RV Insurance vs. RV Extended Warranties

February 24, 2020

So you’re ready for some adventure on the road and you’re thinking about getting a recreational vehicle (RV). Just like an automobile, an RV requires certain insurance coverage to legally operate on the road. You also have the option to cover your RV through an extended warranty, but you might be wondering if it makes sense to have both an extended warranty and RV insurance.

RV insurance

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What’s Legally Required?

It’s important that you have at least basic RV insurance coverage to operate on the road legally. All states require at least a minimum liability coverage insurance policy, just like you’d need to operate an automobile. This will protect you in case you are in an accident with another person and you are at fault.

Beyond liability insurance, all states except New Hampshire also require bodily insurance coverage which pays for medical costs in the event that someone in your RV or another vehicle is injured, no matter who is at fault. This is required because RVs can be more dangerous to operate than smaller automobiles, so injuries are more likely. Some states also require uninsured motorist coverage, in case you are in a collision with someone else who is at fault but does not have insurance. You should check with your insurance provider or state Department of Motor Vehicles to find out which coverage is required in your state. Other types of RV insurance can provide peace of mind and might come in handy, but are not legally required.

An RV extended warranty is never legally required. But, it can still be a smart purchase that can protect you from major expenses not otherwise covered by your insurance policy.

RV Insurance vs. Extended Warranty: What is the Difference?

Besides one being legally required and not the other, there are several other differences between RV insurance and extended warranties. In fact, you can think of insurance and extended warranties as the opposite of one another. Insurance is specifically designed to cover repairs and costs due to collisions and accidents, weather-related repairs, or physical damage to your RV. Extended warranties, on the other hand, cover repairs that are specifically unrelated to vehicle accidents, weather, or physical damage. They only cover mechanical failures, generally resulting from simple use of your RV.

Another difference between the two types of coverage is how you obtain them. An RV insurance policy can be purchased from your automobile or home insurance provider, whereas RV extended warranties are sold by extended warranty companies (often online). It’s important to research these companies to be sure they are offering a fair price for their warranties and that they have a good track record of fulfilling all legitimate claims in a timely manner.

What Does an Extended RV Warranty Cover?

While a limited warranty might be offered by your RV’s manufacturer, an extended warranty is a protection policy that you can purchase from a third party company. Sometimes referred to as an RV Extended Service Contract, these warranties cover various aspects of RV mechanical failure so that if something goes wrong with an RV system, you can have it repaired or replaced. Each company offers distinct policies that will cover different types of issues with different levels of coverage. The most common types of RV extended warranty policies include:

  • Exclusionary RV Extended Warranty: This type of policy provides the most comprehensive coverage. It is called “exclusionary” because the policy provides a list of types of failure that are not covered, and any other issues are covered.

    For example, the most common exclusionary policies list weather and natural disasters, automobile collisions, and negligence as exclusions. They also usually list maintenance, aesthetic repairs (like paint or carpeting), and damage caused by vandalism. Any other mechanical failure would then be covered, up to a certain dollar amount.

    Exclusionary extended warranties generally cover major mechanical failures such as transmission, axle, engine, and leveling system, as well as major mechanical components in the coach like a refrigerator or generator. Be cautious of any exclusionary policies that do not cover these major systems, since they are the most costly to repair.

  • Listed Component Extended Warranty: This type of policy is the opposite of the exclusionary policy. Instead of listing what is not covered, this policy lists only what is covered. These policies can vary from fairly comprehensive (e.g., long lists including every major mechanical system) to more spotty (covering only a few systems).

    If you choose a listed component warranty, look for one that includes coverage for the powertrain (engine, transmission, and front and rear drive axle assembly), as well as air conditioning, brakes, electrical, fuel delivery, gas or propane, generator or auxiliary power, heating and cooling, refrigerator, steering, water heater, waste and freshwater systems, and power step.

  • Powertrain Only Coverage: Because powertrain failures are the most expensive to repair, this type of policy provides the most essential, basic coverage. The powertrain includes the transmission, engine, and drive axle. If you can’t afford a policy covering more or aren’t concerned about coach repairs or other issues, a powertrain-only warranty might be a good choice.

Do You Need Both RV Insurance and an RV Extended Warranty?

Legally, you only need to have an RV insurance policy that meets your state’s requirements. However, you might want to consider an extended warranty as well. Some studies show that 30 percent of RVs need a major mechanical repair within two years, with that number rising to 80 percent by year five, so the odds are good that you’ll be spending quite a bit of money on repairs. The right RV extended warranty policy can help you feel confident that you’ll be prepared to pay for these repairs when the time comes.

If you have an older RV or one with more than 125,000 miles, you may not be eligible for an extended warranty. In that case, it is smart to save away enough money to pay for these mechanical repairs when they happen. Keep in mind, repairing an RV is much more expensive than an automobile because it requires specialized parts and expertise. It would be prudent to keep an emergency repair fund in an interest-bearing account so you’ll be prepared to keep your RV roadworthy.