Car Dealer F&I Products

What to check before you buy

Before comparing coverage, identify who pays the claim. The obligor is the party legally responsible for a covered repair.

It may be an insurer, the administrator or a dealer-owned company. In a dealer-obligor contract, the administrator named on the paper handles claims and cancellations for the dealer.

That means the dealer's own financial health stands behind the promise. Ask each provider to state in writing who the obligor is, how it is funded and where the reserve is held.

Cancellations are where disputes arise. Most contracts return unused premium pro rata or on a short-rate schedule.

Claims paid are usually not deducted from a service-contract refund. GAP refunds follow state rules.

Many states allow a Rule of 78s amortization, and others, such as Texas, require pro rata. A provider whose refund method differs from your state's rule is a compliance problem for you.

Check how quickly cancellation refunds are paid, and who pays when a lender requires payoff first, and how the store is charged back. Finally, read the actual contract language for exclusions, wear items, labor rates and claim authorization limits.

The brochure describes the product. The contract governs it.

Questions to put to every car dealer F&I products vendor

• What is the initial and renewal term?
• What are implementation and offboarding fees?
• What data, hardware or OEM dependencies apply?

Other categories dealers compare alongside F&I products & administration: F&I menu & presentation, Credit, identity & compliance, and Digital contracting & titling.