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Mechanical Breakdown Insurance

Mechanical Breakdown Insurance. Horizontal Marketing. Value added marketing strategy Building customer loyalty Focus on agent, “ I’m here to help ” Now your Farmers Agent can help you with a whole lot more. Horizontal Products. Auto loans Auto buying service Education loans

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Mechanical Breakdown Insurance

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  1. Mechanical Breakdown Insurance

  2. Horizontal Marketing • Value added marketing strategy • Building customer loyalty • Focus on agent, “I’m here to help” • Now your Farmers Agent can help you with a whole lot more.

  3. Horizontal Products • Auto loans • Auto buying service • Education loans • Real estate and mortgage assistance program • Mechanical Breakdown Insurance (MBI)

  4. Mechanical Breakdown Insurance

  5. The Need • Cars are more expensive • Customers keep cars longer • Increased demand for warranties • Dealerships offer coverage

  6. The Solution • Farmers MBI Program • Value added product for customer • Agent/customer relationship • Excellent commission opportunity

  7. MBI Overview • Coverage beyond manufacturer’s warranty • Coverage for specified mileage and time

  8. Parties • Agent • Purchaser • Insurer • Administrator

  9. Due Diligence • Familiarity with MBI product • Strong claims operation • Excellent customer service • Expansion of product

  10. Due Diligence Continued . . . • Marketing support • Ease of use • ‘A+’ rating from AM Best • Flexibility in financing

  11. Mechanical Breakdown Insurance

  12. Founded in 1922 • A+ A.M. Best rating • Extensive claim and policy service experience • Member of Zurich Financial Services

  13. MBI Overview • Terminology • Market Potential • Why Customers Buy MBI Coverage • Reasons to Sell • Sales Oppourtunities

  14. Terminology • Manufacturer’s Warranty • Vehicle Service Contract (VSC) • Mechanical Breakdown Policy (MBI)

  15. 1996 Vehicle MarketSource: Wall Street Journal 1/7/97. Breakdown of Sales Volume

  16. Reasons Why Customers Buy Mechanical Breakdown Coverage • Don’t want to worry about repairs • Concerned about rising repair costs • No warranty on (used) vehicle • Have bought coverage in the past • Like trip interruption feature • Vehicles are more expensive • People are keeping their vehicles longer UUG Survey Results Nov. 1997

  17. Reasons to Sell MBI • Agents receive 20% commission up to $160 per policy • Commission paid up front • Charge back only if policy is cancelled in first 12 months

  18. Sales Opportunities • Insurance quote prior to purchase • Vehicle change notification • Can purchase within 30 days of vehicle purchase • Farmers Friendly Review • Can purchase anytime if within manufacturer’s basic warranty (97 or newer) and less than 30,000 miles • Marketing support materials

  19. MBI in Detail • Coverage Options • Rental Reimbursement • Trip Interruption • Retail Parts and Labor • Simple Steps for Filing a Claim • Required Maintenance

  20. CoverageProvides coverage for mechanical defects and faulty workmanship by the manufacturer • Powertrain (Named Parts) • Engine, Transmission, Drive Axle • Preferred (Named Parts) • Adds: Air Conditioning/Heating, Electrical, Suspension, Brakes, Interior/Exterior, Steering • Comprehensive (All Risk) • Provides coverage for all mechanical failures except those specifically excluded

  21. Rental Reimbursement • First day rental for covered repairs • Allowance based on labor hours • Up to three days for parts delays • Six days maximum per occurrence

  22. Trip Interruption Coverage • Reimbursement for $100 per day for food and lodging. • Maximum of three days. • Must be at least 100 miles from home. Complements Farm-Tow

  23. Wear and Use • Outside manufacturer’s specifications • Excessive oil consumption • Engine bearings Brake pads, shoes, rotors, drums, manual clutch disks, pressure plate and clutch release bearings are excluded from coverage.

  24. Retail Parts and Labor • Retail parts reimbursement • Posted labor rate

  25. Simple Steps for Filing a Claim • Where can the repairs be made? • Any licensed repair facility that warrants its’ work (unless still within mfg. warranty) • Authorize repair facility to diagnose vehicle. • Call 888/240-8803 for authorization prior to work being performed. • After vehicle is repaired, customer pays $100 deductible to repair facility. • Three convenient payment options • Direct payment to repair facility • Credit card payment to repair facility • Customer reimbursement

  26. Required Maintenance • Must comply with manufacturer’s recommended maintenance schedule. • Customer may perform own maintenance but must retain receipts. • Breakdowns caused by lack of proper maintenance will result in claim denial.

  27. How to Complete The Sale • Eligibility • Terms • Payment Options • Rating and Remit

  28. Eligibility • Vehicle must have less than 75,000 miles and be a 1992 or newer. • Customer must be a member of Farmers Insurance Exchange and have liability, comprehensive and collision coverage. • The MBI policy must be purchased within30 days of the vehicle purchase unless the vehicle has less than 30,000 miles and is still within manufacturer’s warranty.

  29. Examples Your customer notifies you that they purchased a vehicle last week. During a Farmers Friendly Review you discover that your customer bought a new vehicle last year that has 24,000 miles

  30. TERMS Eligibility Available TermsMileageAge 6 years/100,000 miles 0-12,000 97-99 6 years/60,000 miles 0-30,000 97-99 5 years/75,000 miles 0-30,000 97-99 4 years/60,000 miles 0-30,000 97-99 3 years/45,000 miles 0-75,000 94-99 2 years/30,000 miles 0-75,000 92-99

  31. 0-30,000 Powertrain Preferred Comprehensive 30,001 - 75,000 Powertrain Preferred Coverage Eligibility

  32. RATING & REMITTING PROCESS • Calculating a rate • make/model • model year • odometer reading • Completing an application

  33. PAYMENT OPTIONS • Single premium • 24 equal payments

  34. SINGLE PREMIUM • Complete application • Collect check for total amount made payable to Farmers Insurance Exchange • Mail all the above in pre-addressed remit envelope to Shawnee Mission, Kansas

  35. 24 Month Payment Option • Complete application • Collect check for first payment made payable to Farmers Insurance Exchange • Complete ACH authorization form • Collect voided check • Mail all the above in pre-addressed remit envelope to Shawnee Mission, Kansas

  36. Is the Policy Cancellable? • Yes, at the customer’s request. • Refund computed pro-rata. Is the Policy Transferable? • Yes, the policy can be transferred in conjunction with the sale of the vehicle.

  37. Supplies Available to be ordered from Farmers Materials Distribution Center

  38. AGENT SUPPORT 888/236-3099 CUSTOMER SERVICE and CLAIMS 888/240-8803

  39. Farmers Gets You Back Where You Belong.

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