Fleet Management and Warranty Companies: What's the Difference?
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Fleet Management and Warranty Companies: What’s the Difference?

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In the case of a warranty company, the company has a direct vested interest in the costs of the repairs. Such companies sell a repair contract on a single vehicle where certain items on the vehicle are specifically named. The company will pay for, or toward, the repair of those specifically named items within the mileage and time limitations of the contract.

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The selling of that contract is the income source for that company. In contrast, the repair(s) of that vehicle on a covered part is a direct expense to the warranty company. The owner of the vehicle may have some expense during of the repair as well. Depending on the contract type and the company it is from, the person who purchased the contract may have an out of pocket expense of zero dollars to 50%, or more, of the repair costs to your shop.

The authorization of any repairs from such a company is based on two main criteria. First, it has to be named on a valid contract. Second, it has to have actually failed on its own accord. For example, A vehicle with one seized brake caliper and worn front brake pads will most certainly only receive authorization for the one new caliper. Most likely, the new brake pads and the suggestion of replacing the other caliper will lay on the shoulders of the vehicle owner.

“Maintenance” items (the pads) and preventive repairs (the other caliper), will not likely be authorized by the warranty company. If the customer mistakenly added a petroleum product to the brake reservoir, then the contract will likely be voided as far as the brake hydraulics are concerned.

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Repair claims with these companies tend to closely resemble that of insurance company’s company – the company has no direct interest in the costs of the repairs. They are hired by companies that have hundreds to thousands of vehicles on the road. These vehicles may be spread all over the country and may be too much for the company who owns them to keep up with.

Especially for a company that is not likely to have automotive knowledgeable individuals on their staff, such as pharmaceutical companies or phone providers. As a result, they hire fleet management companies to track their vehicles, help them decide when to trade the vehicles off, and handle the authorization of the repairs.

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When the repairs are paid for, the money comes from the company that owns the vehicle (like that pharmaceutical company).

When you are speaking to an agent of a fleet management company, you are speaking to some who’s main interest lays in dependably repairing the vehicle without “fluff.” For example, in the above scenario of the brake calipers, if the pads are worn out, they will authorize them. Plus, in many scenarios, the fleet management company will authorize the replacement of the other caliper for preventive reasons.

If the driver mistakenly added a petroleum product to the brake fluid, I’m sure the driver will hear words from their company’s boss, but the vehicle will likely be authorized for a proper repair. Why? Because the fleet management company wants the vehicle not only to be repaired at the time, but also wants it “safe” and to stay out of the repair shop.

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Yes, they monitor costs, just the same as any cost-conscious private individual would. Believe it or not however, unless you are talking about a repair that rivals the vehicle’s value, or the vehicle’s lease is about to run out, cost is not the biggest factor in the typical fleet management company’s decision. How valid the shop’s cause, effect, and repair sound to the agent, combined by the apparent grasp that the shop’s representative has on vehicle’s repair needs are far more important. Repair claims with these companies tend to resemble more closely private automobile owners that are well educated in vehicle maintenance schedules.

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The Write-Up
Hopefully, the customer has been up front with you at this point and already told you that they either have an extended service policy, or that their vehicle is maintained by a fleet management company. In either case, be sure to get all of the company’s information.

In the case of a warranty company, it is best to make a copy of the contract for the time period that the vehicle is at the shop. This way, you have all phone numbers, contract numbers, a list of covered parts, and you can make sure the V.I.N. and customer’s name match, all without being responsible for the potential loss or damage to the customer’s original copy.

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Just be sure to destroy your copy after the vehicle leaves. In the case of a fleet management company, this is usually much simpler. They will usually have a card on them that resembles a credit card. This card contains the company’s phone number, name of the company, name of the driver (make sure it matches), and usually an account number. You can make a copy of it too.

As for the warranty company customer, this is a good time to go over the contract with the customer. Make sure they understand any deductible or other potential charges that they might be responsible for. Often times, customers with an extended warranty have a preconceived notion that they will not be held responsible for any charges, or only for the deductible amount. In many cases, this preconceived notion is false.

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You should read the fine print on the contract with the customer present at the time of write-up. Look for payment “caps” that are named in the contract. Such “caps” include, a maximum dollar per labor hour or a “cap” placed on total labor amount or total invoice amount. If any exist, point them out to the customer and let them read it with you.

This is the appropriate time to explain the possibility of their payment exceeding what they originally thought. A good way to explain this to a customer is that a warranty company doesn’t always pay for the entire amount of the repairs. Instead, they pay toward the repairs.

