Kelly’s Korner – F&I Assurance: What If Solution
Q: Why is it important to assure that F&I products are backed by an insurance company?
A: While no one has 100% future vision, we can minimize potential monetary risk through insurance. Insurance is what we rely on when the unthinkable happens. It is our what if solution.
Every F&I product sold represents a certain amount of contingent liability for the dealership. If a policy administrator goes out of business before a policy expires, it falls on the insurance company backing up the product or service and ultimately, the dealership, to assist the customer who made the purchase. I believe that selling uninsured products in the F&I process is risky business. It just makes sense to limit dealership liability by ensuring that F&I products are backed by an “A” rated insurance company.
A.M. Best Company, the worldwide insurance-rating and information agency (www.ambest.com) issues “Best’s Ratings”, the industry standard for assessing insurers’ financial strength. These ratings can change when a company is experiencing financial difficulties. You want the company insuring your F&I product or service to have an “A” rating, indicative of a company with strong finances. A “C” rating or “No” rating means that you will most likely have difficulty securing lender approval for including the company’s product in an installment contract.
When you are approached about offering an F&I product, ask the representative for a certificate of insurance. Your due diligence now can protect the dealership’s liability later. The time you take and effort you make to verify the financial backing of the F&I products you offer will give you confidence in the products and gain your customers’ confidence in your presentation. An A+ solution for everyone.
“Kelly’s Korner” Column, Oregon IADA Squeaky Wheel Newsletter, June 2006