Life is about probabilities. Regardless of popular belief there are no certainties. Not even death and taxes. These are just huge probabilities. I couldn't understand your first post because you came to the conclusion of 1)rebuilding or 2)replacing a perfectly good engine. You seemed to ignore the correct solution to your dilemma, 3)do nothing and run it as it is. Then in your next post you say that your last engine destroyed itself after 12 hrs. It now appears that you have shown probability with one happening, backed up by it actually happening to you. This is a common error. One happening of anything can NEVER show probability, regardless of whether it happened to you. I have no idea of the statistics of how many Rotax engines destroy themselves after 12 hours, but I can see that it isn't probable. I can see this because if it was probable then it would happen more often. In which case it would be talked about on this forum and Rotax would be unlikely to give a six months warranty on a product that lasts 12 hrs.
I am aware that regardless of how wrong it is to put more gravitas on personal experiences people will still do it. So I know that you may be thinking:- it's all right for him to say that, but he wasn't there when it blew up.
So if I haven't convinced you, I will try and show that regardless of the probability of it failing, you should still do nothing and run it as it is. It has done 5 hrs. and cost �950. so if you sell it for �300 pounds it will have cost �130 per hour. If you rebuild it for �600 it will have cost �120 per hour. If you do nothing until it destroys it self at 12hrs it will have cost �80 per hour.
Or perhaps you should look at what you are trying to do. You are trying to get a warranty just in case it fails. The cheapest option you suggest is a rebuild at �600. So you would be insuring a �950 product for �600, for six months. This is nearly two thirds of its value. If you wanted to insure �30000 of contents in your house and the quote was �20000 for six months, how sure would you have to be that you where going to lose all the contents?
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