9:23 am, March 29, 2019
Legal Solutions 4U offers self-administered warranties and will process all claims on behalf of a dealership.
Most of the garages that we act for go above and beyond with their customer service to keep the customer happy. However, by selling a used vehicle, problems can occur no matter how thoroughly the car has been prepared.
Most garages are more than happy to repair a vehicle as it keeps the reviews at five stars and generally the customer is happy to agree to a repair. The issue with completing a repair is that the garage uses its first and only opportunity to repair the vehicle within the first six months of the customer’s ownership.
We advise all our garages to put a warranty on each and every vehicle and use the warranty to your advantage.
If a car is repaired through the warranty, this should be regarded as a third-party repair and is not the garage’s one opportunity to repair.
The reason for this is a warranty repair is a contractual obligation and not a statutory obligation. Therefore, in theory, a vehicle can be repaired multiple times under warranty and cannot be rejected by a customer.
The problem we then encounter is when a dealer is on an insured warranty scheme and the claim is declined due to the fault being present at point of sale or because the ‘item’ is not covered under the warranty policy.
Commercial benefits
The customer then returns to the dealership in order to get the issue resolved and the dealer ends up paying out for the repair in any event which means the dealer has paid out for a warranty and paid for a repair!
In order to maximise a dealer’s protection and increase a dealership’s profitability, more dealers are switching to self-funded warranties (also known as pot schemes).
There are many commercial benefits to a dealer running their own self-funded warranty.
Firstly, the dealer gets returned 100 per cent of the unused claim fund thus increasing their profitability. Secondly, the dealer has full claims autonomy to decide if they are going to cover a claim or not. This, in turn, gives rise to a much greater amount of flexibility for customer service.
The dealer gets a much greater cash flow benefit as they are holding and controlling the warranty pot of money.
To maximise the benefit of a self-funded warranty, you should ensure that your warranty administration is completed by a third party as this puts distance between the dealer and the customer in the warranty claim and ensures a professional service to the customer.
We recommend that the wording on your warranty booklets is drafted correctly to ensure maximum flexibility and coverage. At the very least, it should reflect your obligations under the Consumer Rights Act 2015.
Legal Solutions 4U offers dealers self-administered warranties and will process all the claims on behalf of a dealership to ensure that the dealer gets maximum protection whilst ensuring the customer receives first-class service.
Every case we process is looked at legally through the Consumer Rights Act 2015.
We advise the dealership if we believe that a customer could reject the vehicle or if it needs to be repaired. It is down to the dealership to decide what they wish to do.
For more information on how to protect your dealership and increase your profitability call 0191 481 3992.
