Warranties & Sales
It is now recognised that whenever a car dealership sells a vehicle that it should also look to include a warranty with the it. There are many reasons and benefits to a dealer in using a warranty. We often get asked how long should a warranty last for on each vehicle and whilst there is no definitive answer, as an absolute minimum it should be 6 months to ensure that a dealer can protect themselves and also the customer.
Types of Warranties
There is the traditional warranty which you can purchase from a third party and is known as an insured warranty. This means the dealership pays the premium and the warranty company then accepts the risk of paying out for any valid claims. The dealer has little or no control over the claims process as the underwriting is with the warranty company. In the event the claim is declined then the customer can always go back to the dealer to ask the dealer to fix the issue.
More and more dealers are now offering a self funded warranty in which the warranty administration is done by a third party. This means the dealer has total control over the entire claims process which ensures that the dealer can provide a positive customer experience and can protect both themselves and the customer. If the dealer is required to cover the issue then they can do so and not be concerned about a third party rejecting a claim. As well as ensuring a better customer service there are many commercial benefits to a dealer running their own self funded warranty.
What Happens?
Firstly, the dealer gets 100% of the unused claim fund compared to this reverting to the insurer in the traditional warranty manner. Secondly the dealer has full claims autonomy to decide if they are going to cover a claim or not, this in turn gives rise to a much greater amount of flexibility for customer service. The dealer gets a much greater cash flow benefit as they are holding and controlling the warranty pot of money. To maximise the benefit of a self funded warranty we believe you should ensure that that warranty administration is completed by a third party as this puts a bit of distance between the dealer and the customer in the warranty claim and ensures a highly professional service to the customer. For more information on self funded warranties call us now on 0191 481 3992
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Warranties
There are many reasons and benefits to a dealer in using a warranty