How do I tell if a tire shop’s road hazard warranty claims are under control?

Begin with the log. Ask whether claims are recorded in one place, with the date, vehicle, damage, decision and cost. If the answer is a drawer of paper, ask to see it anyway and judge how complete it is. A shop that cannot show its claims cannot say whether they are under control.

Next, find out who pays. Some coverage is carried by the shop, some is backed by a supplier or a third party, and some is a mix. Ask for the written terms customers receive, and for what the shop has to cover itself. Your lawyer can read those terms and explain what carries over to a new owner and what stays behind with the seller.

Then look at behaviour. Who approves a claim, and is there a clear test for what qualifies? Do some staff say yes to everything to keep customers happy, or refuse too quickly? Compare the claim totals with sales over several periods to see whether the trend is steady or rising. Ask what sits behind any spike. Finally, check the customer paperwork and data. Records held on customers need to be kept safely, so ask how the shop stores them. Your accountant can show how claim costs appear in the books and whether an amount should be set aside.

Key takeaways

• Read the claim log and check it records date, vehicle, decision and cost.
• Find out who stands behind the coverage and what carries to a new owner.
• Look at who approves claims and whether the trend is steady or rising.