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Another very important issue that needs to be pointed out to the customer is the possibility of diagnostic charges that they might be responsible for.

Most warranty companies will pay for, or toward, a shop’s diagnostic time. However, this is only if the part that is determined to be the cause of the customer’s complaint is covered by the contract. This puts the shop and the customer in a “catch 22.” Before a warranty company will commit to paying for diagnosis and/or teardown time, the vehicle must first be diagnosed before the shop and the customer can expect to receive a straight answer from the warranty company in regards to this expense.

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Be sure to explain this up front to the customer. This is especially important on drivability, internal engine, transmission, and differential assembly issues.

For the fleet management company vehicle, write-up is more straight forward. This is because the driver of the vehicle is not paying a single dime, and often claims no ownership to the vehicle. Therefore, the lengthy explanations to the driver are not required. However, you still need to get the driver’s personal phone number if they are waiting. Remember, even though they aren’t going to need to be reached for authorization, they will still need to be informed of when the vehicle will be ready so that they can plan for it.

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Phone Calls, Estimates, Authorization, and Billing
Neither a warranty company or a fleet management company will pay for repairs without prior approval. This is not unreasonable. After all, you wouldn’t expect a private individual to pay for several hundred dollars in vehicle repairs without first being told of the cost, would you? These companies are no different.

A call should be placed to either company before the vehicle is even brought into the shop. For the fleet management company, this is mainly for professional courtesy. For the most part, you are simply informing an agent that the vehicle is at your shop and the general reason why.

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For the warranty company, this serves as more than just a courtesy call. When it comes to the diagnostic charge “catch 22,” there is another twist. Calling the warranty company to inform them of the customer’s complaint, gives you an authorization to perform any diagnostic checks to begin with.

Even though they won’t commit to paying for the diagnostics until after the cause is determined, they can still decline diagnostic charges that are not approved before they are generated. So, you should call them, tell them the general reason for the vehicle being brought to you so that the agent can respond by telling you that you are authorized to proceed with diagnostics.

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There is another major reason for the preliminary phone call to a warranty company. With the volatile condition of some smaller warranty companies, as proven with the bankruptcy rate of these companies over the last few years, I have always taken an extra measure to protect my shop.

If I find myself dealing with a warranty company that I have never dealt with before, I have a second reason for calling. In that phone call, I am looking for the answer to a specific question. That question is, whether or not they pay by credit card number. When they pay by credit card, they can pay the invoice in a matter of a couple of hours from the time of the job’s completion, versus waiting a couple of weeks for a check in the mail.

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Although that is not fool proof protection to the shop, simply reducing the time period before payment is received reduces the chance that the shop may be left “holding the bag.” In the event that the warranty company cannot pay by a credit card, I have a course of action for that as well.

In that event, I have given the customer two choices. Either they (the customer) pay for the repairs and seek reimbursement from the warranty company, or the vehicle stays in the shop’s care until the warranty company’s check has arrived in the mail. If the customer chooses to seek reimbursement, I have always assisted them by doing all of the paper work needed as the warranty company demands it, and faxing the paper work into the warranty company to speed up payment to them.

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If they choose to leave the vehicle, I agree not to charge a storage fee. These are only examples of how I have handled these situations. How you choose to handle these situations is up to you.

The Estimate
If there is only one part to dealing with fleet management and warranty companies that turns a shop owner off, this is most likely the subject. When it comes to paying for automotive repairs around the nation, these companies are experts. They know your area’s average labor rate, prices on parts (new OE, new aftermarket, remanufactured OE, remanufactured aftermarket and used), they generally expect at least a 12-month, 12,000-mile warranty, and they have access to multiple different labor time guides.

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For a warranty company, this simply influences how much they will pay toward the repair. If it turns out that your particular shop is in the upper percentile of price, the customer may have a larger co-pay than just the deductible. Assuming that you explained this well at the time of write-up, then you should be able to collect your normal repair charges.

For a fleet management company, this may be a problem if it turns out that your shop is far above average in your area. There is no one else to cover the difference. If the fleet management company is not willing to pay your shop’s price, then you have a decision to make. You either compromise, or release the vehicle. Of course, you would still retain your check out fee.

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If your shop is one of the above average, however, this doesn’t automatically mean there will be a “price problem.” Fleet management companies have a different interest in the vehicle than a warranty company. A warranty company is mainly about crunching numbers, especially cost and warranty time period. Fleet management companies place a higher value on the quality of parts and the competency of the shop.

