Most service contract claims are denied the first time around
If you purchase a service contract for your car that is not affiliated with an automaker then any claims you make will be denied. Service contracts are sold by most companies that assume this:
- They won’t have to pay any claims because vehicles don’t break that often.
- They can make claims, and no one will ever call them on their BS.
- 2 is quite common. People working for more than one service agreement company have told me that they are trained to deny any claim they receive. Every. Single. One.
- Don’t assume that a denial of a claim is definitive. Appeals should be made to every denial.
How to Appeal a Denied Service Contract Claim
If an extended warranty provider denies your claim, it’s only the first round of a 12-round fight. Here is a great plan of attack:
You can follow up on any denied claims by calling. Make a note of the time and who you talked to, then ask them for their approval.
Ask for a supervisor if the person you are starting with won’t approve your claim. Make sure you have the names and numbers of everyone you talk to. Get their email address if they have it. Get their postal address for any correspondence if they don’t have it.
Ask the supervisor to clarify why your claim was denied. Ask for the explanation via email if possible. If they refuse to send you an email, make notes and then send a certified mail letter detailing the conversation and what you understood.
Ask your mechanic if the claim was denied due to mechanical reasons. Ask your mechanic if they are willing to write a letter or sign a letter that you write asking for an explanation from the warranty company. Next, send the letter to the supervisor that you spoke with. Ask for an appeal.
Ask if the claim was denied due to non-mechanical reasons. Send an email or certified mail to confirm that the claim was approved if you get a yes answer.
Ask the warranty company for its official name of record in the state you reside. This information is necessary if you plan to file a claim against the company with your state regulators. You can ask for a copy or documentation from the state that proves they are licensed in your area. They may not be able to provide this information, but it is worth asking.
Find out about the formal appeal process and follow it up with a letter. For any correspondence written, use certified mail.
You can file a complaint with the state regulators if the formal appeal fails. Many states have some sort of regulatory authority that deals with service contracts/warranties, and you can file a complaint with them that can trigger yet another review of your claim.
You can file a small claims court claim. You have a better chance of winning small claims court if you have documentation. You should have all documentation (this is where phone calls pay off), and all messages that you sent and received. Next, bring them to court. This article is a great starting point.
Although the odds are against you, there is a chance that you won’t need to go to court in order to win. The warranty companies know that there are many things to do, and they will likely offer some form of compromise if you follow the steps. Sometimes they will offer to pay for part of the claim, to pay half or to cancel the policy. Accept the offer if it is reasonable.
Remember the Golden Rule!
I don’t think the greedy and unscrupulous owners or managers of 3rd party warranties companies deserve to be respected. These people lack morals. These people are deserving of a good dressing down.
The people who review and process claims may not be the same people who own or manage the company. There is a good chance that the person you call or talk to is as sick as you are of the company. If you are nice to them, they are more likely to retract a denial.
Be kind to everyone you meet. It’s best to be polite unless you can get the president of the company to answer the phone. I have spoken with many people who have worked in these companies over the years and can confirm that they all hate their jobs within a matter of months. They are often looking for someone who will make an exception to their boss to keep them happy. Don’t lose heart, be kind, and charming.