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Smart Shopper Warranties Backed by a Risk Retention Group
68 messages, Last post on Sep 16, 2009 at 10:47 AM
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Thanks. I tried getting the article before, but the navigation on the site was confusing and it looked like I might have to pay for it (which wasn't the case). Also, I couldn't read it because you have to register first, which I eventually did. It's easier to question INDS when you have the information right in front of you. Thanks again. xpfshost |
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News Release For Immediate Release Contact: Patrick Shaughnessy DATE: January 12, 2004 512-463-3208 TDLR INJUNCTION HALTS SALE OF UNSECURED VEHICLE WARRANTIES Company Must Provide Financial Assurance Before Selling New Policies AUSTIN - The Texas Department of Licensing and Regulation (TDLR) has obtained a permanent injunction ordering a New Mexico service contract provider to stop offering or selling extended warranties for automobiles in Texas for which it lacks proof of adequate financial security. Judge Suzanne Covington of the 201st District Court in Austin Monday ordered First Automotive Service Corp. (FASC) of Albuquerque to stop providing, offering, advertising, selling or marketing service contracts unless it can show that the policies will be properly backed. FASC did not contest the injunction. It was entered as an agreed final judgment. Under the Texas Service Contract Regulatory Act, companies in Texas that provide service contracts are required to prove before they sell policies that they have sufficient funding to service the contracts they sell and they must maintain adequate security during the terms of those contracts. This can be done through the purchase of reimbursement insurance from a third party. While investigating Warranty Gold, a licensed service contract provider that declared bankruptcy November 11, 2003, TDLR discovered that policies sold by Warranty Gold since June 2003 named FASC, rather than Warranty Gold, as the company that would actually provide the warranty coverage. FASC, in turn, stated in the policies that reimbursement insurance to cover claims was provided by Dealers Assurance Corp. (DAC) of Columbus, Ohio. However, DAC has informed TDLR that it never agreed to provide reimbursement insurance and never provided financial backing for the policies. The injunction prevents FASC from offering or selling any policies that are purportedly backed by DAC. The order does not affect FASC’s ability to sell policies properly secured by other insurers. Created in 1909 as the Bureau of Labor Statistics, TDLR protects the public welfare and safety and promotes a fair and competitive business environment by regulating twenty diverse industries and programs, including service contract providers, boxing, air conditioning contractors and architectural barriers. |
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| RRG's are not backed up or regulated like real insurance companies. A service contract "insured" by an RRG can become worthless a split-second after you purchase it. (That was a $1200.00 lesson for me)Always read the fine print! | |
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http://www.journalstar.com/warranty.php?story_id=116536 Warranty Direct Warrantybynet 1Source Warrantywarehouse These are just a few of the companies backed by Risk Retention Groups. Notice in the article it speaks of several RRG's that are insolvent. The author says National Warranty Insurance was insolvent back in 2001. Be careful! |
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Warranty Direct administered and owned by Interstate National Dealers Service and backed by National Service Contract Insurance Risk Retention Group...Rated B++ with the rating still under review with negative implications!!! Warrantybynet administered and backed by Heritage Warranty Mutual Insurance Risk Retention Group...Rated NR-1 (Insufficient Data)!!!! 1SourceAutoWarranty.com administered by 1Source and backed by PrimeGuard Insurance Company, Inc RRG...Rated NR-1 (Insufficient Data)!!!! Warrantywarehouse.com is backed by a Risk Retention Group but I am not sure who it is yet. But I will find out soon and let you all know!! I will continue to bring more information on these companies when I get it so that no one else will have to go through what myself and thousands of others did when NWIG collapsed....Stay tuned!!
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Keep us posted! I was burnt by WG and decided to go with WarrantyDirect...but after the info in this thread, I've toasted that policy and am awaiting a refund. Thanks for the good info to all here. xpfshost |
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I finally got who their insurer thanks to another post. The administrator is American Guardian Warranty who is backed by....you ready for this??? St. Charles Insurance Company Risk Retention Group!!! Guess, what they are rated....NR-1 (Insufficient Data)!!! I will keep you all informed as I find out more information. It seems my goal in life has become not to let anyone else get hurt by the Warranty Gold type companies like I did. |
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OK, so I sent in a request to cancel my contract and issue me a pro-rated refund from Warranty Direct (from contract date and contract mileage, BTW). I've only had the contract a few months and have driven about 1K miles (I don't drive much) and have paid out $550 so far. My refund was $89. Now you have to excuse me whilst I whip out my heavy artillery...to be continued... xpfshost |
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| You know it is interesting to see that after all that has been said in this post and others about companies that are insured by a risk retention group that Edmunds continues to have a partnership with Warranty Direct!!! A company that is backed by a Risk Retention Group and is rated B++ by AM Best with negative implications. Perhaps that needs to change? | |
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< Perhaps that needs to change? > I'll hold my breath. As long as the all-mighty dollar is involved, there will always be sham companies like WG and others backed by RRG's. I've learned a valuable lesson by my WG experience: any warranty is only as good as the company behind it. . Oh, I almost forgot, I also got burned by an extended warranty on a computer purchase in 1998. I bought a desktop from Computer City (since bought out by CompUSA). At the time I purchased their 3-yr. on-site service plan for $189. When CompUSA bought Computer City one year after my purchase, they sold the service plans to another party. My modem crapped out, so I tried calling for service and was on hold for hours and hours on several different days. I'm sure there was no one there. I realized that a 3-yr on-site service plan CANNOT be profitable for $189. One call will eat all of the $189 up, so no more on-site policies for me. I do purchase the computer manufacturer's warranty that gives me email or phone support for 3 yrs. as I know a little bit about computers. . Sorry to go off on a tangent here, but just posting my experience with warranties in general. |
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