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Warranties Backed by a Risk Retention Group
On June 10, 2003 I wrote in the "Warranty Gold" Claims discussion how the failure of National Warranty Risk Retention Group would affect the Warranty Gold customers (message #639 and #642). At that time respondents thought my logic was flawed. As it turns out I was correct.
Now I am writing to you about 2 other warranty companies that are backed by Risk Retention Groups. As we have learned from the Warranty Gold/National Warranty RRG debacle the damage to the consumer is immense. What we don't need are more people to be victmiized as the Warranty Gold/National Warranty customers were.
1. Interstate National Dealer Services (INDS) - A.M. Best issued a press release on December 23rd downgrading National Service Contract RRG from A- (excellent) to B++ (very good)with the rating still under review with negative implications. In case you don't know National Service Contract, RRG is majority owned by Interstate National Dealer Services (INDS). I can remember all too well how quickly National Warranty fell from grace as soon as AM Best dowgraded them.
2. First Automotive Service Corp - aka First Automotive Insurance RRG. On January 12, 2004 the Texas Department of Licensing and Regulation issued a press release on the following:
"The Texas Department of Licensing and Regulation (TDLR) has obtained a permanent injunction ordering a New Mexico service contract provider to stop offering or selling extended warranties for automobiles in Texas for which it lacks proof of adequate financial security.
Judge Suzanne Covington of the 201st District Court in Austin Monday ordered First Automotive Service Corp. (FASC) of Albuquerque to stop providing, offering, advertising, selling or marketing service contracts unless it can show that the policies will be properly backed".
If you remember First Automotive Service Corp is the new administrator for Warranty Gold!!
I only hope and pray that these two companies don't continue to slide like National Warranty did. What we don't need is more consumers facing the same problems we all did since the National Warranty failure.
Now I am writing to you about 2 other warranty companies that are backed by Risk Retention Groups. As we have learned from the Warranty Gold/National Warranty RRG debacle the damage to the consumer is immense. What we don't need are more people to be victmiized as the Warranty Gold/National Warranty customers were.
1. Interstate National Dealer Services (INDS) - A.M. Best issued a press release on December 23rd downgrading National Service Contract RRG from A- (excellent) to B++ (very good)with the rating still under review with negative implications. In case you don't know National Service Contract, RRG is majority owned by Interstate National Dealer Services (INDS). I can remember all too well how quickly National Warranty fell from grace as soon as AM Best dowgraded them.
2. First Automotive Service Corp - aka First Automotive Insurance RRG. On January 12, 2004 the Texas Department of Licensing and Regulation issued a press release on the following:
"The Texas Department of Licensing and Regulation (TDLR) has obtained a permanent injunction ordering a New Mexico service contract provider to stop offering or selling extended warranties for automobiles in Texas for which it lacks proof of adequate financial security.
Judge Suzanne Covington of the 201st District Court in Austin Monday ordered First Automotive Service Corp. (FASC) of Albuquerque to stop providing, offering, advertising, selling or marketing service contracts unless it can show that the policies will be properly backed".
If you remember First Automotive Service Corp is the new administrator for Warranty Gold!!
I only hope and pray that these two companies don't continue to slide like National Warranty did. What we don't need is more consumers facing the same problems we all did since the National Warranty failure.
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Comments
If you're going to buy a contract, get a real warranty from the manufacturer, or just save your money.
xpfshost
I think www.ambest.com will get you there.
"NSC's rating historically had been supported by the strong capital position of INDS. However, to fund the buy-out of INDS'existing shareholders, its retained earnings were liquidated and management invoked bank debt. At the conclusion of INDS' privatization in January 2003, the strong capital cushion between INDS and NSC was removed. The reduction in capital and addition of bank debt significantly increased INDS' leverage."
So as you can see AM Best didn't downgrade National Service Contract RRG because of nervousness of Warranty Gold. It did based on the action that Interstate took when they bought out their shareholders and invoked bank debt.
