I had a customer who bought a 2000 Ford Focus from a used car lot and purchased the extended warranty. The customer did not trust the used car lot mechanic because of some prior history they had with shady repairs/run around stories. They called my shop, I talked to them, and they told me they had an extended warranty program they had purchased. Before they came in, I called the insurance company to make sure it is somebody I could do business with, and everything sounded fine so we scheduled an appointment for two days later.
The customer drives the car to the shop at 9AM and it dies on the street and they coast it into the parking lot. I walk outside, grab my battery tester, and it is dead. I charged it for a half hour, fired it up, tested the alternator on the car and it appeared to be the issue. I call up the insurance company to send them an estimate before I do any work. I am told they will have an adjust call me back. An hour later, I get a call back.
I had an estimate prepared for the adjuster, I charged the same I would for any customer. My labor guide stated that an alternator would take 2.3hrs. I priced an alternator ($175 my cost, $227.50 with a 30% markup), added the diagnostic fee (1/2 hr, $30), and presented my estimate to the adjuster over the phone.
I was told the warranty company would only pay an hour for labor ($60 vs $138) and that they could find an alternator for $133, so that is all they are willing to pay. I had never heard of the supplier or manufacture for the alternator, it would have to be shipped which would take a day. The customer was responsible for paying the diagnostics, the tax, a $100 deductible, and any extra cost that exceeded what they would pay. The adjuster was very rude, told me their is nothing to discuss, and that is what it is. Needless to say I had to turn down the job because I couldn't absorb any of the cost (nor should I have to), and the customer (rightfully) didn't want to pay anymore then the $100 deductible they thought they should pay. As a courtesy I waived the diagnostic for the customer and returned their deposit.
I explained the situation to the customer and they understood. I gave them a 10% off labor coupon for their next visit and hope they return, but this particular extended warranty company really could have damaged my image with the customer.
Edited by Mario, May 16, 2012 - 09:01 PM.