Why Extended Warranties for New Tires Are A Waste of Money

Awhile back I bought four new tires for my 1997 Honda Civic. The tires came with a pro-rated 65,000-mile guarantee and were $74 each, or just under $300 for the entire set.

As the salesman was tallying up the bill he asked me if I would like to purchase the extended warranty for my brand new tires.

“And how much is that?” I sheepishly asked.

“It’s only $9.95,” came the salesman’s immediate reply.

“Is that per tire?”

“Well, yes.”

“So it’s not really $9.95, right? What you should have said is that it’s going to cost me an extra $40.”

I think I caught the salesman off-guard because he immediately tried to assure me that he wasn’t trying to pull a fast one. I nodded my head, but my raised eyebrows belied my true feelings.

That’s when the guy looked me straight in the eye and insisted that the extended warranty was “a really good deal that most people take advantage of.”

I passed on the warranty but, if what that salesman told me is true, it troubles me that there are a lot folks out there who insist on wasting their money for dubious services.

Prorated Tire Warranties

Almost all tires come with a pro-rated warranty from the manufacturer that typically cover only workmanship defects. Reimbursement is prorated, depending on how much tread is remaining when you make the claim. The rest comes out of your pocket.

Of course, new tires are rarely defective, but when they are, a defect usually becomes apparent soon after the tire has been purchased.

Extended Tire Warranties

Extended tire warranty plans are meant to cover what prorated manufacturer warranties usually don’t: replacement or repair of damaged tires and rims from road hazards like nails, pot holes, sharp debris, and other hazards. They don’t usually cover alignments, however, which may be required if your car hits a curb, pothole or other hazard hard enough. Even so, that sounds like a pretty good idea, right?

Not really.

Here are a few reasons why you may be better off taking your chances by not paying for an extended tire warranty:

Some tires may come with free road hazard warranties. Although uncommon, some manufacturers and dealers actually offer free road hazard warranties. Ask your tire salesman to double-check and see if your tires already come with one. After all, why pay for something if it’s being offered for free?

The odds favor the dealer. If extended warranties weren’t to the dealer’s benefit, they wouldn’t be offering them. I’ve driven more than 500,000 miles in my lifetime. Over that time, I’ve driven over a nail or some other debris that has punctured my tire and caused a flat on just two occasions; that’s an incident rate of less than once every 250,000 miles. In my case, considering the new tires I bought are only expected to last 65,000 miles, it made little sense to insure them.

The cost-risk ratio is too high. Despite the low risk of tire damage due to road hazards, let’s say I did run over a nail that damaged my tire. The cost of replacing the tire is $74. Considering that I would have to pay $40 for the extended warranty, my ultimate savings would be $34. It makes little sense to spend $40 in the off-chance that I might save $34.

Remember, insurance and extended warranties are supposed to protect us from high risk events and losses that we can’t afford to replace. For most car owners, a flat tire is a low-risk low-cost affair that can be easily offset by scrounging up loose change hiding under the sofa cushions.

OK, OK. You’ll probably have to raid your change jar too. But you get the drift.

Photo Credit: shino

34 comments to Why Extended Warranties for New Tires Are A Waste of Money

  • This great “deal” reminds me of getting comprehensive and collision insurance on your car. The premium for this type of insurance stays the same but if something happens to the car, you only get coverage for the current value of the car which is considerably lower after owning the car for, say, three years.

  • The king of personal finance, Dave Ramsey, recommends against all extended warranties.

    • @20s: I disagree with Ramsey in that regard. I can think of instances where extended warranties actually make a lot of sense. For example, parents who give their younger kids expensive electronic devices like XBoxes and hand-held devices like iPods may want to consider extended warranties. I’ve bought them for precisely that reason and they easily pay for themselves because my son is very hard on them. I’ve made multiple claims on several electronic devices that he has ruined or broken.

    • I agree with him on this. You can likely self insure for most things you buy with a little planning.

  • Len

    I’ve always paid the warranties on the tyres. There were a couple of time when they hit a nail and I had them replaced. Because I had them on “warranty”, the cost to replace them was a fraction of a new tire cos they prorate it based on “can’t remember what”.

    Then before I went for my recent vacation, my tire in my Lexus 350 went flat. When I came back I tried to change it (I did not have any warranties on this one). But I could not get the spare out!

