-speed version. When I say nearly identical, I mean it; both cars were finished in Space Grey Metallic, and the build sheets were nearly the same, with the exception of the transmissions and premium sound (my current car has the HK system that I sorely missed in the 2011). I bought the first car from my local CarMax after I saw it for sale at one of their LA locations; I was lured to CarMax because of the steeply discounted warranties they sell, and opting to purchase the MaxCare protection plan for my first 1 Series ended up being an excellent decision.

The big secret about the coverage offered by CarMax is that it’s valid at almost any professional repair facility. Many of the complaints you read about these types of warranties center around denied claims when the car was brought back to CarMax for repair. However, you can use your local dealership or even your favorite ASE-certified independent specialist, so long as they are willing to do the minimal paperwork related to the warranty claim. In my experience, I used the MaxCare warranty exclusively at my preferred independent shop, and never had a single claim denied. In fact, the warranty paid for itself in less than a year—and nothing out of the ordinary happened to my 2011 135i. I’m talking about things like control-arm bushings and a water pump—two tasks that I had previously toiled over repeatedly in my garage on previous BMWs. No more! (Just kidding: I also happen to own an E30 that is long out of warranty.)

You’re protected on the back end with these warranties as well. When it came time to sell my six-speed 135i after the DCT car co-opted its garage space, the warranty proved to be a huge selling point, because it was transferable to the new owner—who was very excited to have coverage. I also had a few potential buyers who weren’t interested in the contract, which wasn’t a problem, either; I was entitled to a pro-rata refund, which was no small amount.

The new warranty I just purchased for the other car isn’t from CarMax, but the company who underwrites the contract is very similar to the three firms that sell coverage under the MaxCare name. The contract I signed is nearly identical to the previous one I had from CarMax, which means that the coverage is exclusionary: If the failed part or system isn’t mentioned, it’s covered.

In buying this warranty, I made a commitment to my car. Yes, the warranty is 100% refundable within the first few months on the off chance I develop cold feet, and there’s also that pro-rata refund available at any point, but that’s all beside the point. Later-production 135i coupes with the N55 engine coupled to the DCT have earned a unique place in the lineup as things continue to advance; in order to get a comparable engine and drivetrain to what’s in my car now, I’d have to spend more than double its cost on an M2. I wouldn’t kick one out of the carport by any means, and of course the current M3 and M4 always remain in contention as well, but this is serious money we’re talking about here, and I’d likely see my insurance premiums double or even triple as well. My 135i will be ten years old when my warranty coverage expires, which gives me incredible peace of mind.

It should also be noted that while I had the option of purchasing what is called a CPO Wrap, which is essentially a year extension of my current coverage, the economics of the pricing simply didn’t make sense for such a short term.—Alex Tock

[Photo courtesy Alex Tock.]

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