When choosing which extended service contract to offer, truck dealers should look for the best combination of partner, coverage, configurability and benefits — along with an excellent experience for both seller and buyer.
This is especially important for used trucks that may already have hundreds of thousands of miles on the odometer.
Here are five key factors to consider when deciding who to partner with and which product to offer.
1. The right partner
With several providers of protection products for heavy trucks in the marketplace, it’s important to look for a partner that has deep expertise in heavy trucking and is ideally a global leader in commercial equipment protection products.
Beyond that, what should dealers and owner operators look for in a partner? Vertical integration is key, allowing efficiencies and greater quality control throughout the business.
For example, end-to-end online systems streamline contract management and accelerate claims processing. It’s also critical to find the right partner with deep underwriting expertise, allowing a provider to offer products and pricing that reflect the needs of today’s market.
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Ultimately, that provider brings all these things together to improve the customer experience of the dealer and minimize downtime for the customer.
2. Better coverage
Choosing the right product means prioritizing better coverage — not only does it reduce out-of-pocket expenses at the time of a claim but also provides greater flexibility and broader protection.
Dealers should ask whether a program offers true exclusionary coverage as well as named component coverage that doesn’t exclude things like electrical systems, seals and gaskets, or fluids in conjunction with covered repairs. That can ensure customers are protected when it matters most.
Dealers should look for a plan with no component-based limits of liability — ideally, a plan with one high overarching aggregate limit of liability. That can prevent owner-operators from hitting separate claim limits or caps for engine, after-treatment and powertrain repairs, leading to purchasers coming out-of-pocket at the time of each claim.
Beyond that, dealers should ask the following key questions when examining available products:
- Can repairs be made at any licensed repair facility, or just at those on an approved list?
- Is the plan transferable?
- Is there a contractual labor rate cap or does the contract pay retail parts and labor rates? If so, what is the limit and is it reasonable for the next four to five years?
3. Coverage configurability
With extended service contracts, dealers shouldn’t settle for anything resembling “one size fits all.” Since every customer — and their truck protection needs — is unique, dealers should be able to offer multiple coverage levels to choose from, several deductible options and flexible terms. And that configurability shouldn’t be complicated. It’s important to look for a plan that makes it simple and easy to configure the right protection for every customer.
Here are three questions to ask:
- Is there a wide range of deductible options, or just a couple? Or worse, is it a “one size fits all” with no deductible options to choose from?
- Are there multiple levels of coverage available? Or just one or two? Dealers should look for a program that gives truck purchasers more ways to buy. That could mean there might be three, four or even five levels of coverage. So, if one buyer wants full exclusionary coverage, and the next wants only engine coverage, the program can accommodate both. And somewhere in the middle there should be coverage for the after-treatment system, which has the highest frequency and severity of claims.
- Does the span of coverages, deductibles and terms allow the buyer to truly “have it their way?” If so, that purchasing flexibility for buyers can lead to higher attachment rates for dealers.
4. Comprehensive benefits
Dealers who offer service contracts with comprehensive, high-value benefits that keep trucks on the road play a vital role in maximizing critical uptime. It’s also an unspoken show of support for dealer customers, addressing that truckers’ saying, “If the wheels aren’t turning, you aren’t earning.”
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To keep customers on the road, and earning, look for a product suite with important features such as:
- A towing benefit with a high-dollar, market-based limit with unlimited use on covered repairs
- Roadside assistance
- Emergency travel expense reimbursement for things like meals and lodging when in the shop overnight when away from home
- An uptime benefit, which helps cover a portion of a monthly truck payment if covered repairs are not authorized within a certain length of time
- A progressive damage benefit with clear and concise language
- While certain providers offer some of these benefits, finding a program with most will help maximize buyers’ peace-of-mind and minimize out-of-pocket costs.
5. A seamless end-to-end experience
As technology in today’s trucking landscape becomes more sophisticated, dealers of new and used heavy trucks, as well as owner-operators, should demand the benefits that come from a seamless, end-to-end experience. That should span quoting the offer, sales, billing, claim adjudication, claim payments. Ultimately, faster claim approvals and faster claim payments lead to less downtime.
Look for service contracts supported by creative ways to expedite claims payments.
For instance, is there a virtual credit card or another tool or process that enables the provider to pay a repair facility directly, in minutes, for an authorized repair? Creative solutions to claims pain points can get a truck repaired and back on the road, eliminating downtime, getting shipments to their destination on time and supporting owner-operator or fleet company profitability.
Bringing it all together
An extended service contract not only protects the truck — it protects livelihoods by keeping the truck on the road and maximizing uptime.
When choosing which plan to offer, dealers should scrutinize products and providers to be sure they are offering the best possible combination of partner, coverage, configurability, benefits and experience for both the seller and the buyer.
Doing so will provide more than just reliable protection against costly repairs — it will help control total ownership costs.
