Do you have a backed up warranty for your newly purchased or used automobile?  Let’s face it. The insurance industry is a mess nowadays and the car manufacturers are not in much better shape. There is actually a chance that your auto warranty claim may not be backed up because your provider or obligator does not exist any more. This could happen for any number of reasons including catastrophes, bankruptcies or simply bad business.

This is why it is crucial to make sure that your extended warranty company is secure and safe. Often a second party is afar then the dealer event though you think that the opposite might be true. You may be led to believe that because it is more expensive and feels more “branded” than a warranty bought from an outside company.  However warranties can come from auto companies on shaky ground that think nothing of tossing the warranty in on top of your auto payments at a high interest rate like 18%. 

The point is that if you are going to invest a lot of money at any interest rate into a warranty or just buy one outright you want to make sure that your investment in that warranty provider is going to be protected. This means that when you are shopping for insurance that you need to make sure that is insured by an A-rated insurance company or risk retention group of some kind.  Whatever kind of administrator this ends up being it also needs to one that is reputable and financially strong. They need to be able to guarantee that there is a reserve account there to cover your claims costs if something happens to their company (like bankruptcy.) 

The worst thing that can happen when you are buying insurance is to have your company become defunct and leave you stranded for coverage. This has happened in the past. To avoid having it happen in the future there has been rating systems put into place. Companies that are rated A or M tend to be the ones with back up reserves of money. 

Yet another marker of a good insurance company is one that is sold or traded on the New York Stock Exchange. That means that it is legitimate. It also means that if for some reason tithe company folds and can’t hold all of its insurance claims that there will be enough reinsurance coverage so that nobody is at a loss.

The very best of the warranty companies will directly deposit your funds into something called a Claims Reserve Account to make sure that money is always there and available to you to cover any issues that you may have with your car. So not only must the warranty company be strong but you should also make sure that the reserve insurance company that backs them is also known for keeping its financial promises as well.   Neither company should have any history of financial trouble as well.