CLIPs for Auto Dealers

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Auto dealers understand that service contracts - vehicle service contracts, or VSCs - have financial requirements beyond a mere promise to provide service in the event of mechanical failure. In most states, this means that insurance is used to protect consumers when they purchase a VSC. Most typically, this involves posting a percentage of the gross consideration of the contractual liability in a separate reserve account, and meeting certain equity and liquidity benchmarks that can be quite onerous. Enter CLIPs - or contractual liability insurance policies - the means by which auto dealers are able to sell VSCs and consumers are protected against failure of the dealer selling the vehicle service contract.

The details of how CLIPs and closely-related service contract reimbursement insurance policies (SCRIPs) work is important, but generally can be handled by an experience underwriter that is associated with a well-rated financial organization. For auto dealers, the main point is that registering with each state is required to meet certain compliance aspects of selling vehicle service contracts. Though the F&I departments of dealers are increasingly acting as major profit centers, this level of understand of complex financial instruments is typically beyond the purview of a typical finance/insurance manager or even the owner of the dealership itself. That's where we can help.

Vehicle Service Contracts - VSC

VSCs have been around for quite some time, and are often even sold directly to the public. Most, however, are sold directly through dealerships, which are vertically-integrated in a manner that allows them to operate within the finance and insurance arenas. For CLIPs and SCRIPs, however, compliance issues make it a bit more difficult. The profitability of vehicle service contracts, however, makes this a problem very much worth solving.

We provide Service Contract Reimbursement Insurance Policy (SCRIP) / Contractual Liability Insurance Policy (CLIP) / Contractual Liability Reimbursement Insurance for compliance with state financial guarantee requirements for obligors, administrators, and other warranty providers.

Maximize F&I Profit

If you own a dealership, work as the CFO or lead accountant for one, or your area of expertise is the F&I department, you understand fully that profit from the financie and insurance department is of the utmost importance. It is, in fact, the lifeblood of most modern dealerships. We can help you maximize your profits in this area, meet compliance needs, and take your dealership profits to a new level.

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