"AM Best remains concerned that NSC's capitalization may no longer support its current rating should INDS' LRF (Loss Reserve Fund) develop advsersely. This concern is due to the fact that under its reinsurance agreement with INDS, NSC is subject to all of the potential adverse reserve development of INDS' LRF."
Just thought you liked to know.
xpfshost
For Immediate Release Contact: Patrick Shaughnessy
DATE: January 12, 2004 512-463-3208
TDLR INJUNCTION HALTS SALE OF UNSECURED VEHICLE WARRANTIES
Company Must Provide Financial Assurance Before Selling New Policies
AUSTIN - The Texas Department of Licensing and Regulation (TDLR) has obtained a permanent injunction ordering a New Mexico service contract provider to stop offering or selling extended warranties for automobiles in Texas for which it lacks proof of adequate financial security.
Judge Suzanne Covington of the 201st District Court in Austin Monday ordered First Automotive Service Corp. (FASC) of Albuquerque to stop providing, offering, advertising, selling or marketing service contracts unless it can show that the policies will be properly backed.
FASC did not contest the injunction. It was entered as an agreed final judgment.
Under the Texas Service Contract Regulatory Act, companies in Texas that provide service contracts are required to prove before they sell policies that they have sufficient funding to service the contracts they sell and they must maintain adequate security during the terms of those contracts. This can be done through the purchase of reimbursement insurance from a third party.
While investigating Warranty Gold, a licensed service contract provider that declared bankruptcy November 11, 2003, TDLR discovered that policies sold by Warranty Gold since June 2003 named FASC, rather than Warranty Gold, as the company that would actually provide the warranty coverage. FASC, in turn, stated in the policies that reimbursement insurance to cover claims was provided by Dealers Assurance Corp. (DAC) of Columbus, Ohio.
However, DAC has informed TDLR that it never agreed to provide reimbursement insurance and never provided financial backing for the policies.
The injunction prevents FASC from offering or selling any policies that are purportedly backed by DAC. The order does not affect FASC’s ability to sell policies properly secured by other insurers.
Created in 1909 as the Bureau of Labor Statistics, TDLR protects the public welfare and safety and promotes a fair and competitive business environment by regulating twenty diverse industries and programs, including service contract providers, boxing, air conditioning contractors and architectural barriers.
Warranty Direct
Warrantybynet
1Source
Warrantywarehouse
These are just a few of the companies backed by Risk Retention Groups. Notice in the article it speaks of several RRG's that are insolvent. The author says National Warranty Insurance was insolvent back in 2001. Be careful!
Warrantybynet administered and backed by Heritage Warranty Mutual Insurance Risk Retention Group...Rated NR-1 (Insufficient Data)!!!!
1SourceAutoWarranty.com administered by 1Source and backed by PrimeGuard Insurance Company, Inc RRG...Rated NR-1 (Insufficient Data)!!!!
Warrantywarehouse.com is backed by a Risk Retention Group but I am not sure who it is yet. But I will find out soon and let you all know!!
I will continue to bring more information on these companies when I get it so that no one else will have to go through what myself and thousands of others did when NWIG collapsed....Stay tuned!!
xpfshost
I will keep you all informed as I find out more information. It seems my goal in life has become not to let anyone else get hurt by the Warranty Gold type companies like I did.
xpfshost
I'll hold my breath. As long as the all-mighty dollar is involved, there will always be sham companies like WG and others backed by RRG's. I've learned a valuable lesson by my WG experience: any warranty is only as good as the company behind it.
.
Oh, I almost forgot, I also got burned by an extended warranty on a computer purchase in 1998. I bought a desktop from Computer City (since bought out by CompUSA). At the time I purchased their 3-yr. on-site service plan for $189. When CompUSA bought Computer City one year after my purchase, they sold the service plans to another party. My modem crapped out, so I tried calling for service and was on hold for hours and hours on several different days. I'm sure there was no one there. I realized that a 3-yr on-site service plan CANNOT be profitable for $189. One call will eat all of the $189 up, so no more on-site policies for me. I do purchase the computer manufacturer's warranty that gives me email or phone support for 3 yrs. as I know a little bit about computers.
