New Warranty Program for NBFAA Members Offers Possibility of Added Profits

Warranty service insurance program allows commercial alarm dealers new revenue stream, additional RMR


In a Dec. 6 email from NBFAA President Scott Colby, the NBFAA has announced that it has teamed with Heritage Insurance Company to offer a new program that can add to dealers' bottom lines.

The program itself is a group-discounted extended warranty program created for dealers in the commercial sector. The program allows dealers to offer their customers a five-year extended warranty service that would include parts and labor on both new and existing alarm systems.

Tony Smith, who is handling the marketing of this program, said the service contracts will be underwritten by Heritage Insurance Company and will protect dealer companies against contingent liability.

Dealers will handle all of the billing of the warranty program, and will simply be able to purchase coverage from Heritage at wholesale premiums. Because of the deal with the NBFAA, members will receive a discount of close to 10 percent, said Smith. The retail value they charge to the customer creates profit for the dealer company (typically a 20-60 percent mark-up, says Smith), and the service department will be paid at normal labor rates -- up to $100/hour, but based on fair market rates -- by the insurer for service performed under the warranty program.

The end result is that the dealer company gets real RMR value based on the profit between the wholesale and retail costs, and the service department becomes a profit center due to the reimbursement at normal labor rates. According to Smith, because of this program, it is ideal for companies that have not been able or willing to offer extended warranties due to their liability exposure, as well as those wishing to limit their equipment repair/replace liability. Premiums are based upon the retail value of the equipment.

The program is also available for customers who lease their equipment, and covers labor during O.E.M. warranty periods. According to Smith, the warranty will cover defects in installation, normal equipment failure, and system failures resulting from equipment failures.

The NBFAA will receive funding from sales of this product, with a profit split for Heritage. For more information on the program, dealer companies can contact Smith at tsmith@securityfinance.com.