Keep Your Money in Your Company: Quit Paying the Warranty Company

We may be crazy for using that headline, considering that one of our core products is extended service contracts or warranties. However, while we use performance-based pricing—much like a safe driver discount—to ensure contractors get the best-priced warranty program, we also recognize that this is just a stepping stone toward the ultimate goal: giving contractors complete control over their warranty programs.

Who’s Customer is the Warranty Holder?

In the HVAC space, third-party warranties are often sold by contractors to homeowners. What many contractors may not realize is that in traditional warranty programs, such as those offered by JB Warranties or AIG, the real customer is not the contractor or even the sales company marketing the warranty. In many cases, the customer actually belongs to the insurer.

In the case of AIG, the insurer and the sales company might even be the same entity. For programs like JB Warranties or Caddie, there’s often a marketing company and a separate insurer or obligor company that technically owns the customer. Understanding this distinction is critical.

The story you’ve been told—that by selling these contracts you “lock in” a customer for five or ten years—is not necessarily accurate. If, as a servicer of those contracts, you become too costly, the warranty company has the right to transfer those contracts to another servicing company. All the contracts you’ve sold, and the equity you think you’ve built in those relationships, can become essentially worthless overnight.

Moreover, if you are dissatisfied with the warranty company and want to transfer your warranties elsewhere, that request almost never happens. Why? Because warranty companies profit significantly from the investment income generated by the premiums you’ve sold for them.

At Caddie, we have thought deeply about this issue and are taking a bold step by sharing this knowledge. While we still offer traditional programs where third-party administrators and insurers are involved, we are committed to moving the power back to contractors.

How Are We Doing This? Workmanship Guarantees.

For the first time ever, we have built a platform that shows contractors exactly what it costs for them to offer warranties. Our vision for Caddie is to provide the best tools for our customers. “Best” can mean a number of things—highest quality product, most cost-effective solution, advanced technology, superior support, or the ability to customize services.

Although revealing this truth may result in some loss of revenue, we believe doing what is right for our customers is more important.

Now, for the first time, contractors have the ability to keep their warranty money in-house and truly understand the costs of underwriting their own programs. Traditional warranty companies are making 40-60% gross margins by taking contractors’ premiums and deciding what to pay out. With Caddie, there’s no longer a need for that. Contractors can now keep the money in their own bank accounts, adjudicate their own claims, and retain 100% control over their business.

To learn more about how you can take control of your warranty offerings, contact us today.