.
Sorry to go off on a tangent here, but just posting my experience with warranties in general.
xpfshost.
What I have learnt over the years, especially with computers, that they depriciate faster than cow dung cools. The modem that failed on your computer was probably still covered by its manufacturer's warranty. Besides, even the most expensive, hardware type modem, is about $80. I am pretty sure that a store built computer had a cheapo sub-$10 winmodem.
I am always sceptical about warranties other than manufacturer's, be it cars, computers, electronics, other merchandise. In order for those companies to stay in business and pay the executives million dollar slaries, they have to be profitable, if they fulfill every claim they will not be profitable and will not be able to afford million dollar salaries.
Most warrnaties have exclusions that no one bothers to read. Even manufacturer's warranties exclude many things. Chances of something major, like engine or tranny failing after basic warranty are slim if the component has not failed this long. Good routine maintenance will make the car run indefinateley, some parts will require periodict replacement, but these are the parts that are not covered by the warranty.
Generally, I would say stay away from extended warranties, put that money in the high yeld savings (ING direct or E-trade) or 3 year CD, and then see if you end up on top after 5 years.
.
At the time (1999), I was ready to switch to Road Runner but I thought it was a good idea to test my warranty. Glad I did before something broke and I needed it, not sure what modems were going for back then. I never did fix/replace the modem.
.
My thoughts exactly on extended warranties in general. If I do consider one, it's only with the original manufacturer (that is after my WG lesson). And I read the fine print first to see if they sell it to a 3rd party.
Doing my routine checking on the Risk Retention Industry and trying to save innocent individuals from making the same mistakes that I and thousands of others did with National Warranty Insurance RRG..I found some intersting information.
Looks like National Service Contract Risk Retention Group, owned by Interstate Dealer Services the parent company of Warranty Direct, has refused to be rated by AM Best!!! Their rating changed from A- to B++ to a NR-4!!! AM Best states that an NR-4 rating means: "Assigned to companies that were assigned a Best's Rating but request that their rating not be published because the companies disagree with Best's rating conclusion".
I wonder why they disagree with the findings? Is it really becuase the rating was about to be lowered again? Sounds fishy to me!!!
Oh, wait a minute isn't Warranty Direct a sponsored link to Edmunds? Looks like Edmunds needs to rethink their relationship with Warranty Direct before it becomes to late!!!
"now the car dealership that I bought my van from said that I have to foot the bill and submit my repair bill to a company that I can't even get a hold of in hopes og getting reimbursed"
Yes, that's correct.
"I would think the dealer would be responsible for the cost and that they would have to try to get reimbursed, they are the ones who sold me the warranty!"
Sorry, and not to be unsympathetic, but you're on your own.
I'd say you're stuck with a very expensive piece of paper.
Now: next time someone says 'give me $1200 and sign this contract and I'll fix whatever breaks on your car for the next four years,I promise',
RUN.
Ray T.
I have been in the business for 35 years. I can tell you that how long a warranty company has been in business, and if they pay claims mean a lot more then who the Insurance Company back them up means. Warranty Gold was rated A+ from AM Best a week before they went Bankrupt.
By the way, be careful of the "rust or corrosion" and "salt" exclusion at Section D--no coverage per the salesman (sounded real flip) I talked to.
After researching various warranty cos, my take is they are not worth the money and the only people who will buy them are ignorant consumers who haven't done their homework. A shame because many can't afford the added expense.
Conclusion: When buying a vehicle, obtain the best manufacturer "bumper to bumper" available! American automobile manufacturers will have to improve their warranties if they want anyone to buy their vehicles. I also wonder if there is some tie in with the Better Business Bureau the way these companies tout their records--something fishy.
