The Extended Warranty

The distrust of our economy and our high-tech lives from the media is unrelenting.

This Halloween, a little Christmas. A bit of good news you probably haven't noticed before.

Turn on your TV. Chances are you're going to see adds from outfits like Mogi, Carchex, EasyCare, or  StopRepairBills. 

The ads are basic. Customers getting new transmissions who aren't troubled because the bills are covered. Customers moaning over the cost of a needed repair. Customers on both sides of the divide sitting side-by-side.

I'm not telling you to buy this stuff. Just notice how such companies have suddenly become a big feature in your broadcast day. And ask why.

The reason is, of course, that it's good for the companies offering this service. They may claim it's insurance. But it's really an extended warranty.

These became a joke about 20 years ago, when consumer electronic companies were offering them on computers and other gear. Reason was, they didn't pay off. They weren't worth it. Anyone who bought the extended warranty was stupid, because everyone knew that computers didn't wear out, and neither did other forms of electronic gear.

Chips don't break. PCs can break down because of malware, or because they're mishandled (dropped), or because of bad connectors. But the chips don't lie. As Moore's Law causes the number of circuits on a chip to increase, it also assures reliability.

The same sort of thing is now starting to happen with cars. It's not just that cars now contain a lot of computers. It's also that computer-controlled machines help make the cars, and design the cars. Cares have gotten better.

Take my example. I have two cars, a 4 year old Scion and a 6 year old Corolla. I have yet to face a major repair on each. They're both paid for. I get the oil changed, I am on a first-name basis with my mechanic, and if something is starting to go wrong she takes care of it.

A lot of the innovation that made cars better came from Japan, but (finally) American car makers are following suit. American cars are getting better. So are Korean cars and German cars.

A well-made car that is well-taken care of is going to last a long time. The chances of a major breakdown — to the engine or transmission — is low. It's manageable enough that a lot of people see big money in using our fear of car failure to make a little money.

Now if you've got a used car, and you don't have the savings for a repair, and you can afford the extended warranty, I am not here to talk you out of it. My guess is the companies offering this coverage know just which cars are most likely to blow up and price accordingly but you might get lucky. You might even be buying some piece of mind you need.

But cars are getting better. That's the message here. 

If they weren't these salesmen wouldn't be out there.