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The big issue is what the failure rate is - I would argue from anecdotal evidence that it is higher than 1% - probably not 25%, but I would say between 5% - 10%. Your point is probably still valid, though I think you also need to factor in the cost of having the engine fail at an inopportune time. If it fails in your driveway, fine, your numbers work. If it fails on a cross country trip, it's going to cost an awful lot in towing, rebuilds, etc. Plus, I'd be willing to be pay a premium to NOT have my engine fail on the road.
But, as you say, it's insurance. Some people like to load up on insurance, so running the numbers will never really convince them.
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Steve Wilwerding
1998 3.4L Zenith Blue Boxster
2009 Meteor Gray Cayenne
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