I also have a useless Triad Advantage Warranty. I plan on making life at Garvey Volkswagon in Glens Falls NY a living hell. I had trouble getting my truck fixed there with the warranty after the first month. It is not expired yet, however my letter from the dealer must have gotten lost in the mail. At least that is what I was told. I cant get anywhere with any website or phone number for Triad either. Have you found out anything else? I paid $1500 for this and after 9 months they went out of business and I never knew till last week when my truck broke down! I really learned a lesson and I hope to get the dealer to pick up some of the slack. After all they are hightly rated by Huandia and that will be who I will write my first letter of discontent to. Trisha
Trying to decide what warranty to buy for my new (used) 2000 Volvo C70. My past experience with SAAB convertibles made my warranty worth the cost. I had mixed experience with Warrantybynet plans. On one of my SAAB's, the warranty was from American Guardian and they became real pains in the neck in the last two years (always paid much less than the dealer repair bill). However, I have another plan sold by Warrantybynet on my wife's SAAB from Vemeco (Heritage). So far with two significant claims (power steering pump, direct ignition cassette, towing reimbursement), they paid VERY quickly and painlessly.
That being said, I can't seem to get a Vemeco exclusionary policy on my Volvo due to the age.
So...
I'm considering 1Source, Warranty Direct and Mercury. Mercury is an actual insurance company. I don't know enough about any of them.
If anyone can give me some advice, please post and email me at jeff.simon@salesapproach.com.
Thank you!
Does anyone have anymore information on what is going on with 1SourceAutoWarranty.com?
CUSTOMER EXPERIENCE
On December 2, 2005 the BBB learned that the Hawaii Division of Insurance had suspended operations of this company. The BBB has been unable to confirm with government or law enforcement agencies in Hawaii or Colorado to respond to questions. The BBB urges consumers to be cautious in purchasing any products from this company until more details are made available.
Here is the link for the entire BBB report.
http://www.data.bbb.org/scripts/cgiip.exe/WService=denver/denver/showrpt.html?la- nguage=english&zid=RONjJmLoM
Anyone that has purchased from 1 Source recently needs to cancel with their credit card company. If you have a payment plan also cancel with your credit card company. You may be able to salvage some of your money, if you have claims, well it look like another Warranty Gold fiasco.
Unless there is no choice don't even consider a warranty that isnt backed by a major car company. You save a few dollars with the aftermarket warranty but in the end you won't save anything and there is a good chance you will end up with nothing but alot of promises.
I plan to purchase extended warranty. With so many internet offerings, I don't know which one to pick. Does anyone have experience with AAAutoWarranty.com, who sells warranties backed by Warranty America, LLC/Capital Assurance Risk Retention Group?
Some folks suggested me to go with AAA's warranty service from www.corpmsc.com.
They have similar plans. But I don't know which one can really handle my repairs.
Thanks for your feedback.
There are a few companies out there, like www.AutoWarrantyBroker.com that offer extended warranties from actual A-rated Insurance companies, and nothing to do with RRG's.
I am in the end strong enough not falling into the RRG trap. I selected AAA member care. The insurance comp. behind the program is not RRG. They are certainly not cheap, but I feel confident that my claims in the future will be granted. If anyone needs more info. please let me know. Or you can check out www.corpmsc.com
Anyone have any info on this company? They offer 2 lines of coverage:
American Mercury Silver
Extra Care - Freedom Coverage Best Value
and
American Mercury Platinum
Bumper to Bumper True Exclusionary Coverage
is it worth the extra $200 to get the bumper to bumper?
Thanks
From Mercury's sample contract:
SECTION III. WHAT IS NOT COVERED
NOT ALL COMPONENTS OF YOUR VEHICLE ARE COVERED BY THIS CONTRACT. ONLY THE COMPONENTS LISTED IN “SECTION II WHAT THIS CONTRACT COVERS” ARE COVERED BY THIS CONTRACT. THE COMPONENTS AND CONDITIONS LISTED BELOW ARE SPECIFICALLY NOT COVERED BY THE TERMS OF THIS CONTRACT.
