Quebec brokers lobby to disallow car dealers from selling replacement warranties

The Regroupement des cabinets de courtage d’assurances du Qubec (RCCAQ), Quebec’s broker association, is lobbying the province’s financial services regulator, L’Autorite des marches financiers (AMF), to disallow the province’s car dealers from distributing “replacement warranties.”
Brokers have identified the replacement warranty as an insurance product. As such, brokers are telling the AMF that car dealers are not licensed to sell the insurance product.
Car dealers, on the other hand, distinguish their replacement warranties from insurance products known as “replacement cost endorsements.”
Warranty and endorsement contracts are similar, but not identical, the Quebec office of the Insurance Bureau of Canada notes in an online newsletter.
For example, in the event of a total loss, insureds that have a replacement cost endorsement can usually purchase a new vehicle of like kind and quality, regardless of the make of the car. Those who buy a replacement warranty must purchase the same make of car from their dealer as the vehicle involved in the accident.
In addition, those who want to continue with an endorsement merely continue to pay their insurance premiums, whereas to continue a warranty, a consumer would have to buy a new warranty from the dealer, which can cost in the neighbourhood of Cdn$400.
“RCCAQ pleads that this type of coverage has to be distributed by brokers, not by car dealers, in order to get a better protection for the consumer,” says RCCAQ executive director Johanne Lamanque, when asked about her association’s priorities for 2008. “If the consumers get the right explanations (about various coverage options available to them), then they can make the right choice.”