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Tough Dealings with Extended Warranty Companies


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Working with extended warranty companies can be frustrating. Some go over the line and make me question if we are still in America.

 

The other day, Mike one of my service advisors was obviously upset on the phone. He was calling to get authorization for a claim. The claims rep questioned our labor rate, stating that the average labor rate in our area was $30 dollars less than ours. The claims rep also stated that he wanted to see all our part invoices because they only pay MSRP list (whatever that means) with a cap at 15% over what we pay!

 

It was obvious that he was strong-arming Mike. My opinion? These tactics must stop. Who are they to tell me that my labor is too high? Who are they to dictate to what I can charge? Who are they to demand me to send them my part invoices. This is America, right?

 

I told Mike to give that I would call to finalize the claim. I gave rep an earful and refused to back down on my labor rate. I also refused to fax him part invoices. I actually told him, what if I got the parts for free? What are you going to pay me? I simply told, Just give me what you are paying and the rest is coming from your insured He did not like that, and I did not care.

 

Luckily, we have a policy to warn customers about these warranty companies, and inform the customer that they will be responsible for the balance that Their warranty company does not pay. In the end, the warranty company was the bad guy, we were the heroes, and the job was done the way we want.

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Some of the warranty reps I have delt with even go so far as calling our local dealers and parts stores to locate the parts and get a price quote the same as my cost. Then call me with their quote numbers.

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The worst is Cars out of Pennsylvania by far. $60/hr Cap based on labor guide and they search online for the cheapest part and that is what they will pay for the part. They have no concern if the vehicle is disassembled on your lift and you have to wait 2-3 days for their online part. They charge the customer a $100 deductible and customer pays for diag and anything over their limit.

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This isn't just extended warranty companies either .Customer of mine had an 09 BMW, needed a radiator and was replacing the thermostat too. They had "breakdown coverage" on their insurance. Said lizard-represented insurance company that rhymes with psycho wanted me to come down on my labor hours across the board. "I show this many hours for this, and this many for this. I found the thermostat for $88. I can get a genuine BMW radiator for $100 less. We may have to ship in that radiator overnight." He kept me on the phone for a solid 25 minutes while I told him "No, no, no, no, no" and just kept working while I had him on speaker. Eventually he gave up and let me get the work done, but he was really trying hard to do whatever he could to get the prices down. Customer had a $250 deductible and said they've been paying $70 a month for this service for the past 4 years and didn't even realize they had it. Anyone wanna do the math on that?

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This isn't just extended warranty companies either .Customer of mine had an 09 BMW, needed a radiator and was replacing the thermostat too. They had "breakdown coverage" on their insurance. Said lizard-represented insurance company that rhymes with psycho wanted me to come down on my labor hours across the board. "I show this many hours for this, and this many for this. I found the thermostat for $88. I can get a genuine BMW radiator for $100 less. We may have to ship in that radiator overnight." He kept me on the phone for a solid 25 minutes while I told him "No, no, no, no, no" and just kept working while I had him on speaker. Eventually he gave up and let me get the work done, but he was really trying hard to do whatever he could to get the prices down. Customer had a $250 deductible and said they've been paying $70 a month for this service for the past 4 years and didn't even realize they had it. Anyone wanna do the math on that?

 

It is truly amazing how these companies get away with this. I hope we, as an industry, do not cave under these tactics. As I tell my customers up front. "Your extended warranty company or insurance company will most likely not pay my entire bill, you will have to make up the difference". If we all do this, we can make a difference. I do not work for the extended warranty or insurance company.

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The warranty companies are crooks for sure, however I have dealt with several customers that have a completely unrealistic expectation of how the process is suppose to go. I always warn my customers that these warranty companies are crooked and they were probably talked into signing up for these policies. I give them the break down of what to expect. When the final numbers come back to what I was expecting and warned my customers about, they get all bent out of shape and some how it becomes our problem or we have to deal with the repercussions.

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I think Joe's strategy of warning customers about warranty companies beforehand is of the utmost importance. If you set the customer's expectations and let them know that they'll be left with whatever charges the warranty company wont pay, there's little chance they'll blame you when the prediction comes true.

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I have had a lot of dealings with these extended warranty companies and very seldom does it go well. Most of the time the customer is left with a bill of more than their deductible. Of course we do warn them ahead of time. It's still shocking to them.

The worst one was... yes... yes it was... a company out of PA.

They didn't like the price on this motor so they said they would get it. Not my choice, but when the motor arrived I expected to see a gleaming clean crate engine, what I got was a greasy run down used piece of crap. I refused to put it in. The extended warranty company then pulled the job and took it to another shop.

About 2 weeks later the same car was back, running like crap. AND, the warranty company wanted me to look at it. Because as they said, "It wasn't doing this before."

I laughed, and told them where they could shove it. Never seen the car again.

Nobody wins on these deals.

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I think Joe's strategy of warning customers about warranty companies beforehand is of the utmost importance. If you set the customer's expectations and let them know that they'll be left with whatever charges the warranty company wont pay, there's little chance they'll blame you when the prediction comes true.

 

That is #1, always prepare the customer up front. I also recommend that you understand each individual companies procedures EXACTLY, and record all communications with them.

 

I have had both good and bad experiences with multiple companies. The worst one being a company that "approved" the repairs and then refused to pay because, per their procedure, the wording should have been "authorized". (they argued that the "approved" only meant it could be covered, and we were waiting on "authorization" from upper management.) That one is still hard to talk about!

 

For the most part if you CYA and are a little cautious, they are not too bad. I always build in a little extra labor time, sometimes paid by the customer, to cover the added time required to deal with the process. Stick to your guns, and never let them tell you how to run your business.

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  • 3 weeks later...

I worked as a desk adjustor for 3 different extended warranty company's. Id be happy to help you guys out when dealing with them. Most of the time there are ways to get what you want, all depends on the verbage of the contract the customer signed. Most of they guys who you talk to on the phone are washed up tech or service advisors who couldnt sell. Feel free to mssg me.

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