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Why Should We Settle for Discounted Pay From Warranty Companies?

Joe Marconi
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Andre R Enthusiast

Andre R

Posted
Posted

We used to feel the same way ,that we had to accept what the insurance was paying. Now we take all the aftermarket warranties. We inform our customers

that the warranty will not pay for everything and that we will deal with them and then let the customer know what the difference is. The customer is responsible for that difference

and if they want the repair then we move forward, otherwise they are charged a testing/inspection fee that they agreed to at drop off and they pick up their vehicle. Everything is explained up

front and we don't have any problems. Some companies insist on sending the parts and we refuse but usually there aren't any issues.

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TheTrustedMechanic Community Regular

TheTrustedMechanic

Posted
Posted
On 11/8/2024 at 8:35 AM, Transmission Repair said:

My biggest problem with extended warranty companies is they plug up the shop's production.

How so? Some demand to send an adjuster, but how is that any different than having the customer want to come in to see what you found wrong? Did you want to avoid accountability?

 

TheTrustedMechanic Community Regular

TheTrustedMechanic

Posted
Posted

I don't get too many requests for extended warranty work but I agree with Bell Road Automotive. Further than that, when I call the customer with the warranty company's determination I encourage them to call the warranty company if the authorization doesn't seem right or fair.

As for a horror story, my last experience with an extended warranty company was on a transmission and it was with American Auto Shield (just one of many names the company goes by) and I will NOT deal with them or CARS again. First they wanted to send an adjuster, no problem. Then the adjusted called to establish a time frame in which he could come look at the car, no problem. I am a one man shop and close for lunch between 1:00 and 2:00. The adjuster left a message saying he would be here no later than 1:00, possible problem. I left the shop at 1:16 and he had not arrived. When I called the warranty company to find out what had happened they told me that the adjuster's notes said he was here at 1:06 and the shop was closed after confirming that lunch was between 12:00-1:00. BIG PROBLEM!!!!! Remember, I have the voicemail message saying he'd be here BEFORE 1:00. The warranty company allowed me to submit the proof they were seeking but then couldn't accept/open/convert an iPhony video (really?). Anyway, we went through the whole ordeal and then they told me they would only approve what THEY could buy the transmission for. We all know how that goes, the cheapest garbage they can find regardless of miles. I refused and that's pretty much where the ordeal ended. The customer did not have the money to pay any additional over the cut rate that the warranty company approved but she needed it fixed so she could trade it in.

Warranty companies have their agenda and it is NOT to pay out more than they take in. Can you as a shop owner blame them? They aren't fair often to the customer or to the shop demanding we use inferior quality parts, but they don't care. They expect us to provide the warranty after that so they are done with the liability or expect the extended warranty to expire before the USED UP part fails again. Again, how is this wrong for a company that is simply playing the numbers? Don't we do the same thing with our warranties and how we factor them into our hourly rates? Extended warranty companies appear to be evil and they certainly do work in evil, unscrupulous and unethical ways. But they offer a contract and the customer accepts that contract, Like Kind & Quality and all. I think the problem comes in by the repair shop not adequately informing their customers IN ADVANCE that the warranty company will NOT cover everything and likely will NOT perform in a way that the customer is expecting. We do not need to accept the risk and danger to our reputations, but these are often our existing customers who trust us, who like us, who want to do business with us. Education is the key, educate them up front that you will do everything you can to get as much covered as possible, but that there will most likely be things that the warranty company won't pay that they should pay. For example, my state of Michigan used to charge sales tax on core values but I had one extended warranty company tell me that they would not. And it was not an insignificant core amount either. I explained that to the customer, the customer called and complained and the warranty company finally relented and covered the sales tax because the customer induced them to investigate the law. Thankfully now we don't have to charge sales tax on the cores unless there is no core returned.

 

  • Like 1
Gary Childs Explorer

Gary Childs

Posted
Posted

We deal with them. Shop rate is $20.00 per hour more and we add the time we have to hassle with them to the bill. Also inform them and the customer that the customer has to pay us what they will not pay. I do not take any crap from them at all. 

  • Like 2
RKM Newbie

RKM

Posted
Posted
6 hours ago, Joe Marconi said:

I think we would all be better if they adopted your strategy! 

Agreed. For us, since we want to be a one-stop-shop as much as possible for our customers and do not like sending them elsewhere, we chose to take care of our customers by doing these warranty company jobs, but charging a higher rate seems best for us.  Our labor rate for warranty companies is closer to $35 above normal rate to recoup the extra phone time and hassle we advisors go thru with warranty companies. I agree with  MOORE Automotive about advising the customer ahead of time - to expect the warranty company to not cover all of the repair even if its a repair is included in the contract.

What are the thoughts of bringing this up to customers who are looking at buying a new car....that the dealer will likely attempt to sell them a warranty package, and advise them to instead put that money aside for vehicle repair/maintenance. I told one customer that the $1500 that they could pay for the warranty package may or may not cover the needs your car has in the future, but if you store it away in a separate account, it will defiantly go toward any needs your car has. Is that a good idea...any thoughts?

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newport5 Enthusiast

newport5

Posted
Posted

I just dealt with a warranty company for a small amount, $400 and it went very smoothly. He said his higher-ups said not to be too picky for small amounts: not worth it. Don’t know what "small" means. Under $1000? He agreed to MY labor time. AND he somehow “saw” our labor rate at $145. I said I don’t know where that came from. We’re $185. He easily agreed. And agreed to my parts price. We’re $20 over normal labor.

YEARS ago a warranty guy said I could post a sign that says: Insurance labor rate is $$$.

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