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Old 02-09-2016, 09:13 AM   #61
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Can you cite any examples that have failed?
OK, this is ancient history and regulation has probably stepped up since then, but in 1997 I was a part of a board handling a case against an actuary who certified reserves of a Canadian Auto Warranty company that eventually became insolvent. (He was based in the US, as am I.) I still remember reading through a pile of disciplinary hearing proceedings, many of which were in French.
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Old 02-09-2016, 09:23 AM   #62
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I'm a fan of only one type of car extended warranty - the added mfg. warranty that comes with the purchase of a certified used car. I bought a used 2015 car with three years remaining on the new car warranty, and the certified qualification added another year/12,000 miles to the bumper-to-bumper coverage.
But you can even get that stripped off of a used car and save money (if it's a good reliable car). I've had dealers tell me that they can take $1k or more off of a used car simply to ditch the 'certified' label (and warranty). On top of whatever deal I negotiated beforehand.

Kinda tells you upfront how shady the whole business is, especially with used cars. They're not doing anything special with 'certified' cars vs. their other late-model cars, they're just charging you more for the extended warranty.
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Old 02-09-2016, 09:27 AM   #63
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OK, this is ancient history and regulation has probably stepped up since then, but in 1997 I was a part of a board handling a case against an actuary who certified reserves of a Canadian Auto Warranty company that eventually became insolvent. (He was based in the US, as am I.) I still remember reading through a pile of disciplinary hearing proceedings, many of which were in French.
So you rang the alarm bell based on an ancient and isolated example that wasn't even in the US? Were any claims not paid?

At least in the US as you know, it is very possible for a troubled company to go into receivership but all claims still get paid as they blow through reserves but not through surplus or another insurer picks up the book of business.
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Old 02-10-2016, 11:37 AM   #64
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Thanks for all responses on this topic. I called my auto insurance agent yesterday and added GAP coverage to my policy. Auto Owners Insurance does not offer Anything in the way of extended warranties. Think I'll wait until original warranty is about to expire and then consider extending it. So, today I will cancel all four policies from the dealer. Even though I said this may be our last vehicle purchase, never say never applies in this case. Again, thanks for all the replies, information and recommendations. They were all helpful in making my decision.
So Johnnie, how did it go canceling the four policies with the dealer? Did they pressure you not to cancel? Do you think they will give you a prompt refund?
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Old 02-10-2016, 11:39 AM   #65
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OK, this is ancient history and regulation has probably stepped up since then, but in 1997 I was a part of a board handling a case against an actuary who certified reserves of a Canadian Auto Warranty company that eventually became insolvent. (He was based in the US, as am I.) I still remember reading through a pile of disciplinary hearing proceedings, many of which were in French.
the reprimand may be on the abcd website. were you on the abcd?
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Old 02-10-2016, 12:37 PM   #66
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So Johnnie, how did it go canceling the four policies with the dealer? Did they pressure you not to cancel? Do you think they will give you a prompt refund?
Well, you know how these dealers are. I called yesterday morning for the finance guy who handled my "deal" (as they call it these days). Left a message for him to return my call. Called again later in the day and left a harsher message about not having returned my call for the entire day. Told him in the message I had decided to cancel all four options. Never heard from him. So today I was loaded for bear. Called first thing this morning and left him another message. After a couple hours I decided to drive down to the dealer. They paged him and mentioned my name in the page. After a period of time I was told he was off for the day. I think he was there but didn't want to talk to me. I asked to see another finance manager. I discussed the situation with him, told him what I wanted to do and wanted it done now because I only had two days left on the "thirty days to cancel without penalty" clause. He went to his office, returned with a form that I filled out with all the details, he approved the cancellation, signed it and ran a copy for me. All done. No problem with that guy. Unbelievable how some things go. Can't wait for the next time at the dealer. I'm going to look up the original finance guy. I have a few words to say to him.
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Old 02-10-2016, 12:40 PM   #67
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good call, all 4 of those things are rip offs
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Old 02-10-2016, 12:48 PM   #68
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Way to go, Johnnie. An example we can all follow.
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Old 02-10-2016, 01:07 PM   #69
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+1 but I probably would have gone on to the owner/general manager or whoever the first F&I guy who was unresponsive reported to and complained about him. Your leverage is the survey that Toyota will want on your "buying experience" and that dealerships are harshly penalized for bad feedback as I understand it. Stay hot on the trail until your refund money is in the bank.
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Old 02-10-2016, 01:44 PM   #70
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Consumer reports says a waste of money and that's why they sell them, but got a very good plan for my tundra for $1200 from from the dealer. It shows every thing they will fix and also its exactly what is not covered so no surprises. 7 years and no worrying then I get another one, Its worth it to me for peace of mind. I used it once in Two years and a minor fix would have been $435 and they bring a replacement car to my house while repairing, simple is good and to me worth paying for.
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Old 02-10-2016, 02:01 PM   #71
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Take a look at the CNBC American Greed program, session 8 (2014) #91 special called "The Car Con" where:

Quote:
Brothers Darain and Cory Atkinson start a business selling vehicle service contracts, but the warranties prove worthless and the brothers pocket millions.
A good watch on what can go wrong. Entertaining and informative.
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Old 02-10-2016, 03:13 PM   #72
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the reprimand may be on the abcd website. were you on the abcd?

