On February 20 I purchased an extended vehicle warranty from Warranty Gold. The term was for 5 years from the date of purchase or until my vehicle reached 150,000 miles on the odometer. My salesman was Gabe LeBleu. I thought I had purchased a pretty good plan, with a zero deductible and a total price of $1899. I paid $399 down on credit card.
My first payment of $150 was also done on credit card on March 20. After that I switched to being billed and paid $150 by check on April 20 and again on May 20. I learned about Warranty Gold from the Edmunds.com Website Forum. Like most of the warranty companies there were mixed reviews, some bad, but most good, and that, along with looking over their website and talking with my salesman, made me finally decide on Warranty Gold.
Well in mid-June, (just into my 4th month with them), I read on Edmunds about financial difficulties the Administrator of my plan, National Warranty Insurance Group (NWIG) was having, and a temporary injunction on paying claims, etc. I called Warranty Gold and spoke with a Sales Manager there named Tony Rossi. He explained what they knew and gave me a payment holiday, so my June 20th payment I could skip and my next payment would not be due until July 20. I continued to follow these events through Edmunds Website and phone calls to Warranty Gold.
Finally on July 17, I called Warranty Gold and spoke with Rudy Cantu, a Customer Service Representative. Since they still did not know the outcome of what would happen to their customers who had NWIG as their Administrator, and they said they could not let me skip any further payments, I decided I needed to cancel my contract. I filled out a cancellation form and sent it in to them.
Warranty Gold has defaulted on all contracts written before June due to the bankruptcy filing of their administrator, National Warranty Insurance Group. This failure to pay for claims is a breach of contract, and failure to render services as agreed to in the contracts. They also have claimed that all funds are insured to protect policyholders, while claiming they don't have the funds to pay for claims or pay refunds for those who cancel.
The administrator (NWIG) has claimed the Warranty Gold reserve account as an asset in their bankruptcy filing in the Cayman Islands, where NWIG is incorporated. Since this has happened, Warranty Gold stopped paying for any claims on defects or repairs on vehicles covered by their contracts. Even after diagnosis by an approved repair facility, Warranty Gold is refusing to pay for repairs, as required by the contracts.
Furthermore, Warranty Gold may be committing fraud and misrepresentation on their Website, www.warrantygold.com, Warranty Gold states that:
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Warranty Gold has put the processes into place to secure the investment that each of our customers make in our products. We have established a "Trust Reserve Account" ("TRA") which is managed by our administrator to pay your claims for the life of your contract. Our administrator is insured to adequately cover all claims today and tomorrow. The insurer and the re-insurer are rated by A.M. Best. Your Warranty Gold service contract is absolutely reliable and secure.
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In the Frequently Asked Questions section of their Web site, they further state:
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Q: What reassurance do I have that your company will be here in years to come to honor claims?
A: Warranty Gold submits actuarily required funds to a third-party administrator, which sets up "trust reserves". These reserves are used to pay for claims.
Q: Are your vehicle service contracts adequately backed?
A: Yes. Warranty Gold's claim reserve is reinsured to offer you, the consumer, the ultimate in protection. Our Administrator reinsures our Trust Reserves twice to adequately cover all claims today and tomorrow. The insurer that backs our contracts and the reinsurer are) rated by A.M. Best. Your Warranty Gold service contract is absolutely reliable and secure.
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This situation has left literally thousands of policyholders across the country waiting to see if their contracts are valid. Any assistance you can offer to either get a complete refund, a significant partial refund, would be greatly appreciated. I believe that since I had the contract for such a short time and did not file any claims, I should receive a full refund of the $849.00 I have paid them. However, if a partial refund is agreed to I feel that $754.05 would be the least I should receive. $1899 for 60 months equals $31.65 per month. I would allow that for the first 3 months they did meet their obligation to provide a viable contract, so that would subtract $94.95 off the $849.00 I already paid. If not, I request you immediately pursue any civil or criminal actions available to you under Texas law against Warranty Gold.
I have now found out from Edmunds.com and an article which ran in the Chicago Sun-Times, that Warranty Gold knew that NWIG was having problems as far back as late 2002. They did not update their web-site or inform potential customers. Furthermore, any customers making installment payments have not been informed about these problems, yet WG continues to collect people's money. But when those customer's try to use their warranty, they will find out the sad news that their coverage is worthless.
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