Wheel-and-tire-replacement plans, virtually nonexistent 15 years ago, now are hot-selling finance and insurance products in the U.S., particularly at high-end dealerships.

“They have almost become a core product,” says Rick McCormick, training director at Automotive Financial Services, an F&I firm.

The rise in popularity corresponds with increased replacement costs. Run-flat tires can cost $500 each. Accessorized alloy wheels start at that much. Four upmarket rims can approach the price of a new entry-level subcompact.

It wasn’t like that years ago in the era of ordinary inflatable tires and plain hubcaps. Today, it has reached a point where many premium car owners carry insurance plans to protect the investments at the ends of the axles.

Consumer Reports cautions readers to avoid buying several F&I products, notes Steve Lynch, Mercedes-Benz Financial Services’ western regional manager. “But even CR says wheel-and-tire protection is valuable. We’ve had customers asking for it.”

He tells of a Mercedes owner who opted for the plan and ended up filing seven claims for damages incurred during his daily commute in Los Angeles.

“That guy got more than his money’s worth on that F&I product, especially because we replace, not just repair,” Lynch says. “We were tempted to go up there and patch the road he takes to work.”  

The cost of claims has skyrocketed. Consequently, some insurers are considering offering limited plans. “I think you’ll see a variety of offerings, including ones that repair, rather than replace, tires,” Mike Burgholzer, senior vice president at Warrentech, says at a recent F&I Industry Summit.

Garret Lacour, head of RoadVantage, is one of the pioneers of wheel-and-tire protection plans. “We were the stepchildren for so many years,” he says. “But the product speaks for itself. There isn’t a driver that hasn’t had tire and wheel damage.”

Dealership F&I managers pitch the plans in different ways, he notes. “I’m not a believer in scare-tactic selling, but one F&I guy makes it a point of stepping over a damaged rim as he heads to his desk, telling customers, ‘That’s mine, and it would have cost me $1,200 to replace it without insurance.”

Mercedes Financial encourages dealers to set up displays to draw customer interest. Some setups include damaged wheels retrieved from the store’s service department. “It’s not the display itself as much as what you do with it,” Lynch says.

Mercedes Financial started offering wheel-and-tire protection plans in 2006 after dealers pitched the idea at a meeting. Two years later, the captive-finance company introduced an enhanced version that can be financed as part of a vehicle lease or purchase.

Almost anything can happen when it comes to the only part of the vehicle that actually touches the roadway. “One dealer sent us a photo of a tire with a fork sticking in it,” McCormick says.

Burgholzer adds, “Road debris is everywhere.”

The more expensive the car, the more costly the wheels and tires, and the greater the chances an owner will get a protection plan for those, says David Duncan, president of F&I provider Safe-Guard Products International. “At Porsche F&I offices, it’s 100%. At lower-end stores, it’s 30%. ”

The take-rate varies by region and the overall condition of roads in particular areas, he adds.