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Smart Shopper Extended Warranties
2868 messages, Last post on Nov 09, 2009 at 8:08 AM
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Edmunds article: Third-Party Extended Warranty Scams
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Replying to: varsitysg (Jun 07, 2007 5:16 am) API is a piece of a larger holding company, NServ Inc. Nserv is owned almost exclusively by James Hawk and his son, James Hawk Jr. Nserv consists of four companies, API (Automotive Professionals Inc), SRI (Service Resources Inc), BPI (Brokerage Professionals Inc) and IWS (Intercontinental Warranty Services). API sells auto warranties through dealerships, IWS sells warranties through credit unions. These warranties are advertised as being backed by "major insurers". In fact, the vast majority of API's contracts, and ALL of the IWS contracts are backed by Marathon Financial, a risk retention group. It is critical that you understand this, in order to follow what they are trying to do. Part of your warranty may have been the "GPR" or Guaranteed Price Refund. The GPR is a loser for the company... a real loser. And this has been known for over a year, actually closer to two years. Yet the company continued to sell GPR until 2/1/2007. And they shut down the business on 2/15/2007. More importantly they continue to happily sell GPR through IWS today, along with those Marathon backed contracts through www.iwsgroup.com. The way things are structured, the dealer sells you the warranty. There is a lot of fat in that price that you pay. A lot of fat. The dealer clips that off that top and hands over the rest to BPI. BPI skims some off the top, and then places some in an off shore account that is the "reserve" that is put in place for the dealer to pay claims. If the reserve goes negative... then the insurer has to pick up the tab. BPI then sends the remainder to API as the price of the contract. Some of that money goes to the insurer as a premium for insuring the reserve account. The rest is API's profit. Then when you call to make a claim, you talk to SRI. And they charge a fee to handle that claim. That fee is paid by BPI who takes the fees back out of the reserve accounts. All of these companies are in the same building... in the same room even. Why it was setup that way became obvious when they pulled the rug on 2/15. It was incredible, cold hearted and cowardly what was done. They simply stopped answering the phones. But the setup prior to this was even more sickening. All through December and January they accepted GPR claims, and told customers their claim was approved and the checks were 'in the mail'. Right. Then people had cars in for repair and were trying to call. Nothing. No message saying we're out of business. Nothing. Just a happy voice mail. Thousands and thousands of voice mails came in. When the box got full -- they dumped them. I heard women crying on the phone, people begging for someone to call them back. Now keep in mind that the calls were coming into 'SRI' who continued to operate full tilt. They processed claims for Intercontinental Warranty Services and any API contract that wasn't backed by Marathon. But because it was known that Marathon would most likely not survive API's default, and couldn't pay the fee to SRI, they just acted like they didn't have to answer the phone. All the same company. All the money goes into the same clowns pockets. The Hawks. About a week after the mess started the Illinois Dept of Insurance shows up. They setup an office and start auditing. Oh... and Allstate Insurance is onsite, because they backed about 70,000 contracts starting mid 06. They were a real piece of work too... they actually convinced API to continue to sell contracts the same day they closed. Yep... you got it... we stop taking phone calls on claims and are stiffing people right and left... but you could still unknowingly by an API contract. In fact I am almost certain that Hoffman Honda had been rolled over to Allstate. So probably while you were standing there screaming about being screwed by API they were still selling API contracts. There were certainly other dealers all to happy to screw people as fast as they could. So the Dept of Insurance is really an interesting bunch. They basically can't find their rear using both hands. And they do NOT want API to go under because then they get handed the bill. Do you really think the state of IL wants to send money out of state to pay claims???? Hardly. The DOI begins making the company take claims calls. But almost everything is still routed to vmail. Allstate wanted the DOI to go away. They actually instructed the claims adjusters to tell callers that got through to call the IL DOI and complain because they are the reason their claims are not being paid. And Allstate has lots of pull in IL. Their offices are right there. next...... |
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Replying to: uvebeenscrewed (Jun 09, 2007 10:12 am) But IWS continued to sell Marathon backed contracts as fast as they could. Along with GPR. Think about what is going on... there is incentive for all the players to limit the damage and keep everyone moving along. The IL DOI doesn't want to see API or Marathon go under. Allstate wants to continue to sell these very lucrative auto warranties. The Hawks want to continue to sell Marathon backed warranties through IWS. But somebody has to pay the bill. And whose not in the group above? You. So guess who got screwed. This was a well thought out plan that was put in place a long time ago. You see the GPR portion of the contract is not backed by the insurer. Yeah.. its the sole responsibility of API and IWS to pay that out. Marathon is in a bind... Allstate offers to buy out the 'good' accounts on the cheap (the ones with non-negative reserves) -- minus GPR of course. So GPR customers and customers who happened to be unlucky enough to buy from a dealer with a lousy claims history are now being stiffed. Easier to sweep that under the rug. From the Hawks point of view all they want is to keep IWS afloat. Intercontinental Warranty Services can still remain profitable for a while and they can begin to setup the same scam or a variation for the state of Florida. Whatever you are hearing when you call into API is most likely a lie. I have heard unbelievable things. The story can change daily. Your best bet is to avoid API and IWS and purchase a factory backed extended warranty if you REALLY think you need one. Personally I will never buy one again.
