Monday, May 08, 2006

What is the difference between a broker and a warranty administrator?

...and Why is it important for me to understand the difference before I purchase my warranty?

A warranty administrator is the company responsible for actually paying your auto warranty claims. A broker, on the other hand, is a person who sells you an auto warranty and then "farms" the deal out to an outside administrator. There are lots of brokers, but relatively few actual full-service warranty companies who administer their own programs. Understanding the difference is important to you for several reasons:

1. It is impossible to research the claims handling history of a broker since they do not pay the claims.

2. Brokerage firms often need the services of an outside administrator because their own company does not have the financial assets to back up their claims. You want a company with a claim paying history and the assets to service your vehicle over the entire term of your contract.

3. Common sense tells you that you will receive much better customer service when your contact for claims is the same contact that sold you the coverage. Remember, the average consumer buys many cars during a lifetime and reputable companies depend of happy consumers purchasing repeatedly. They also depend of their customers to refer friends and other family members. Brokers are not worried about you after your contract is signed. You will be someone else's problem.

So, be careful. The first questions you need to ask a warranty salesperson is "Are you a broker or does your company actually process and pay the claims?" We recommend dealing directly with the administrator, also known as a full-service warranty company, like Auto Service Warranty.