    So I called triple A. Guy came out and I thought he was going to change the tire for me. But instead, he repaired it. I saw him insert a thick rubbery stuff in the hole, “cemented” it and said it was good to go. He said that was the way an auto shop would repair it, but they would have charged me $40 for labor. He charged me only $7. He then said that if I brought it to the dealer, they might change it! Or had I had a warranty and brought it to the person who sold me the tires on warranty on my other car, he would have replaced it and “charge me only a prorated rate because I had a warranty!”..

    Moral of the story is : warranty for tires are useless. Get a AAA membership and call them whenever you have a flat. They’ll send someone to fix it for $7!

  • It is hard to read and to digest but this is the reality one has to face.It is not only with the tyres , but the other things such as Laptops too. My friend had purchased one extended warranty for his Laptop (the name I would not like to mention) but his screen got damaged but it was not covered in the warranty !

  • That also doesn’t account for uneven wear, or failure to rotate those tires, either. Somewhere in there is a clause that allows them to get out of honoring the warranty.

    If it fails, most shops have a used tire with over 1/2 the life available to replace it, at under 50% of the cost of a new tire.

    Unless you are dropping some serious cash on tires, it is not worth the money.

  • Green Pumpkin

    Beware of those gas stations and tow truck tire repairs – they are meant to be temporary and will void the tire manufacturer’s warranty. You could also buy a can of fix-a-flat for $4 bucks at Kmart and have the same effect.

    A tire needs to be dismounted from the wheel and patched from the inside for a proper repair. This type of repair usually runs around $20 at a tire store – often free with the road hazard coverage

    Whether you buy road hazard is your own decision, but I am on the road with you, please fix your tire correctly so you don’t have a blowout and smash into my car.

    • When I was a teenager my car ran off the road after a front-tire blowout due to improper maintenance. Luckily, me and my sis weren’t hurt. But I did learn a hard lesson at a young age about the importance of keeping properly maintained tires.

  • Jerry A

    I’m sorry to say that Green Pumpkin is wrong. There are several ways to fix a flat tire. I have fixed deflated tires still on the rim with special rubber strips, a couple of tire patching tools, and regular rubber cement. The kit costs between $5-10 and can be used to fix several flat tires. I have watched a professional garage mechanic do the same job with similar materials. When done right, those can last the life of the tire. They are _not_ temporary. The “fix a flat” cans are the worst way to do it and may be dangerous depending upon the compressed gas in the can (some are flammable).
    To Len: Improper maintenance is not the same thing as an improper repair job.

  • This gives me something to think about. However, I want to add that when I purchased my car 4 years ago, we also purchased tire insurance. It was a nominal monthly fee. We’ve actually used it a couple times, like 1.) when the Honda dealership stuck glass in our tire. Yes, you heard me correctly (it’s a scam they have going and we no longer go there!), our tire insurance refunded us the cost of our tire, $125. 2.) I recently ran over a nail (I don’t know how this happened!) and the air was oozing out, enough for another motorized to point this out to me. I took it in to our tire shop and they fixed it for free (I don’t know if they would have done this for anyone, but our tires are less than 2 years old.

    In the end, maybe I paid, and am still paying, way more for this convenience than the actual amount I’m getting out of it. However, I do have the piece of mind because I don’t have to worry if I run over another nail. It will be fixed free of charge!

  • Not only do I turn down extended warranties I also turn down new valve stems. They put on new stems anyway and I save 3 bucks a tire.

  • I just purchased a set of tires and also purchased the warranty even though my friend pointed out the same valid reasons not to. I did so “just in case.” It has finally dawned on me, I do have a roadside assistance plan with my car which would have someone come out and repair the tire, if necessary.

    • @Mr. CC: Great advice! I know that most any gas station will plug a flat for between $5 and $10. As for me, I use AAA too. I swear by their service – it is absolutely terrific.
      @LittleHouse: It’s tough to put a price on peace of mind – so if the money you spends makes you more comfortable, then good for you! I am slightly concerned about the Honda dealer sticking glass in your tire. Although I have to say, I have the world’s best Honda dealer! They are very reputable and, when it comes to repairs and maintenance, they are usually the ones telling me that a service I’ve requested is not necessary.
      @DaddyPaul: I always wondered about the tire valve stems! Thanks for teaching me something new. Looks like I wasted $12 anyway this time around…
      @Lillie: Don’t be too hard on yourself. I ended up buying $12 worth of valve stems I probably didn’t need. LOL

  • Akron

    I’ve never been a fan of extended warranties for anything. As mentioned, the odds are always in favor of the vendor… big time.

    It’s almost never worth the money unless you are one of the unlucky ones whose tires (or other product) malfunction quickly. But even so, if you always refuse the extended warranties you will still come out far ahead in the long run.

