Dear Tom and Ray:

I have purchased a 2003 Toyota Prius hybrid (with 29,500 miles), and the dealer is urging me to buy extended insurance that covers "everything" (parts and labor) to 100,000 miles. It costs $1,200, and I wish I could determine whether that's a good investment -- I can barely afford it. There's A LOT of electrical/computer stuff in the car, about which I know nothing -- except that it's expensive -- and I really don't know if I need this "Platinum" insurance, or if that would be a foolish investment. Thank you for your help! -- Betsey

TOM: "Platinum" sounds like a good level of coverage, doesn't it? I should have thought twice before I bought the "aluminum foil" level of coverage on my car.

RAY: The reason you might want to buy an insurance policy on this car, Betsey, is that it's a relatively new type of vehicle. Unlike the overwhelming majority of cars of the past century or so, this car uses a computer to combine the power of a gasoline engine and a battery-powered electric motor.

TOM: So, there's a bunch of stuff in there that we just don't know much about, in terms of its longevity. There's the hybrid propulsion computer, the generator/electric motor, the regenerative brakes -- all stuff that's newfangled and potentially very expensive if it breaks.

RAY: But fortunately for you, the hybrid battery and all hybrid components on this car are already warrantied by Toyota for eight years or 100,000 miles. Plus, the rest of the powertrain is already covered for five years and 60,000 miles. So, what your "Platinum" insurance is really covering is "everything else" -- maybe.

TOM: Right. You have to be very careful when a salesman says a warranty covers "everything." It probably excludes so-called wear items, which are items like brakes and clutches that are expected to wear out during normal driving. So, when you need four brake rotors at a cost of $400, they'll say, "Oh, sorry, that's a wear item, that's not covered." And when you need shocks all around for $950, they'll say the same thing.

RAY: So you're not getting that much additional coverage for your $1,200. And since it's a Toyota, it's probably not going to give you much trouble, anyway.

TOM: So, given that the important stuff (read: expensive and mysterious) on this car is already covered by a 100,000-mile warranty, and the also-expensive but less mysterious stuff is already covered by a five-year/60,000-mile warranty -- and that you can barely afford it -- I see no good reason why you should fork over another $1,200 just to slightly improve your warranty.

RAY: It's always a gamble when it comes to extended warranties, because you never know if your particular car is going to be the one to have an unexpected problem. But if it were me, I think I'd pass on this one and take my chances. Good luck, Betsey.