Would you personally take on this liability?

Claim Limit
Engine $1500
Gearbox/Transmission $1500
Differential $1500
Cooling System $750
Braking System $750
Electrical System $750
Ignition System $750
Claim Limit
Steering System $750
Air Conditioning $750
Fuel Systems $750
Drive Shafts $750
Clutch $750
Turbo Charger $750
ABS Control Unit $750

You may already be!

There has been a lot of confusion in the Market place over Dealer Service Contracts. Most of the misleading information could be seen to be a deliberate attempt to hide the facts and to confuse the position regarding licensing obligations under the Financial Services Reform Legislation.

There are Dealer Service Contract that offer full protection for the Motor Dealer and the Consumer, but there are also Dealer Service Contracts that hold the Selling Motor Dealer solely liable for all claims.

In this instance, as a Motor Dealer:
  • No matter what, YOU are liable!
  • The buck stops with you!
  • It's your business on the line!
No matter how you put it, this is something that could haunt you for a long time!

What happens if the warranty company goes into liquidation? It wil leave you out of pocket and paying clients' claims for the next three years!

What to look for:
  • Is your Warranty Company (administrator) an Authorised Representative of a licensed Insurance Company?
  • Have you signed a Reimbursement Agreement between yourself and a recognised Insurance Underwriter?
  • Have you signed an Administration Agreement between yourself and an Administrator listing their duties and obligations?
If you answered "No" to any of the questions above, and in the Terms and Conditions or Definitions of the Contract book, the "Selling Motor Dealer" or "Retailing Outlet" is referred to as the Warranty provider, ask yourself:

Would you personally cover all those items and pay the claims for the next 3 years?

Chances are, you'll be doing just that!

If in doubt, for your protection obtain independent legal advice or contact ASIC.
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