In the first part of this article, we talked about the different kinds of extended warranty plans you may encounter, and where they come from. In this second part, we'll cover how you submit claims, get paid and get your customers on their way.

Every service contract administrator I know uses a labor and parts guide to determine what will be paid on a claim. Factory plans may pay labor times from the factory guide only, while independent plans generally pay time from any of the major aftermarket guides.

Parts are usually covered at the carmaker's list price. In the case of expensive parts, the administrator may request aftermarket or rebuilt parts. In a few cases - a blown engine for example - used parts will be specified. If a plan specifies a used part - and your customer insists on new - they are often free to pay the difference - but ask first.

When you report parts, be prepared to provide part numbers as well as prices. If you are replacing an original equipment manufacturer (OEM) part (for example, a transmission control unit) the administrator will expect to cross-reference an OEM part number and they will generally pay the OEM list price.

There are certain parts and supplies that service contracts will almost never pay for - shop supplies, oil filters, maintenance, tuneup parts, and anything that represents "betterment" rather than a fix. When the left brake caliper is stuck, you may feel both calipers should be replaced as a matter of good practice, but warranty only covers the part that's bad.

Rarely will you be covered for time beyond the book if difficulties are encountered. For example, if you have to remove the exhaust manifold and a stud snaps, the extra time probably won't be covered. Diagnostic time is another area where you may not be covered for all time spent. You should warn customers of this possibility.

When presenting these things to your customers, explain that their plan will pay most of the tab, but that certain things will not be covered. Presented correctly, you will have a winning situation for you and the customer.

When a vehicle covered by a contract arrives at your shop, you should make sure your work order includes these items:

• A distinct repair order number and the date the car was received
• The mileage on the vehicle
• A complete vehicle description - year, make, model and full VIN
• A line-by-line list of customer complaints
• The customer's signature authorizing you to service their car.

You should diagnose the vehicle, then call in the claim to the company. Most of the time, diagnosis is straightforward - the water pump drips on the ground, the ball joint broke, etc. You report the complaint, what you found and what repairs are needed.

In some cases, the diagnosis is not straightforward. In those cases, I suggest calling the company first. For example, if an engine has a rap, you should call the company and ask if it wants to send an inspector to see it prior to teardown. If you need to embark on potentially time-consuming wire harness diagnosis, you should call them first for advice.

You should always make sure the customer understands he or she is ultimately responsible for paying to fix the car. Anything the service contract does not cover will be his or her responsibility. Make sure they know their out-of-pocket cost could be greater than their deductible before you begin. Time-consuming diagnostics may not be covered.

Once you have presented the claim to the administrator, they will determine what is covered and give you a total that they will cover, with your customer being responsible for the balance. Reputable companies will then allow you to fax the completed work order in for processing, after which they will pay you by credit card or check - as you wish.

Remember, our job is to solve our customers' automotive problems. That means they rely on us to make things as smooth as possible. As a independent auto repair shop, it's been my experience that we want to "do things our own way." I've found that this won't work with most warranty companies, which expect jobs to be priced and billed by a fixed formula.

Dealerships are used to this because manufacturer warranty works the same way. So does insurance work when fixing a wrecked car. It can be profitable work, but you need to understand the process to have a successful experience for you and your customer.

When you do a job, you should look over the labor guide carefully to identify all the times to which you are entitled. This includes test time, charge and fill time, extra time for interferences, etc.

In closing, remember that the adjusters at these firms are just guys doing their jobs, like us. A shop that calls in a $2,000 claim with every part identified by OEM number and price and every labor operation matching the third-party information provider's guide will have a much smoother time than a guy who calls in a $500 claim with none of those things.

John Robison is general manager of JE Robison Service Company of Springfield, Mass. It is an independent auto dealer and service center specializing in European vehicles. Robison's company is an authorized Bosch Service Center. Robison Service sells and supports service contracts backed by APCO Easycare, the extended warranty subsidiary of Ford Motor Co. John can be found online at www.robisonservice.com or e-mailed at Robison@robisonservice.com.

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