Why is KTAC Insurance So Expensive

[HowardTractor]

I just purchased a new Kubota tractor and various implements and options. The total invoice was $32K. I did not finance it. I called up KTAC to get a quote for insurance and was told that it would be $500 per year. I was also told that I would only be covered for the current value of the tractor not full replacement. Full replacement was only available to those who finance. Kubota was offering 0% interest. I should have just financed, I could have held onto my money longer and gotten full insurance for less money. How does that make sense. I gave Kubota more money sooner and got penalized for it.

 

[shiraz627]

Live and learn.

 

[85Hokie]

I have to agree - even IF you got a discount paying in full - the 0% is money in the bank - period.
I will argue with anybody about that - EVEN if you have cash on hand ...... unless you are getting 10% or more off by paying in full - you are smarter to finance at 0% - you are never in a hurry to pay BACK money at ZERO %.

Plus the cash you would have spent ......

could be used elsewhere
could make a payment if needed
could be placed in the bank making a fantastic 1%
or could be placed in mason jars and placed in the backyard!

the insurance via kubota may be a pit pricy - but it covers a loooottttt of crazy crap that can happen!!!

 

[kubotafreak]

I just purchased a new Kubota tractor and various implements and options. The total invoice was $32K. I did not finance it. I called up KTAC to get a quote for insurance and was told that it would be $500 per year. I was also told that I would only be covered for the current value of the tractor not full replacement. Full replacement was only available to those who finance. Kubota was offering 0% interest. I should have just financed, I could have held onto my money longer and gotten full insurance for less money. How does that make sense. I gave Kubota more money sooner and got penalized for it.

Don't feel bad I just paid 599 for 38k coverage after tractor paid off. I paid and moved on. My new tractor like 85hokie said, I financed 84 months 0%. 5.5k for ins.

 

[HowardTractor]

I have to agree - even IF you got a discount paying in full - the 0% is money in the bank - period.

I would definitely give this decision some more thought if I were to do it over again. There is some peace of mind in not owing money, having to make payments, or dealing with paper work. Is that amount worth the 1% interest I would make holding on to that money. Maybe. My peace of mind is worth a lot to me.

But the insurance thing is upsetting. As is the logic. I know buried in some deep dark hole of financial mystery Kubota makes more money this way or they wouldn't do it. I understand it makes sense to insure financed equipment. But how is it worth it for them to provide full replacement coverage for financed, but not for cash bought equipment.

 

[kubotafreak]

I would definitely give this decision some more thought if I were to do it over again. There is some peace of mind in not owing money, having to make payments, or dealing with paper work. Is that amount worth the 1% interest I would make holding on to that money. Maybe. My peace of mind is worth a lot to me.

But the insurance thing is upsetting. As is the logic. I know buried in some deep dark hole of financial mystery Kubota makes more money this way or they wouldn't do it. I understand it makes sense to insure financed equipment. But how is it worth it for them to provide full replacement coverage for financed, but not for cash bought equipment.

Bc they do not want to insure for full replacement value. I would hope a smart investor makes much more than 1%, because inflation has you beat, and this is a moot point. They want to push financing, so full replacement is easy sell incentive for a sales man to a buyer. Dealer and Kubota make more money that way assuming you don't file a replacement claim. I had this discussion with my mother, she wants to buy a camper for cash. I told her finance the full length(20years) and keep the money in the bank. At her age if she dies, camper goes back who cares. Just don't forget time value of money.

"edit"
Remember they cut out a middle man. They insure what they sell. Their replacement or repair parts is cost for them.

 

[Borane4]

I gave Kubota more money sooner and got penalized for it.

Financing makes money for manufacturers across all their customers and across time. Interest, loyalty, late fees, returns for service, etc all work in their favor. The old, "I will pay cash so you should discount the price" doesnt work well anymore. Car dealerships wont lift a finger for cash payoff. It's a strange time that you can borrow money forever with 0%. You should, and then take the cash and invest it in something smart and stable (mutual fund?). Make 5% on the cash and draw off the money yearly to make the payments. Slight paperwork hassle, but the money will grow. If left alone $35K would become $50K in 7 years. The insurance is same as financing. Keeps you with them and coming back. Very few tractors are total losses.

 

[mcfarmall]

Expensive to me is low cost insurance policy that doesn't hardly cover anything.

 

[TX Chris]

It's more expensive than other insurance policies because it's got a full buy-back included. Destroy your tractor, they buy it back for what you paid for it. I've yet to see another insurance policy discussed on here or elsewhere that does this.

This is pretty much the only time I suggest it, but finance at zero percent and pay the minimum. As soon as it's paid off, the KTAC insurance is null and void and they refund whatever portion of the premium you haven't used. As long as you don't mind the payment, drag it out.

Maybe they're insuring the tractor while it's financed because they know you'll quit paying if the tractor is a total loss. So they have you pay for insurance to cover their financed asset.

 

[Jester67]

I had the same experience. when I found out that KTAC full replacement was only available when financed. I took the 0% for 60 months. I could have gotten 0% for 84 but it had fees offset the savings and the KTAC with the replacement plan is 60 months max. I took the cash I was going to use and opened a bank account and pay the bill online so no stamp needed. The account pays interest, the tractor is insured and I have an emergency fund.