I just sent you a PM on this.
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Old 02-10-2016, 07:20 PM   #73
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ABCD.... quite creative!
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Old 02-10-2016, 08:01 PM   #74
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I have a friend who had to have the engine replaced after about 5,000 miles... it was covered under warranty.... Pontiac Grad Prix.... he is up into the 60s right now and his second engine is starting to have problems... he does take care of them, so it is not lack of maintenance....
The big problem engine is GM's 3.6 315 hp engine going into many vehicles, including Camaros, the big SUV's and Cadillacs.

The problem is that their camshaft chains stretch and the engine will jump timing. There's been too large of a percentage of their engines cause problems. GM quietly dropped their original warranties from 100K to 36K. The problems often occur around 50-60K miles. Unfortunately the engine's got to be half taken apart to change chains and sprockets, etc. While they're apart, they also replace the water pump and coolant. Total repairs take 2 man/days and cost $2400 average.

My son was a victim recently. The internet is full of negative info on this engine.
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Old 02-10-2016, 08:14 PM   #75
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One of my major clients was an insurer that specialized in extended warranties and it was an obscenely profitable business. Reserving was not a particular issue because claims were reasonably predictable (stable historical loss development triangles).

I totally disagree with the "house of cards will fall apart" comment with respect to these insurers.... it is unnecessarily alarming. These entities are regulated like any other insurer... they have adequate reserving practices that are audited annually, examined regularly by the regulators, lots of surplus and very strong RBC ratios. Can you cite any examples that have failed?
I've been away from the auto business many years by now, but I never knew any regulations on ESP companies. Most back in the day were Arizona Chartered corporations and later moved off shore to Bermuda and/or The Caymans.

A lack of regulations was the big problem. That's why we wouldn't do business with an ESP company that was not bonded/insured against failure.

The automobile business has changed over the years with big dealership chains buying out so many of the smaller dealership groups. I really don't know how the ESP industry went after the big round of wholesale sellouts, as some of the dealerships and their affiliates no longer exist. I was just glad to get out of the dog eat dog auto business as it was just too high pressure month after month.
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Old 02-10-2016, 08:45 PM   #76
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I was referring to insurers who offer extended warranty insurance coverage. As I recall these are sold through the dealership and the dealership receives a commission on the sale (and a handsome commission at that).

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Who backs the service contract?
Find out who performs or pays for repairs under the terms of the service contract. It may be the manufacturer, the dealer, or an independent company. Many service contracts are handled by companies called administrators, that authorize the payment of claims to any dealers under the contract. If you have a dispute over whether a claim should be paid, deal with the administrator. If the administrator goes out of business, the dealership still may be obligated to perform under the contract. The reverse also may be true: If the dealer goes out of business, the administrator may be required to fulfill the terms of the contract. Whether you have any legal remedies depends on your contract's terms and/or your state's laws.

Find out if the auto service contract is underwritten by an insurance company. It’s required in some states. If the contract is backed by an insurance company, contact your state insurance commission to ask about the solvency of the company and whether any complaints are on file.

Insurance regulations generally require companies to:
  • maintain an adequate financial reserve to pay claims.
  • base their contract fees on expected claims. Some service contract providers have been known to make huge profits because the cost of their contracts far exceeds the cost of repairs or services they provide.
  • seek approval from the state insurance office for premiums or contract fees.
Check out the dealer and the administrator with your local or state consumer protection office or local automobile dealers association to see if any complaints are on file against the company. You also can search online for complaints.


If you decide to buy a service contract through a dealership — and the contract is backed by an administrator or a third party — make sure the dealer forwards your payment and you get written confirmation. Some people discovered too late that the dealer failed to forward their payment, leaving them with no coverage months after they signed a contract. Contact your local or state consumer protection office if you have reason to believe that your contract wasn't put into effect as agreed.
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Old 02-10-2016, 10:15 PM   #77
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The big problem engine is GM's 3.6 315 hp engine going into many vehicles, including Camaros, the big SUV's and Cadillacs.

The problem is that their camshaft chains stretch and the engine will jump timing. There's been too large of a percentage of their engines cause problems. GM quietly dropped their original warranties from 100K to 36K. The problems often occur around 50-60K miles. Unfortunately the engine's got to be half taken apart to change chains and sprockets, etc. While they're apart, they also replace the water pump and coolant. Total repairs take 2 man/days and cost $2400 average.

My son was a victim recently. The internet is full of negative info on this engine.

His is the 3.6, but not the 315HP... their old 3.6 was pretty solid...
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Old 02-11-2016, 07:28 AM   #78
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You already have a 3 year 36,000 mile warranty on pretty much everything along with a 5 year 100,000 mile warranty on the power train.

I wouldn't buy any of them.

Mike
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