Keeping the driver on the road and not wasting time moving the vehicle to another shop is worth something too. They can prove rather flexible on this subject if the agent sees the value. That value is defined by more than just dollars.

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One thing that is nice about fleet management companies, is that many preauthorize up to a certain dollar amount. It will be stated right on the driver’s card. In many cases, this is enough to cover minor items like an oil change with air filter, wipers, or maybe a battery, or even one tire, without having to spend time on the phone over these little items. This feature saves both you and the fleet management company from time spent on the phone over trivial items. So, look to see if they are preauthorized up to a certain dollar figure and if its enough to cover your estimate. If so, there is no need to call with an estimate.

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Generally speaking, the estimate and authorization process goes more smoothly if the estimate does not contain “packages.” For example, if a shop calls a fleet management company and suggests a 15,000 miles service, the agent is prompted to ask “what does your 15,000 mile service include?” The service advisor from the shop then answers something like “an oil change, tire rotation, and check this, check that …”

Packages like that can give the impression that a portion of the expense is to cover someone standing around staring at the vehicle. In reality, the “checks” in the package are usually free. The cost of the service usually only covers the “meat” of the service. However, this issue is about perception.

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Authorization
When it comes time to call for authorization, both types of companies are going to need some similar information. They both need to know mileage, repair order number, date of the RO, shop phone number, your name, name of your shop, warranty from your shop, taxes in your area, your shop’s labor rate, customer’s concern, recommended corrective action, vehicle towed in or driven in, and whether the replacement parts are OE, aftermarket, new or remanufactured, or even used.

As a general rule, they also want any measurements that can be provided of a failed part. This might mean a voltage and/or amperage reading or this might mean a micrometer reading or such.

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Warranty companies usually also ask if the vehicle owner will be needing a rental car, and if so, for how many days. Fleet management companies usually want to know a lot more about the vehicle’s maintenance conditions and the conditions of associated components. For example, the driver’s complaint may only be about the brakes. However, the fleet management company will likely want to know if it is due for an oil change (by the sticker in the windshield). They will likely also want tread depths on tires measured in 32ths. Tread depths will be required if you are recommending replacement tires.

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Plus, they will likely want to know about the condition of steering and suspension parts. To many fleet managing companies, its about saving money over the long run. Performing maintenance services, reducing tow bills, making tires last longer, and catching services or repairs that overlap labor with each other in one repair shop visit, versus several individual visits, saves money. Many fleet management companies are realizing this.

You might be pleasantly surprised to find out just how much maintenance work a fleet management company will do to a vehicle, or even volunteer at the time of authorizing other repairs. All you really need to do is just inspect the vehicle and let them know. They will make the appropriate decisions based on their particular company’s policies and the expected time frame that they will be maintaining the vehicle.

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Do keep in mind though, that most of these companies have there own maintenance schedules. Also, if the vehicle’s manufacturer doesn’t suggest a particular maintenance service, the fleet management company is likely to decline it. So save your breathe on that power steering flush.

Billing
Warranty companies and fleet management companies do share a common dislike on a repair bill. A shop expense that might be refused by both is the ever popular “shop supplies.” These are often refused due to their generic description. If your shop is one that uses a “shops supplies” charge, consider dropping that charge for this invoice and bill each item that would have been otherwise covered by a “shop supplies” charge individually.

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For example, if you used a can of brake cleaner, brake fluid or tube of silicone during a repair, bill it to the invoice as such with a part number as you would any part. Most warranty companies state whether they pay for materials such as chemicals that are used in the covered repair, they just need to know what they are paying for.

Fleet management companies are similar in that respect. Most have no problem paying for fluids and chemicals that are an unavoidable part of the job, they just need to know what they are paying for. The words “shop supplies” or “miscellaneous supplies” doesn’t give them that information.

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The agent who authorizes the repairs will give you an authorization number or a purchase order number. Each company will have specific information that they want added to the paper work. They usually want the authorization number or PO number and the shop’s warranty openly listed right on the front of the RO. Warranty companies usually expect to see where the customer paid their deductible.

They generally also have a problem accepting an invoice that says “estimate” on it when referring to the dollar amount or the invoice number. Generally, you will be given a fax number to send the repair order to.

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If you are receiving payment by a credit card number, most will respond back that same day or next business day depending on when the fax was sent in. If you don’t receive a call back from either a warranty company or fleet management company with credit card payment by the end of the second day, call them. Maybe the fax wasn’t readable or maybe it was faxed to the wrong number.

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