Warranty Administrator goes bankrupt

malibu
warranties

#1

I have a 2002 Malibu with 49,000 miles. When I bought the car, the dealer sold me an extended warranty, bumper to bumper, good until 2009 or 84,000 miles.



I’ve had only one occasion to use this service until now.



Occasionally, the car won’t start, because the anti-theft system is activated. I can work around this by keeping the key in the on position for ten minutes, turning it off, then turning it on again. However, I feel this is probably a malfunction of the system.



Sounds like a no-brainer for warranty service to me.



The dealer now informs me that the warranty administrator has gone bankrupt, and that IF after diagnosis the repair is covered, I would have to pay first, and then hope for reimbursement if and when the company is able to pay.



I feel that the dealer, who sold me this contract, should do the right thing and honor the warranty.



To make matters even more painful, I’m still paying for this contract, as its cost was rolled into my car payment.



I’m tempted to just do nothing, as it’s more of an annoyance than a mechanical problem.



But do I have any rights here?



Thanks,



Charlie


#2

Here’s another really good reason NOT to buy an extended warranty, especially one that is rolled into a car payment.

You’re basically stuck, and your contract is with a bankrupt entity, not the dealer. The dealer SOLD you a contract with someone else. They got the profit, you got the shaft. Sorry, but that’s the way it is.

You will have to pay, as they said, and hope to recover later. Good luck.


#3

There may be a couple of options here. First contact the Attorney General’s office in your state (Consumer Affairs Div). Because of the bankruptcy and the number of state residents affected, they may choose to assist or act on behalf of the group affected by the bankrupcy. They can advise you on state law concerning the bankruptcy and its effects. As a minimum, you need to file in the controlling bankrupcy court a claim for the unused portion of your warranty. Hopefully the Atty Gen’s office will help you here. It is also possible that you should have also received a letter from the court, indicating how claims can be filed and adjudicated.

In general, the dealer is notliable as he is merely a sales agent and not a principal in the warranty company. The dealer passed the warranty fee on to the warranty company. You are now stuck with any immediate repair bills and may or may not be able to receive payment for them, based on the bankrupcy and assets available.

This is one good reason why I am very leery of extended warranty companies. Like with any business, if they go into bankruptcy, it costs you the consumer time and money to retrieve your money back. In many cases, you will not get any of the money back, depending on the asset conditions of the bankrupt company.


#4

Just one more reason to avoid an extended warranty. There’s a very good chance that even if the company was still in business they would not even pay for this repair anyway.

It’s a coin flip as to whether the dealer would cover this as a good will gesture.

These warranty companies popping up, collecting some money (while stalling paying for anything), and then bailing when things get too hot, is not that unusual.


#5

Reason #46 why you should never buy an extended warranty (insurance policy).

The dealer is libel for the insurance unless he knew or should have known of the pending bankruptcy.

#6

This is VERY common. But I doubt there is much u can do. In NY the state atorney general took a few of them to court. The “Managing Company” went bankrupt but the underwriting company was still in business (i.e. AllState and StateFarm).


#7

One can not throw all extended warranties onto the same pile.Some are quite good and some, like the case here, are just a rip off.

The extended warranties that sometimes make sense are backed by the auto company themselves. These are merely an extension of the original factory warranty.

Many time the extended factory warranty will be somewhat more limited in scope than the original warranty. Instead of bumper to bumper coverage only the big ticket items are covered, leaving the little problems to the owner. Still, in the case of a very high tech, expensive to repair type vehicle, having coverage for seven years or 100k miles on the big items can make very good fiscal sense. These warranties are valid at any franchise dealership nationwide.

The problem lay with the “after market” type warranties. As with most things, the devil is in the details.

Some warranties are good only at the dealership you bought it from. Not much help when you break down far from home.

Some warranties require you to pay up front, then collect from them later. Not good for many peoples cash flow to have to “carry” the warranty company for three months for $2500.

Some warranties have very tight restrictions on what you must do to qualify. Your engine go out? Fine. Now document that you had OUR shop change the oil and filter with our required oil every 3000 miles or six months. Failure to do exactly as the fine print says lets them off the hook for any payment. And on and on.

The final problem is exactly what happened here. The company sells a boatload of warranties through dealerships, paying them a good commission for incentive. Then the warranty company says “Oops, we’re done.” The owner of the warranty is left holding the bag. I am certain that somewhere in the extensive fine print of the warranty it says the seller of the warranty (The dealership) is not responsible or liable in the event of the warranty companies early demise.
Everyone still gets their money, and the only one stuck is the owner of the worthless warranty.

My advise is to stay ONLY with the factory backed extended warranties, and only then if the vehicle is prone to problems that are expensive to fix.

I would NEVER recommend buying a non-factory backed extended warranty, either through a dealership or on a web sight. These warranties are put together by very intelligent people who know how to legally separate you from large amounts of money.

Benzman


#8

Yet another way they guarantee they never have to pay! Extended warranties on cars are worthless. You will come out FAR, FAR ahead my taking the money you’d buy and putting it in the bank.

Chances are, this company that went bankrupt will re-emerge the very next day under a new name. Thanks to our pro-business, screw-the-people government here in the U.S. a business can go bankrupt and basically start up under a new name tomorrow and never have to pay a cent to anyone.

Meanwhile, you try and file bankruptcy because of something like an major medical illness and GOOD LUCK. Bush and his cronies have made sure they will get every red cent out of you – and hound any family members left after you are dead.

So, basically, they got their money, the CEO and the rest of the gang have already spent it on jets, boats and houses – and a campaign contribution or two – and now you are left holding the bag.


#9

You likely have to contact your states attorney general.

On extended warranties if you ever purchase in the future buy only those backed by the car manufacturer themselves, eg GM, BMW, Subaru etc not a third party. Not only do they have financial security to back it up they also have a reputation to uphold in the execution of the warranty.


#10

A warranty is only as good as the company providing it. The dealer really has nothing to do with it. If you bought a lawn mower at the hardware store and the company went belly up, you wouldn’t go back to the hardware store. You bet, you lost, so suck it up.


#11

First, find out what type of backruptcy the underwriter declared. If they are reorganizing, continue to pay. That means that they can’t pay their obligations right now but want to stay in business.

It is also possible that someone will buy their assets - the policies that you and many others pay on every month. They are worth something, and someone is almost certain to buy the policies at a discount in bankruptcy court if the company will not reorganize. Whoever buys the policies is liable for payment. You may have to pay for a repair until the court decides who the policy owner is, but you will be reimbursed when someone buys it. If you need pointers on how to check on the bankruptcy proceedings, just ask.


#12

I bought my extended warranty from my auto insurance carrier, GEICO, had two claims and they paid without probems. Was much cheaper than the dealer warranty.