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Let's Stop Compromising with Extended Warranty Companies


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I don't cave. I've told the warranty companies that I'll let the customer know that you've refused to honor the warranty.

 

I do have a work around that hasn't failed yet. When the warranty companies want to send us parts, I tell them that my insurance won't cover any parts that aren't sold on the work order. Doesn't matter if they are OES or AM. I politely ask if the warranty company if they would like to underwrite my insurance policy and cover the million dollar liability I have.

 

This is a huge thing that I don't think ESO's take seriously. If the part you install isn't supplied and sold by you, you will not be covered if there is any problems ( at least on my policy and other shops that I've worked at, I've seen it in the contract as well as asked the adjuster). You all have read the posts " times were slow so I went ahead and took the job and used the customer supplied brake pads cause some money is better than no money". That never ends well.

 

 

I encourage everyone to review and ask your adjuster about it. I was told by 2 different companies that if I put customer supplied parts on, there is an accident, I have no protection. No insurance coverage, no company lawyer, no financial protection.

 

With extended warranty companies, I make my money. I know how to play their game and charge for stuff that I wouldn't charge for with regular customers ( ie hose clamps, total freon in the system not what was evaced minus what I put in, list price on coolant and filters, book time for LOFs, full diag time at a higher per hour charge). I make good money on the extended warranties most of the time. I don't let them dictate how to perform my job, what I make, or what parts I use.

 

Good on you Joe!

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We don't negotiate with the A/M Warranty companies and we let the customer know up front. We inform the customer that many times the warranty company does not pay for all the procedures required for us to properly repair their vehicle and provide them with our warranty. We will be happy to submit the claim and speak to the adjuster but we don't argue with them. We will let you know what your total out of pocket fees are before we do the job and we will need their authorization once we know what the warranty company is paying for.

We also increase our labor rate by $15.50 per hour just because we have to deal with them. I don't think I have had a company ask to send us parts but I am going to check with my service writers. I like the idea of "our insurance policy will not cover parts not sold by us." I will also check with my agent on this.

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  • Have you checked out Joe's Latest Blog?

         5 comments
      I recently spoke with a friend of mine who owns a large general repair shop in the Midwest. His father founded the business in 1975. He was telling me that although he’s busy, he’s also very frustrated. When I probed him more about his frustrations, he said that it’s hard to find qualified technicians. My friend employs four technicians and is looking to hire two more. I then asked him, “How long does a technician last working for you.” He looked puzzled and replied, “I never really thought about that, but I can tell that except for one tech, most technicians don’t last working for me longer than a few years.”
      Judging from personal experience as a shop owner and from what I know about the auto repair industry, I can tell you that other than a few exceptions, the turnover rate for technicians in our industry is too high. This makes me think, do we have a technician shortage or a retention problem? Have we done the best we can over the decades to provide great pay plans, benefits packages, great work environments, and the right culture to ensure that the techs we have stay with us?
      Finding and hiring qualified automotive technicians is not a new phenomenon. This problem has been around for as long as I can remember. While we do need to attract people to our industry and provide the necessary training and mentorship, we also need to focus on retention. Having a revolving door and needing to hire techs every few years or so costs your company money. Big money! And that revolving door may be a sign of an even bigger issue: poor leadership, and poor employee management skills.
      Here’s one more thing to consider, for the most part, technicians don’t leave one job to start a new career, they leave one shop as a technician to become a technician at another shop. The reasons why they leave can be debated, but there is one fact that we cannot deny, people don’t quit the company they work for, they usually leave because of the boss or manager they work for.
      Put yourselves in the shoes of your employees. Do you have a workplace that communicates, “We appreciate you and want you to stay!”
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