How Long Does it Take to Form a New Service Contract Company

It is easier than you might think to form your own Service Contract Company. The basic elements are well defined and many great resources are available to help you with detailed items.

The best method is to engage with an advisor with experience and connections in the industry to help guide you through the many decision points, engage the right partners for regulatory or legal and help source the right insurance carrier to support your requirements.

You can have a solution up and running in as few as two months or up to 9 months, depending on the roles you in-source versus outsource. A good advisor will help explain the various options and who the best companies are to support a new company.

Many companies simply want to take control of the customer experience and maximize the profit by sharing in the underwriting profits in addition to the upfront commissions. This approach is very easy to set up and the lest time consuming.

Building the proper roadmap in the beginning is the key to launching a new company.

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What is Product Warranty Insurance?

When a seller or manufacturer (OEM) wish to offer a longer product warranty but do not wish to retain all of some of the liability they seek options for Product Warranty Insurance. For a single defined cost the company purchases coverage to transfer the risk to a third-party obtaining balance sheet relief.

This is an easy solution to offer a longer limited warranty on a promotional basis or for selected products. The transaction is between the company and the third-party and the end customer has no impact. In most cases, the company still takes care of the customer experience and manages the claim process just like under the "normal" warranty term. The company doesn't need to pay an administration fee or processing fees or go through multiple layers. This streamlines the costs for the company.

Depending on the product type, coverage exists for parts, labor, or parts & labor. The term includes a limited OEM or seller warranty retention, and then the liability falls to the third-party. The obligations for the warranty or service contract are insured by a contractual liability insurance policy or other structure.

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