Why is KTAC Insurance So Expensive

[HowardTractor]

I ended up adding everything to my home owners insurance. I just sent my agent the invoice and she added everything to the policy so all the exact equipment is called out. It is pretty close to what KTAC would offer for a cash bought tractor at a much lower price. I think I am paying an additional $100 a year on my home owners. I imagine my home owners won't cover quite as many things like flood damage and vermin infestation, but most other things. This is obviously not as good as the ktac insurance offered on financed tractors which is full replacement, but I think its my best option.

 

[kubotafreak]

It not so much the replacement value, but the on/off/transit coverage that makes it so valuable. Homeowners generally wont cover off property/transit.

 

[doublebass73]

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.

I did the same thing. KTAC insurance and "doc fees" added thousands of dollars to the cost if I financed it so I paid cash. There's a reason they push 0% financing and KTAC insurance, it's certainly not for our benefit. It's a huge money maker for them.

 

[TX Chris]

I did the same thing. KTAC insurance and "doc fees" added thousands of dollars to the cost if I financed it so I paid cash. There's a reason they push 0% financing and KTAC insurance, it's certainly not for our benefit. It's a huge money maker for them.

If you can't afford to pay cash and you choose to finance elsewhere, you're paying interest and then likely getting third party insurance. For those of us that choose to finance for whatever reason, 0% with KTAC makes sense considering the level of coverage from the KTAC policy.

 

[doublebass73]

If you can't afford to pay cash and you choose to finance elsewhere, you're paying interest and then likely getting third party insurance. For those of us that choose to finance for whatever reason, 0% with KTAC makes sense considering the level of coverage from the KTAC policy.

Understood but you're paying many thousands of dollars for that coverage which negates the so called "deal" of 0% financing.

 

[Outdrz]

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.

To better understand, think of it from Kubota Credit's perspective: They are getting us to pay for *really* good insurance to protect the asset they own. They dont want us suffering uninsured tractor "incidents", then deciding not to pay the loan.... If that were allowed to happen they'd be repossessing a nearly worthless asset.

So they sell us great insurance. Keeps us happy - but most important - it also protects the collateral for our loan. Once its paid off... they dont care as much what happens to the tractor, as they are not at risk.

 

[Nicfin36]

Just like a homeowners insurance company, Kubota is also making money off their KTAC insurance. I am sure the amount of KTAC claims are very low compared to how much is being paid into KTAC. That's how regular insurance companies make their money. The 0% interest is very enticing, and I bet the majority of people who buy Kubotas use their financing, which puts them into KTAC payments. It is a pretty sweet business model if you think about it.

 

[PaulL]

I also suspect that KTAC have a competitive advantage. Their true cost to replace or repair a tractor is significantly less than anyone else's - so they make money where others don't. Also keeps you in the family so to say - if you break your tractor you have to get another Kubota.

To be honest, all these things are things people inside companies say to justify what they're doing. Actually, they sell insurance because they need it with the financing, and someone thought it might be easier to make their own insurance than outsource it. And then once they had it, lots of people say "that's really good insurance" and so they start to think that's essential to their business model.

 

[doublebass73]

Just like a homeowners insurance company, Kubota is also making money off their KTAC insurance. I am sure the amount of KTAC claims are very low compared to how much is being paid into KTAC. That's how regular insurance companies make their money. The 0% interest is very enticing, and I bet the majority of people who buy Kubotas use their financing, which puts them into KTAC payments. It is a pretty sweet business model if you think about it.

Excellent summary. Kubota expanded their business a while back to also become an insurance company. The 0% financing makes people think they're getting a deal even though it now forces them into buying their KTAC insurance where the real money is made. That's why I mentioned earlier in the thread that the 0% financing is not for our benefit. If a company is pushing 0% financing over cash sales there's a reason behind it, it's called profit.

 

[TX Chris]

I also suspect that KTAC have a competitive advantage. Their true cost to replace or repair a tractor is significantly less than anyone else's - so they make money where others don't. Also keeps you in the family so to say - if you break your tractor you have to get another Kubota.

To be honest, all these things are things people inside companies say to justify what they're doing. Actually, they sell insurance because they need it with the financing, and someone thought it might be easier to make their own insurance than outsource it. And then once they had it, lots of people say "that's really good insurance" and so they start to think that's essential to their business model.

Actually, you don't have to get another Kubota. There are two different transactions when you suffer a total loss. First, they buy your tractor back from you at actual value at the time of loss. At that time, you are free to walk away with nothing or go buy a new tractor of equal or greater value within 60 days. If you choose to buy a new tractor, they credit the additional $$ towards the purchase of the new tractor.

If you bought a tractor for $25,000 and it was worth $10,000 when it was destroyed, they buy it back from you for $10,000 in the first transaction. If you buy another tractor, they give you $15,000 towards the new tractor. If you don't buy another tractor, you never see that $15,000.

They do not "replace" your tractor. It's your decision whether to replace the tractor or not and, if you do, what to replace it with. I chose to replace my L3901 with an MX5400 when mine was destroyed. I paid the difference between the two models (plus inflation).

 

[TX Chris]

Excellent summary. Kubota expanded their business a while back to also become an insurance company. The 0% financing makes people think they're getting a deal even though it now forces them into buying their KTAC insurance where the real money is made. That's why I mentioned earlier in the thread that the 0% financing is not for our benefit. If a company is pushing 0% financing over cash sales there's a reason behind it, it's called profit.

You act as if there is zero benefit to the buyer to receiving REALLY good insurance protection. The policy is unmatched from what anyone on here has shown. Is Kubota making money, sure. Can every person that walks in the door afford to pay cash for a tractor, not even close. Give me the option of zero percent plus the KTAC versus paying 3% interest and then getting a homeowner's policy add-on that doesn't actually cover my financed tractor, I'll take the zero percent.

 

[doublebass73]

You act as if there is zero benefit to the buyer to receiving REALLY good insurance protection. The policy is unmatched from what anyone on here has shown. Is Kubota making money, sure. Can every person that walks in the door afford to pay cash for a tractor, not even close. Give me the option of zero percent plus the KTAC versus paying 3% interest and then getting a homeowner's policy add-on that doesn't actually cover my financed tractor, I'll take the zero percent.

Yes it's good coverage and yes it's expensive. Kubota doesn't give you that coverage for your benefit, they give you that coverage for their benefit to cover their asset (you don't own the tractor until after you make the last payment) all while making you pay to cover their asset. It's a huge money maker for Kubota and negates the "deal" people think they are getting with 0% financing. It was a shift in Kubota's business model years ago, rather than profiting from financing they now profit from selling mandatory insurance if you finance. Plus the dealer makes a profit from "doc fees" if you finance. You pay the dealer hundreds of dollars for the difficult job of entering a finance application into a computer

 

[BadAndy]

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.

HowardTractor, That sucks about the coverage... I am in the process of betting my first tractor BX23s and I was going to put half down or buy outright, but since I found out about the coverage with the 0% financing i'll finance and invest what I was going to put down. (I found out about the coverage with 0% on youtube and forums), It doesn't seem to be a widely known thing.

 

[BadAndy]

It's expensive because it covers stupidity.

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

SDT

LOL!!!