  • guide

    I always purchased a set of tires and also purchased the warranty even though my friend pointed out the same valid reasons not to. It has finally dawned on me, I do have a roadside assistance plan with my car which would have someone come out and repair the tire, if necessary.

  • Dan

    I just got back from my tire dealer and I’m pretty pissed. I have an 80k prorated tire warrenty. I have yokohama avid trz’s and had the tires on my car about a year and a half and put about 25-30k on them. When I originally bought them I paid about $100 each. That wasn’t with a deal or anything. So, I had an air bubble in the sidewall of my tire( the second sidewall problem I have had with these tires) and figured they would be mostly covered.

    Well, when I get the bill I was shocked that they were charging me $92. I said something to the guy and he told me the tires were about 50% worn, so the tire was $61. Then the new insurance on the tire was $13 and new valves were $12, plus tax. I was pissed, I told him I paid $100 for these tires when they were brand new and it’s ridiculous that I have to pay $92 for half the same tire. I told him if I knew that, I would have just paid the extra $20 for the new tire. He said that these tires have gone up over 20% sense the time I had bought them. I feel like I was just kicked in the nuts. I will never purchase the warrenties on tires again and it’s the last time I go to this tire dealer. I have a friend that works there that I am going to talk to about it this week. I just can’t believe it was so much.

    • Len Penzo

      I appreciate you sharing your story with my readers, Dan. You definitely got screwed. Sorry to hear about that. If I were you I would look for another tire dealer who is honest enough to tell you to pass on those warranties.

  • John

    I ran over a nail with my expensive new Michelins on my brand new Ford SUV. Ford and other tire places could not or would not fix it. All advised me to shell out $300 to them to buy a new expensive replacement Michelin and Ford also suggested a $500 tire warranty from Ford which would cover such brand new tire damage.

    Bottom line. Michelin would not cover their supposedly warranteed brand new tire that could not withstand the damage from one tiny nail. Ford would not cover their supposedly waranteed brand new car or the tires they put under it. And State Farm would not cover under their zero deductible and supposedly “comprehensive” coverage that they sold me.

    Now folks, we all know that when I was asked to pay for the new car and when signed for the auto insurance, I was assured that “everything” was “fully covered” …

    But when it came time to stand behind their products, Ford, Michellin and State Farm all assured me that somewhere in the “comprehensive” contract that I had signed with them were the some corporate lawyer’s weasel words that do not at all match the auto dealer’s pitch, the insurance agents smarmy smile, or the Madison Avenue television advertising they all use to shill their products as being able to fiord rivers, climb mountains with ease, herd cattle and explore the goddam Arctic in effortless ease.

    As always, you cannot trust a snake … and these people are all reptiles.

    • You could have simply driven to the nearest Costco and purchased a road hazard warranty on the existing Michelin tires since they were allegedly brand new. Ford was not selling you a warranty but their new “Tire Replacement Program” they have incorporated on new vehicles, it used to be called Tires for Life, but there are many stipulations in the contract and you must adhere to the guidelines, like rotating your tires which ties you to their service department for oil changes and mileage driven service intervals. Most customers don’t follow the manufacturers service intervals and end up voiding the contract getting the dealership out of replacing the tires. By the way they really weren’t for the “life of the vehicle”, it entitled you to 2 sets of tires.

  • sonicBoom

    I always get the warranty from the tire place. My truck tires were $150 +$10 for warranty apiece and that was cheapest anyone had. With the giant hole the hazard put into the tire they replaced it for $39 purchased in 2007 now 2012. They always do the tire rotations and air for free. AZ has all kinda of crap on roads, always new construction usually use the warranty more than once.

  • Douglas Roper

    I bought extended warranty since I was told that the flatless tire I have on my BMW cannot be repaired even if it a simple nail puncture. As such I would told it buying extended warranty will save me a lot just in case I run over a nail.

  • I have to disagree with you on this one, at least from personal experience the warranty has paid for itself more often than not. On just about every set of tires, I’ve had one run into some sort of sitaution where one needed to be replaced due to a flat or something like that. I also recently had some tires that I put on 20,000 miles ago end up having problems, and since the protection plan gave them a 60,000 mile warranty, I had 75% of the replacement costs covered. Maybe it’s just because Michigan roads are so awful, but tire warranties are a no-brainer and seem to pay for themselves.

  • The big problem I find with extended warranty for any merchandise is it starts immediately overlapping manufacturer’s warranty. If you paid with credit card, check its features, may be it provides some kind of warranty as well.

