How Well Do You Know Your Service Plan/Warranty Administrator?
Service contracts and extended warranties can be a great source of revenue for retailers, manufacturers and distributors. And their use as a customer satisfaction and retention tool can never be overstated. But what happens if your administrator ceases operations or is otherwise unable to service your business? To be an approved administrator, certain licenses must be obtained along with proof of financial stability. Most administrators in the marketplace satisfy this last requirement by securing a contractual liability insurance policy (“CLP”) issued from an insurance company. This CLP requires the insurance company to “stand in” for the administrator in the event the obligations to the consumer have not been met. But what happens if the insurance company cancels the administrator, cannot provide administrative capabilities or ceases operations? While the name of the administrator, and often the insurer, is listed in the service contract, when the customer seeks payment