Procedure for dealing with extended warranties
Posted to Shop Management Forum on 5/21/2017
20 Replies
This is what I used when I was dealing with this companies
on a regular basis.
Step 1. Explain to the customer what the process is going to
be. The two biggest things that you want to clarify to them
is that they will be responsible for anything the warranty
company doesn't pay and that because of the warranty company
it will probably take longer to repair the car. In other
words, auto repair is still going to take time and cost
money. If possible get the paperwork for the warranty from
the customer at this time.
Step 2. Get approval from the customer for diagnostic time.
The warranty company (with few exceptions) is not going to
pay for this.
Step 3. Diagnose the vehicle
Step 3.5 Read the warranty paperwork if you haven't already
(and if you have it). Make sure that what you are about to
call for approval on is a covered repair, if it isn't, then
don't bother calling the company, call the customer. Often
the paperwork will tell you how to explain the repair to the
warranty company, some things will only be covered if they
failed due to another part failing.
Step 4. Write a proper estimate. When you are dealing with a
warranty company they will want to know what labor guide you
are using, what your labor rate is, what the tax rate is in
your state, is labor taxed or just parts? All parts need to
be itemized, including hose clamps, how much coolant you
need, every detail. Most of these companies will not pay for
shop supplies, so if you want to get paid for using a hose
clamp, write it down. Parts have to have part numbers and
you have to note if they are aftermarket or dealer parts.
Use all of your normal mark-ups, just as you would for a
regular customer.
Step 5. Make sure you have the vin number/mileage on the
work order.
Step 6. Call the warranty company. Yes, you may have to wait
on hold for a little while or leave a message and wait for a
call back. Once you are talking to a real, live human, give
them the information that the want. They are just doing a
job, and the easier you make their job, the easier it is for
them to say "yes, that's covered and we will pay $XXX" Write
down what they will pay, don't take it personally when they
say that they will only pay half your normal labor rate and
won't pay more than $XX for a part. Maybe they don't pay for
gaskets, or fluids, or a million other possibilities. Just
write it down. Whatever the company doesn't cover, then the
customer will. Once you get to know the individual warranty
companies you can figure out the best way to write the
estimates. Some companies will pay up to dealer list on any
part, so if you can quote the dealer list price for a part,
then buy the part for less through worldpac, so be it. Make
sure you ask the warranty company how they pay. Do they need
a signed invoice faxed to them? Will they send you a credit
card number within 24 hours? Is there a number to call if
their is a problem?
Step 7. Call the customer. Let them know what the warranty
company will pay, and what their share of the costs are. Get
their approval.
Step 8. Fix the car
Step 9. Collect the money. This may depend on shop to shop,
I never had a problem with collecting the customer's share
of the repair then waiting a day or two for the warranty
company to pay theirs. If it's a company you never dealt
with before, or you got a bad feeling for their
professionalism you may want to keep the car until you get
paid by both the warranty company and the customer. To me,
this would be a case by case decision.
Once you get used to their processes, and learn which
companies are good and which are not, these warranties can
be good for the shop. If it doesn't work for your shop to
jump through their hoops, then simply don't take them.
The biggest problem that I ever had was with the customers
who didn't have any money. If you take a customer who bought
a car they can't afford then give them a warranty, they are
still a customer who can't afford the car. If the customer
owns a decent car, has some money, and bought a good
warranty because they preferred to even out the costs by
paying for a warranty over a few months instead of having a
big repair cost at a bad time, then it will probably be a
good situation for everybody.
Nathan from Colorado
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