1. THIS CONTRACT DOES NOT COVER ANY REPAIR OR REPLACEMENT OF COMPONENTS THAT ARE RECOMMENDED OR REQUIRED SOLELY BY THE ENACTMENT OF ANY LOCAL, STATE, OR FEDERAL LAW, RULE OR REGULATION.
2. THE FOLLOWING COMPONENTS ARE SPECIFICALLY EXCLUDED: AUDIO SPEAKERS; BATTERIES; BODY PANELS; BODY SEALS; BUMPERS; CABLES; CARPETING; CHASSIS; CLAMPS; FASTENERS ( I.E. , NUTS, BOLTS, CLIPS, ETC. UNLESS REQUIRED IN CONJUNCTION WITH A COVERED REPAIR); CONVERTIBLE TOPS AND THEIR MECHANISMS; EXHAUST AND EMISSION SYSTEM COMPONENTS; GASOLINE FUEL INJECTORS THAT DO NOT HAVE AN ELECTRICAL FAILURE; GLASS; INSULATION; HOSES; LINES AND FITTINGS (EXCEPT BRAKE LINES AND FITTINGS); MIRRORS; MANUAL CLUTCH COMPONENTS; PAINT; PASSENGER RESTRAINT SYSTEM; SEATS; SECONDARY IGNITION COMPONENTS; SOFT TRIM/MOLDINGS OR APPEARANCE ITEMS; SUSPENSION SPRINGS; TELEPHONES; TORSION BARS; UPHOLSTERY; WEATHER STRIPPING; WHEEL LUG NUTS/STUDS; WHEELS; WHEEL COVERS; INTERNET COMPUTER; NAVIGATION SYSTEM; VIDEO COMPONENTS; HEADSUP DISPLAY, AND NIGHT VISION SYSTEMS.
3. THIS CONTRACT SPECIFICALLY EXCLUDES: NORMAL MAINTENANCE AND SERVICE ITEMS; ALIGNMENTS; ADJUSTMENTS; CALIBRATIONS; CLEANING; NON-PUBLISHED DIAGNOSTIC LABOR; FILTERS/FLUIDS/LUBRICANTS/REFRIGERANTS (EXCEPT IN CONJUNCTION WITH A COVERED REPAIR); A/C ACCUMULATOR/DRIER (EXCEPT IN CONJUNCTION WITH COMPRESSOR REPLACEMENT); FUSES; LIGHTS/BULBS/LENSES; SHOP SUPPLIES; ENVIRONMENTAL DISPOSAL CHARGES; WEAR ITEMS; ACCESSORY DRIVE BELTS; BRAKE PADS AND SHOES; BRAKE DRUMS AND ROTORS; SHOCK ABSORBERS; STRUTS; TIMING BELTS THAT ARE WORN OR STRETCHED, AND WIPER BLADES.
4. THIS CONTRACT DOES NOT COVER ANY COMPONENT NOT SUPPLIED AS ORIGINAL EQUIPMENT BY THE VEHICLE MANUFACTURER.
5. IN NO EVENT WILL WE COVER ANY MECHANICAL BREAKDOWN OR DAMAGE:
A. CAUSED BY RUST, CORROSION, OXIDATION, CONTAMINATION, SLUDGE, OR RESTRICTED OIL PASSAGES;
B. CAUSED BY IMPROPER AMOUNTS OR IMPROPER TYPES OF LUBRICANTS, COOLANTS, REFRIGERANTS OR FILTERS;
C. IF PRIOR AUTHORIZATION IS NOT GIVEN BY US PRIOR TO REPAIRS BEING PERFORMED (SEE CONDITIONS OF COVERAGE);
D. RESULTING FROM MISUSE OF, ALTERATION OF, TAMPERING WITH, DISCONNECTION OF, MISCHIEF OR VANDALISM TO, THE VEHICLE OR ANY OF ITS COMPONENTS, OR DAMAGES RESULTING FROM COLLISION, ACCIDENTS, WATER, FIRE, FREEZING, ACTS OF GOD, OR THEFT;
E. IF MAINTENANCE RECORDS HAVE BEEN REQUESTED BY US BUT CANNOT BE PRODUCED OR VERIFIED;
F. THAT EXISTS PRIOR TO THE EFFECTIVE DATE OF THIS CONTRACT, THAT OCCURS OR IS REPORTED AFTER THE EXPIRATION OF THIS CONTRACT, OR THAT OCCURS DURING THE VEHICLE MANUFACTURER’S WARRANTY PERIOD, OR A REPAIRER’S GUARANTEE, OR A PARTS WARRANTY;
G. IF YOUR VEHICLE’S ODOMETER IS INOPERATIVE, HAS EVER BEEN ALTERED OR TAMPERED WITH, OR THE ACTUAL ACCUMULATED MILEAGE CANNOT BE DETERMINED.
