Important Update on MaxCare Limitation! Beware!

Regrettably we have stumbled on a limitation on MaxCare coverage that to date I’ve not experienced nor seen implemented. For the last 10 years, since I bought my beloved 2004 Mercedes S55 AMG unicorn, and certainly for the past five here in this blog, I’ve been advocating the advantages of MaxCare – shift the financial risk of major repairs when owning high-end automobiles to CarMax.

I had enjoyed $35,000 in repairs to the S55 I purchased for $21,000, and over $15,000 in repairs to the 2010 Mercedes S600 I paid $31,000 for. Woven into many posts I’ve gushed about warranty coverage for up to five years and 150,000 odometer miles. I’ve emphasized that MaxCare is transferable, and sold both Mercedes with mileage and time left on the warranty for the next owner to enjoy. Well, there’s a third rail to be aware of on transferable warranties, discovered by Jared – the buyer of my S600, that I need to make you aware of. Before I do, I have to express my gratitude to Jared for being a gentleman. neither he nor I knew this was going to be an issue with the purchase and he has been gracious in sharing with me….and not hiring an assassin. To the best of my knowledge.

When Jared took the S600 to his Mercedes dealership for a repair CNA, the MaxCare underwriter, advised that the ceiling had been hit for repairs and declined additional work. Both Jared and I were stunned. He shared with me the Limit of Liability in the MaxCare service contract (General Provisions, paragraph 5); “The limit of Our liability is the total amount We will pay for all claims throughout the Service Contract Term and it shall not exceed the purchase price of Your Vehicle.”

Jared and I chatted and we were stunned that CNA was exercising that provision. I asked if CNA had shared an itemized list of repairs to date – how can we be sure of their calculations? So far, they’ve only indicated the ceiling had been reached and we have to take their word for it? There has been no accounting so far on the S600.

Going forward, buyers need to be aware that there are three, not two, caps on MaxCare; 1) the time limit, 2) the mileage limit, and 3) the purchase price of the vehicle. That’s mentioned nowhere on the CarMax website when describing MaxCare, only in the MaxCare service contract itself. Beware.

Disappointing, but the three attributes are knowable when buying a car directly from MaxCare. Presuming CNA (or the other MaxCare underwriters) will stop paying for repairs when the purchase price is hit, we know what that cap is – whatever we pay for the car from CarMax. It should have been $21,998 for my 2004 S55, $30,998 for my 2010 S600, $36,998 for my 2008 Porsche 911, and 41,998 for my 2013 BMW M3.

But what about when buying a CarMax car from a private owner like me, and transferring MaxCare to the new owner. The private buyer will need to know the original purchase price from CarMax and the amount of repairs MaxCare/CNA have covered in order to know how much is left for future repairs. Is that even knowable?

Turns out it is. I decided to experiment and contact CNA, the underwriter for my BMW M3, to ask how much cap was left on my MaxCare warranty. First, it wasn’t easy to navigate the phone menu for claims, transfer, cancellation, etc. None of them really applied. I chose transfer and got nowhere. They relayed me to claims. Claims insisted they couldn’t help me and tried to punt me to the dealership where I bought the car. The problem was they could not understand my question and thought I was asking how much refund I could expect from MaxCare if I sold my car. With a little persistence, though, the rep (Gary) understood what I wanted and in seconds tallied up the repairs to date on my BMW. He told me I have $39,025.67 left. To the penny. So the repairs are tracked and knowable, just not as easy to get there as I would have liked.

Bottom line? I don’t think it changes a thing on my enthusiasm for MaxCare as the primary buyer from CarMax, other than the chances of getting the underwriter to pay 150% of the purchase price (S55 experience) are probably slim. That said, until now my strategy was to sell these cars with enough time and mileage to give the buyer some comfort they can drive the cars hard and sort them out initially under the MaxCare protection. That model only works if I haven’t reached the purchase price cap. Someday when the M3 is for sale I will make the allowance clear. And if you’re buying a CarMax unicorn with transferable MaxCare from someone other than me, know that you need to know how much cap is less, and that it is knowable.

Final thought. My estimate when I offered the S600 for sale was that I had enjoyed $15-18,000 in repairs, meaning there may have been $12,000 in available repairs left on the warranty. Jared had more confidence in his local Mercedes dealership over his local CarMax on this high-end V-12 sedan and I totally get that. That said, $12,000 goes a lot farther at CarMax than it does at Mercedes. I had always used either CarMax or an independent Mercedes shop for work on the S600 here in Northern Virginia. Many times CarMax sent the S600 out to Mercedes for work they could not do. I had always been a fan of that – if Mercedes wants to charge labor rates MaxCare won’t cover, the dispute was between my CarMax dealership (the customer), MaxCare, and the Mercedes dealership, and was resolved without my knowledge. I do not know if repair costs done by Mercedes when CarMax was the customer were any less than if I had gone direct to Mercedes. But I do know that given Jared’s experience I won’t be taking my M3 to BMW any time soon.

I have two more MaxCare experiences to share – one from a reader and one from me – but I owe it to you all and to Jared to get this out now. Will write again this week. But if you have MaxCare experiences that differ from mine I always welcome feedback.