 

[SDT]

I just purchased a new Kubota tractor and various implements and options. The total invoice was $32K. I did not finance it. I called up KTAC to get a quote for insurance and was told that it would be $500 per year. I was also told that I would only be covered for the current value of the tractor not full replacement. Full replacement was only available to those who finance. Kubota was offering 0% interest. I should have just financed, I could have held onto my money longer and gotten full insurance for less money. How does that make sense. I gave Kubota more money sooner and got penalized for it.

It's expensive because it covers stupidity.

No, not you, but those folks who drive their new equipment into the pond, etc.

SDT

 

[Henro]

I just purchased a new Kubota tractor and various implements and options. The total invoice was $32K. I did not finance it. I called up KTAC to get a quote for insurance and was told that it would be $500 per year. I was also told that I would only be covered for the current value of the tractor not full replacement. Full replacement was only available to those who finance. Kubota was offering 0% interest. I should have just financed, I could have held onto my money longer and gotten full insurance for less money. How does that make sense. I gave Kubota more money sooner and got penalized for it.

I can’t answer your question but can say I bought both my Kubota tractors new (for cash like you) and never had or needed any insurance. That was 18 & 16 years ago.

Maybe you can have the same experience and save what the insurance would have cost you.

 

[DustyRusty]

I didn't see the need for insurance in the past, however, since getting my BX23S with the metal and glass cab, I immediately thought that insurance would be important, should I break a piece of glass. I got a rider to my homeowners policy with $100 deductible, for $120 plus or minus a couple of dollars. Don't remember the exact amount. I valued the tractor and accessories at $30,000, knowing that not all of them will be on the tractor at the same time. I hope that I don't ever need it, but I sleep better knowing that it is covered for all risks, damage, fire, & theft.

 

[random]

It's expensive because it covers stupidity.

No, not you, but those folks who drive their new equipment into the pond, etc.

SDT

Wait, you're NOT supposed to drive it into the pond?

 

[NCL4701]

If you don’t like the cost of KTAC get info on what all it covers and shop similar coverage elsewhere. An independent agent or carrier that deals with tractors and equipment routinely (Farm Bureau, Grange, etc.) should be able to quote you a policy that will cover it at least for the value of the equipment. Whether you can pay additional premium and get replacement cost coverage on it elsewhere depends on what state you live in and what you’re using it for. Whether you use it for business, use it off your residence premises, etc. all play into what policy and coverage choices you have, which is why I suggest dealing with a company and agent familiar with insuring equipment. KTAC may be great but if you aren’t happy with the cost or coverage it doesn’t hurt anything to shop it like any other insurance. If you have an agent or company for your homeowners that doesn’t routinely deal with equipment I wouldn’t implicitly trust whatever they say about coverage; at least call one agent who has expertise in the area.

While you’re at it, if you will ever use it anywhere other than at the premises where you live, don’t overlook liability coverage.

Just because someone in Georgia has theirs covered on their homeowner policy or a IM46 or whatever doesn’t mean that’s what you need on yours in Pennsylvania.

 

[JimmyJazz]

A Scotsman would prefer not having to pay for insurance at all and thus pay in cash after protracted price haggling.

 

[Nicfin36]

I paid for mine in full and did not finance either. They way I saw it was I did not want to pay more for the tractor by having to also by insurance. It is possible I may wish that I had insurance, but I am playing the odds that I won't need it. It is the same reason I never buy extended warranties. Plus, I hate owing money, 0% or not.

 

[nbryan]

.... As soon as it's paid off, the KTAC insurance is null and void and they refund whatever portion of the premium you haven't used. ...

That's not quite correct, according to my Kubota insurance fine print. The portion of the insurance you haven't used, that is returned if you pay it all off early, is not proportional to how long you 've been paying off the financing. Like, by year 5 of a 6 year term, there'[s only a few hundred left to return to you, NOT 5/6 of the initial cost. Something about the rule of 78s? I don't get it, but it's not proportional!

 

[PaulL]

Same here. We self insure, other than genuine "everything burned down" incidents, or areas where liability is an issue. We take the highest deductible we can on what we do insure, which brings down the premium and takes us out of the "insuring against stupidity market" - it also means anything less than about $5K in damage I don't have to fill in paperwork for.

I remember when I bought some new reading glasses and the young lady asked if I wanted to insure them. I was trying to imagine who would typically be getting payouts for sitting on their reading glasses, and figured I'd be subsidising drongos. If I sit on my glasses I'll pay for my own mistakes.

 

[TX Chris]

That's not quite correct, according to my Kubota insurance fine print. The portion of the insurance you haven't used, that is returned if you pay it all off early, is not proportional to how long you 've been paying off the financing. Like, by year 5 of a 6 year term, there'[s only a few hundred left to return to you, NOT 5/6 of the initial cost. Something about the rule of 78s? I don't get it, but it's not proportional!

I believe we're saying the same thing. At least what you said is what I meant...