The deterioration observed in many industrial systems may be modeled in two phases. In the first phase, a period during which the system operates fault free ends with entry into a worn state. In the second phase, the system spends time in the worn state prior to failure. Should the system be found to be in the worn state upon inspection, failure can be pre-empted by preventive maintenance. Transitions into the worn state occur more frequently as the system ages, as does the cost of maintaining the system. The goal of analysis is the design of cost-effective policies for the inspection, maintenance, and renewal of such systems. The paper extends previous work by offering a choice between a (cheap) repair and a (more expensive) renewal of the system, should it be found to be in the worn state upon inspection. The decision-maker may also renew the system at any time without inspection. We propose simple, cost effective heuristic policies, whose design avoids the computational complexities of a full dynamic programming (DP) solution. The closeness to optimality of these policies is investigated, as is their sensitivity to parameter misspecification. A numerical investigation identifies cases for which the inclusion of the repair option is most advantageous.