Well, another service contract company is OOB. Sad! Sad because the consumer & dealer may have claim battles on their hands due to the fact they were NOT insured. Yes, insured providers can also go OOB. However, they do have a layer of protection by INDEPENDENTLY watching reserves & have actuarials to minimize loss etc. They can also tap into the states Guaranty Fund provided for the REAL insurance companies. For example, self insured, bonded & RRGs are NOT ALLOWED to participate in the States Guaranty Fund. Sure, they were cheap but what can the “REAL” cost end up being to you, the dealer? Self insured contracts have their place if they are used correctly in the right situation based on the vehicle’s mileage & term.
(ie: Customer won’t buy vehicle with high mileage if you don’t offer them at least a 3mo/3k mi service contract/warranty.) I recommend to my dealers to keep the term low to decrease their risk long term if the company goes belly-up & on longer term contracts use only insured VSCs. I always recommend to dealers to go 100% insured in their dealerships when I call on them. However, the dealer ultimately makes the decision on which one they will sell. It’s our job as reps/consultants to inform the dealer as to what the risks are then let the cards fall as they may.
Make it a great week & make the right decisions!