What Kinds of Coverage Should an F&I Provider Offer?
When you partner with an outsourced financing and insurance (F&I) provider, they may offer many insurance products, including gap and extended warranty coverage. Should you offer those types of coverage to your customers? Do you or they really need them? Let’s go over what these types of insurance coverage options involve and whether your dealership and customers need them for boats and RVs.
What Does Gap Insurance Cover?
Gap insurance covers the amount left on your loan after your vehicle is totaled in an accident or stolen. The most common kind is gap auto coverage, which pays off loans on totaled or stolen cars, so the owners don’t have to pay off the loans with their own money. How does gap insurance work? It covers the gap between the amount left on your loan and the vehicle’s depreciated value at the time it’s totaled or stolen. Let’s say a customer buys a new vehicle for $30,000. Then the vehicle gets stolen when it has a depreciated value of $25,000, but the customer still has $27,000 left on their loan. The customer’s collision insurance covers the $25,000. Without gap insurance, the customer would have to pay the $2,000 difference between the depreciated value and the amount left on the loan. Gap insurance prevents a vehicle owner from paying more money out of pocket than necessary in the wake of an accident or theft.
What Do Extended Warranties Cover?
Extended warranties cover mechanical failures and repairs after your RV or boat’s manufacturer’s warranty has ended. Most of the time, what we call an extended warranty is really an extended service contract. For RVs and boats, an extended warranty covers repairs for listed components, usually mechanical or electrical, when your vehicle breaks down or develops problems. Customers can purchase extended warranties from RV or boat dealerships or online brokers.
Should Your Dealership Offer Extended Warranties and Gap Insurance?
Whether you offer extended warranties and gap insurance depends on how many F&I services you can pay for when you partner with your F&I provider. Some providers try to push these insurance offerings onto dealerships before working out dealerships’ payments for their basic services. Extra products and services do not equal better services or products from your F&I provider. When you sign on with an F&I provider, make sure they establish your base payments for their services before they add any extra products or services. It’s best if you work out gap coverage and extended warranty services after you determine the basics of your partnership.
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Yes, RV and boat extended warranties are worth it for your customers to purchase and for your dealership to offer. Extended warranties cover boat and RV repairs, so your customers don’t have to pay for them out of pocket. Similarly, gap insurance is worth it because it helps customers cover their loans if their vehicles suffer significant consequential damage. However, it’s best to work out your extended warranty and gap insurance services with your F&I provider after they begin offering more basic financing and insurance services to your dealership. Why? Because you can assess how they offer those basic services first, and then you can decide to add on gap and extended warranty services.
Outsource Your Insurance Services To Finance Solution
If you want an F&I provider that puts your needs first and doesn’t tack extra products and services onto your partnership, reach out to Finance Solution today. We prioritize your dealership’s needs and goals when we partner with you. We help you make insurance policies available, so your customers can buy gap insurance and extended warranties if they want them. We always work out our basic offerings with you first to show you how they fit your dealership’s financial objectives. Once you’re happy with those services, we begin offering gap insurance and extended warranties. Then, you can offer those insurance options to your customers while we take care of all the details. We handle the complexities of financing and insurance while you focus on customer service and moving units through your dealership.