Should your car repair business honor aftermarket extended warranty policies? If you are willing to process the claims, there is great potential for additional business to be gained.

Car owners can elect to purchase coverage for mechanical break-downs with some exclusions. Some policies cover drive-train only. Maintenance like oil changes, tires and brake pads and shoes are commonly not covered. But for the average person that wants to budget a set amount for expenses extended warranties make good financial sense. For example, a transmission replacement might cost several thousand dollars.

Many car buyers get extended warranty coverage when they finance their car at the bank or credit union. The coverage allows the car owner in most cases to choose any licensed auto repair shop. Once the car’s problem has been diagnosed, the repair shop calls the claim in with the repair estimate. When calling the claim in, it’s best to have the cause and correction well documented. Simply stating that a component is “broken” or “no good” will not be enough to get a repair authorization.

In some cases the warranty company may send an inspector to verify that the repairs are in fact needed. The inspector will make sure the mileage (stated in the policy) has not been exceeded, check for impact damage and take some digital pictures to email to the warranty company. Once the warranty company approves the work, the repair is performed, the customer pays a deductible and the extended warranty insurance company pays the balance.

Yes, dealing with a warranty company can be somewhat of a hassle, but it can also be very lucrative. Since the customer only pays a deductible, it may be easier to get large repairs approved with a customer that has extended warranty coverage as opposed to selling the job to a customer that has to pay the entire bill. Many transmission repair shops have been accepting extended warranty insurance on a broader scale for a longer time than most general auto repair shops. Now with rising repair costs for many general repairs and the higher number of cars that have extended warranty coverage, shops are realizing that accepting this coverage can increase their sales drastically.

If your company decides to accept extended warranty coverage it can then include this in advertisements and spread the word to customers coming in for regular maintenance. Towing is usually covered as long as the breakdown was caused by a covered component. Let the potential extended warranty customers know that they can have their car towed to your shop if their car breaks down.

Does your shop already accept extended warranty coverage? Is it worth the time to process the additional paperwork?