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
• Real estate and mortgage assistance program
• Mechanical Breakdown Insurance (MBI)
Mechanical Breakdown Insurance
The Need
• Cars are more expensive
• Customers keep cars longer
• Increased demand for warranties
• Dealerships offer coverage
The Solution
• Farmers MBI Program
• Value added product for customer
• Agent/customer relationship
• Excellent commission opportunity
MBI Overview
• Coverage beyond manufacturer’s warranty
• Coverage for specified mileage and time
Parties
• Agent
• Purchaser
• Insurer
• Administrator
Due Diligence
• Familiarity with MBI product
• Strong claims operation
• Excellent customer service
• Expansion of product
• Marketing support
• Ease of use
• ‘A+’ rating from AM Best
• Flexibility in financing
Due Diligence Continued . . .
Mechanical Breakdown Insurance
– Founded in 1922– A+ A.M. Best rating– Extensive claim and policy service experience– Member of Zurich Financial Services
MBI Overview
• Terminology
• Market Potential
• Why Customers Buy MBI Coverage
• Reasons to Sell
• Sales Oppourtunities
Terminology
• Manufacturer’s Warranty
• Vehicle Service Contract (VSC)
• Mechanical Breakdown Policy (MBI)
New Vehicles27%
Used-Franchised
28%
Used-Independent
24%
Used-Individual
21%
1996 Vehicle Market
Source: Wall Street Journal 1/7/97.
Breakdown of Sales Volume
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
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
• 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
Sales Opportunities
MBI in Detail
• Coverage Options
• Rental Reimbursement
• Trip Interruption
• Retail Parts and Labor
• Simple Steps for Filing a Claim
• Required Maintenance
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
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
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
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.
Retail Parts and Labor
• Retail parts reimbursement
• Posted labor rate
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
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.
How to Complete The Sale
• Eligibility
• Terms
• Payment Options
• Rating and Remit
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.
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
TERMS
Eligibility
Available Terms Mileage Age
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
Coverage Eligibility
0-30,000
Powertrain
Preferred
Comprehensive
30,001 - 75,000
Powertrain
Preferred
RATING & REMITTING PROCESS
• Calculating a rate– make/model– model year– odometer reading
• Completing an application
PAYMENT OPTIONS
• Single premium
• 24 equal payments
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
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
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.
Supplies
Available to be ordered
from Farmers Materials
Distribution Center
AGENT SUPPORT
888/236-3099
CUSTOMER SERVICE
and CLAIMS888/240-8803
Farmers
Gets You Back Where You Belong.