    One tire on my car got busted completely. The dealer installed a new tire with no charges to me because the manufacturer’s warranty covered it.

    For the most part, extended warranties are just wasting money.

  • I would agree with this if your tires don’t come with free rotations and balancing for life. I use Discount Tires and pay their $10 per-tire warranty, but it covers a ton of stuff (like absolutely anything) and they do free flat repairs, rotations, and wheel balancing.

    So I go in there after every oil change and have my tires rotated for free. And we’ve had at least 6 nails in tires over the last 5 years that they have fixed for free. New tires usually cost 25-50% less since they give us prorated discounts for the last ones.

    In short, I think warranties should depend on the company and the need. We drive through lots of developing areas, so nails happen. It’s worth the $10 per tire for us to have them fixed for free anytime.

  • I love my AAA membership. That said, there are also tire insurance programs through certain dealers that will insure whatever tires you have, so that it is not based on the warranty period.

  • Allyn

    Well, I agree that most extended warranties are a waste of money. I do get the road hazard protection with new tires, however. If new tires on my car were only $74 each, I wouldn’t bother; but when I’m paying $150+ per tire, an additional $7 is worth it to me. I’ve had to use the road hazard protection a few times over the years. Having the guy replace my expensive tire (that wouldn’t have been covered under the ‘normal’ warranties), no questions asked, for just $7 is a deal. If I add up all the money I’ve spent for road hazard protection over the last 35 years and compare it to the amount of money I would have spent replacing those tires out of pocket, I’m *way* ahead.

  • Bruce

    I agree 100% with NOT buying a tire warranty. I’ve been buying my tires from the same company chain for more than 25 years and always bought the tire warranty. I used it once. The warranty only pays for the tire replacement you still pay for mounting & balancing & disposal fee. I think I recall paying the tax on the tire also. So the tires that I recently bought I did NOT buy the warranty. The salesmen seem astonished, bewildered, confused & hurt but I stuck to my guns. About 3 weeks later I was low on air so I went to one of the chain store to get it repaired free and true to form and following Murphy’s law the salesman come out and said the sidewall was damaged and that I needed a new tire. Because the tire was under the manufactures warranty and it was prorated the tire cost me about $6.00 with mounting & balance final price was about $30.00. BTW I drive about 18,000 miles a year and doing it successfully without a tire warranty.

  • Les

    For what it’s worth, and these are for the folks that mention nail damage, you can purchase a tire plug kit for less than ~$10 at WalMart and it will come with enough plugs to fix multiple sets of tires.

    These plugs are the EXACT same plugs that tire repair shops use, are extremely DIY friendly, and the kits are small enough that they’ll fit in your glovebox.

    Rather than buy the tire warranties, I instead invested in a plug kit and a small air compressor (about $20 total) that allows me to fix my own nail punctures wherever they might occur. This combo has lasted for the past 8 years on my family’s 3 vehicles not to mention all the balls, air mattresses, and floating tubes the compressor has also aired up.

    The only downside is that most of my neighbors/co-workers know about this and are always calling or bringing me their tires to fix!

  • Daryl Bowling

    you ought to try good year tires, brand new on a travel trailer, four plus the spare and the replacement tire i had to buy because i guess with 3 thousand miles the side walls are supposed to blow out. LOL The manufacture would not honor their word. So nothing i own will ever have a goodyear tire on it again since they are so good for their word NOT. I would not trust that company to clean the floor much less put someone ik care about on their product. Oh part of the deal on the travel trailer was extra coverage, they would not honor it either, sad it was goodyears problem.

    • You don’t know what you’re talking about, get your facts straight and actually support your argument. The only truth in your story is the travel trailer company’s part of not being able to take care of the tire issue. Tire warranties are applicable to the TIRE MANUFACTURER, not to maker of the trailer/vehicle/truck.

  • I am going to be the typical female here and say that taking care of tires is my husband’s job. All kidding aside, I am not guilty of paying for this kind of insurance. It just didn’t seem like a smart thing to do at the time. Have you ever done an entire post on what kinds of insurance are worth it? Just wondering.

    • Len Penzo

      Good one, Suzanne. :-)

      As for the insurance question: I’ve done lots of posts on different kinds of insurance. The trouble is, there is rarely a standard “right” or “wrong” answer when it comes to buying insurance, because everyone’s risks — and tolerance for risk — are going to be different. Especially when it comes to the major insurance offerings: home, life, auto and health.

      Heck, despite my opinion that tire insurance is a waste of money, I’m sure there are at least a few people out there who can make a good case why buying tire warranties was a smart choice — for them.

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