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Does anyone out there know what a Honda dealer would charge for 10 year 100,000 mile ($0 deductible) bumper to bumper warranties on those two cars? I'm wondering if the hybrid's higher expected maintenance and repair costs are reflected in the warranty prices. |
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Replying to: joe131 (Jun 09, 2007 1:23 pm) Isn't the maintanence interval on all hybrids every 10K miles?
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Replying to: joel0622 (Jun 09, 2007 1:51 pm)
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Replying to: joe131 (Jun 09, 2007 1:53 pm) |
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Replying to: joe131 (Jun 09, 2007 1:23 pm) I found the Civic warranty costs $885. But the Civic Hybrid warranty is $935. That is for an 8 year, 100,000 mile, $0 deductible warranty on a car 2006 or newer and with 6,000 miles or less. It is a HondaCare warranty. But I still wonder what a dealer would ask. |
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Replying to: joe131 (Jun 09, 2007 1:23 pm) If you get an extended warranty (AKA service plan) you want to get factory backed HondaCare and not a 3rd party warranty. The is no such thing as a "bumper to bumper" HondaCare plan, it does cover a lot of stuff but does have a long list of exclusions. You should read the list of what is covered and was is not before making a purchase. There is a separate thread here to talk about Honda Extended Warranties: Click here I have found that either Saccucci or Bernardi offer the best prices, but it always pays to check for yourself before you buy. Right now Saccucci charges $940 for the longest term $0 deductible plan (8 yrs, 120k miles) for the hybrid and $890 for any other Civic - so not a lot of difference. One reason for the close price is that many of the hybrid components are covered from the factory by an 8 yr / 80k warranty. In some states the battery pack is covered up to 10 yrs/ 150k. I have no idea what your local dealer would charge for this, the answer most likely is a lot more. You do not have to buy the HC plan at the time of the purchase and do not have to buy it from the dealer that sells you the car. Buy online and save lots or money, or print the online prices and get your dealer to match them. Since the HC is not much different, what you have to calculate is how long it will take you to pay back the extra cost of the hybrid over a normal Civic. The hybrid may set you back $3k or more over an EX sedan - a lot more if your local dealer is having no trouble selling hybrids. You can't believe the EPA numbers on hybrids - even after the adjustment. You also have to consider your driving style, drive a hybrid as most folks drive and you will not get close to EPA numbers. With 12k miles per year at $4 per gallon, you might pay $1,371 for gas in the EX (using 35mpg and 12k miles per year to figure) and you might pay $960 in the hybrid (using 50mpg). If you save $411 per year and pay $3,000 more for the hybrid you will break even after 7.3 years or 87,591 miles. That is at $4 per gallon which is way high for TODAY. At some point the battery will have to be replaced and that would cost more than you have likely saved over the life of the car. Resale value is another unknown - short term (under warranty) the hybrid might strong and be really strong as gas prices rise. Way down the road when out of warranty, it is likely it could be well under the EX since the needed repairs would be so high and we have no track record. For these reasons most 3rd party banks are still not leasing hybrids. Make the call for yourself, but the HC price will not be a factor. Dennis |
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Replying to: uvebeenscrewed (Jun 09, 2007 10:28 am) |
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Replying to: uvebeenscrewed (Jun 09, 2007 10:28 am) Thanks for taking the time to post all of that info. It's truly amazing. I'm going to see if my dealer is still selling those API warranties, and if so, I'm going to report them to the state's AG's office for fraud. This is the first time that I've bought an ext. warrantry and after negotiating a good price for my Trailblazer, I regretted not trying to negotiate the price of the API warranty. I just didn't realize how much "fat" was built into the price. Overall, based on the service history of my SUV, I've gotten more than my monies worth from the ext warranty. However, I got lucky. If I had bought it in the last few years and was just getting out of the factory warranty and into the ext. warranty period, I'd be screwed and out the money. Next time, if I do buy an ext warranty, it will be a factory based warranty. It's funny how my dealer didn't even make me aware of the existence of a factory based warranty. All they did was push the API warranty on me. Thanks to your post, now I know why - they make alot of money on them. In the end, after my aggressive prodding, they accepted payment from APIs ins. company. I'm wondering if they even wind up getting paid, although I couldn't really care less. Thanks again for the info.
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