H. DUE TO CONTINUED OPERATION OF YOUR VEHICLE, OR FAILURE TO USE REASONABLE MEANS TO PROTECT YOUR VEHICLE FROM FURTHER DAMAGE, AFTER A FAILURE OCCURS (SEE CONDITIONS OF COVERAGE);
I. CAUSED BY ENGINE OVERHEATING DUE TO FAILURE OF A NONCOVERED COMPONENT.
6. IN NO EVENT WILL WE COVER ANY OF THE FOLLOWING:
A. ANY RESULTING OR CONSEQUENTIAL DAMAGE TO A NON-COVERED COMPONENT, OR CAUSED BY, A NON-COVERED COMPONENT;
B. ANY CHARGES, COSTS, EXPENSE, INCONVENIENCE, LOSS OF TIME, LOSS OF INCOME OR ANY OTHER CONSEQUENTIAL LOSSES ARISING FROM A MECHANICAL BREAKDOWN NOT SPECIFICALLY COVERED BY THIS CONTRACT, OR ANY OTHER EXPENSES YOU INCUR NOT SPECIFICALLY COVERED BY THIS CONTRACT;
C. IF YOUR VEHICLE IS USED FOR, EQUIPPED FOR OR IDENTIFIED AS A:SNOW PLOW, RACING, EMERGENCY, DELIVERY VEHICLE, OR COMMERCIAL VEHICLE (LIMITED COMMERCIAL USE IS AVAILABLE ONLY IF THE PROPER SURCHARGE HAS BEEN PAID);
D. GRINDING OF VALVES OR OTHER COMPONENT REPAIRS TO IMPROVE COMPRESSION OR CORRECT OIL CONSUMPTION WHEN A DEFINED MECHANICAL BREAKDOWN HAS NOT OCCURRED;
E. ANY MECHANICAL BREAKDOWN IF ANY ALTERATIONS OR MODIFICATIONS HAVE BEEN MADE TO YOUR VEHICLE, OR YOU ARE USING OR HAVE USED YOUR VEHICLE IN A MANNER NOT RECOMMENDED BY THE MANUFACTURER, INCLUDING BUT NOT LIMITED TO: THE FAILURE OF ANY CUSTOM OR ADD-ON PART, ALL FRAME OR SUSPENSION MODIFICATIONS, LIFT KITS, OVERSIZED TIRES, HD TRAILER HITCHES, EMISSIONS AND/OR EXHAUST SYSTEMS MODIFICATIONS, ENGINE MODIFICATIONS, ENGINE OVER-REVVING, OR IMPROPER SHIFTING. IN THE SITUATIONS COVERED BY 5.E., 5.G., 6.C. AND 6.E ABOVE, OR IN THE EVENT YOUR VEHICLE IS REPOSSESSED OR HAS EVER BEEN DECLARED A TOTAL LOSS, SALVAGE OR REBUILT, WE MAY CANCEL THIS CONTRACT. ALSO, SEE THE PROVISIONS CONTAINED IN “SECTION V. GENERAL PROVISIONS, SUBSECTION I. CANCELLATION.”
And, in case you didn't notice. American Mercury Warranty is 'insured' by American Mercury Insurance Group. Maybe they're related...
API has stiffed thousands of customers on GPR claims as well as service claims.