Warranty company money woes leave Fairbanks drivers short

Posted: Wednesday, August 06, 2003

FAIRBANKS (AP) Money woes of a national company that sold extended warrantees for used cars is causing headaches for Fairbanks dealers and drivers who bought the now seemingly unusable contracts.

National Warranty Insurance Co., which insures service contracts under the Smart Choice program, was declared insolvent in a Cayman Islands court Friday, the Automotive News reported. National Warranty is based in Lincoln, Neb., but incorporated in the Cayman Islands.

National Warranty's financial troubles have left drivers who bought the contract without a warranty and without a refund, according state Rep. John Coghill, R-North Pole, who has been fielding complaints about Smart Choice contracts.

The warrantees generally covered major vehicle systems but not items that wear out, such as tires, windshield wipers and spark plugs.

Delois Ford of Fairbanks bought a 1996 Cadillac Deville at Park & Sell and opted for the 36-month warranty that cost nearly $3,000. When she learned the Smart Choice contract was not being honored, she canceled it. A refund never came.

''We're just really nervous and afraid we're not going to get any back,'' Ford said. ''I think this is not fair.''

Other Fairbanks drivers who spent hundreds or thousands on a warranty learned this summer that they could not get repairs paid for.

''They (paid) anywhere from $2,000 to $3,000 and don't have any coverage on their vehicle and can't afford to get another policy at this point,'' said Rynnieva Moss, a legislative aide for Coghill.

Coghill said Monday he is looking at how similar problems can be avoided and will meet with Linda Hall, director of the state Division of Insurance, later this month.

Fairbanks dealers, such as Heindl's Car & Truck Sales and Park & Sell, learned this summer that National Warranty would not process new claims, accept new service contracts or process repair claims, according to Coghill's office.

''I received a letter from them (National Warranty) on June 9 stating that they were going into Chapter 11,'' said Park & Sell General Manager Mike Roberts, who said about 50 percent of buyers at his business usually opted for the Smart Choice contract.

Ford, the Cadillac owner, said Park & Sell recommended Smart Choice to her. She said the company should pay her a refund.

''Why isn't it that we can't go to Park & Sell and say, 'You sold us faulty insurance, now I want my money back?'''

Park & Sell is working with Coghill's office to resolve the problem, Roberts said. ''The bottom line is that we've got to get the customers taken care of; that's what we're trying to do.''

Roberts and Heindl's salesman Joel Baldwin said Smart Choice was not a fly-by-night operation and had been around for years.

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