MNVette

For those who have GMPP and have wondered whether it will remain solvent, in today's paper:

GMAC is prepared to file Chap. 11. They were unable to generate enough financing to qualify as a "bank," which they attempted so as to get a piece of the $700 billion bailout for financial institutions. GMAC's application is to be withdrawn, and they are out of cash. Neither GM nor Cerberus (Chrysler) have the cash to put into it to cover the losses.

So, the question becomes this - GMPP is a part of GMAC. They are supposedly "insured" to cover their service contracts, but that "insurance" comes from another GMAC subsidiary. Can GMPP avoid failure?

Thoughts?

lh4x4

Jee I send them my 0% interest payment each month. How can they be in trouble.

BetterMostC6

Ken Fichtner any comments? Should we start cashing out of our GMPP contracts?

GotVett?

Me too. If they go away, maybe the payment will too . . . nah!

Kayvan

Depends, every insurance company is backed by its states Guaranty Fund (sorta like FDIC)

That state will take over the policy, give it to other insurers to administer and/or pay them out.

This happened with Daewoo and some RV/ Boat makers

Dave Carney

It's not insurance though. It's a service contract. If it were insurance, it be sold by licensed agents.

danl72

It would be interesting to see if they will cover the warranties if they file Chapter 11.

BAK

California Insurance Guarantee Association covers insolvent insurance carriers in CA. But I'm not sure the GMPP is covered, as they may not be consider insurance, but a form of an extended warrentee. If so, no funds are required to be kept in reserves and adherence to responsible management is not required. Sorta like the credit default swap thing, that worked out so well. I the GMPP on my Cadillac, or at least did, we'll see.

AroundMyHorn

Could we really lose our warranties?

siffert

I knew it would not be worth the paper it was printed on-but was happy to buy Fichtner yet another vacation Think I'll give a call to them (am sure I can get right thru to them) about cashing in.

AORoads

In filing for bankruptcy, since the only business of GMAC (or one of the major ones) is to sell and service the warranties, it will be interesting if this aspect of their business survives. Very interesting and a restrained thread, even somber.

I'll also be interested to see if these contracts with owners fall under any state's insurance commissioner.

User 2623

GMPP is and extended service contract as a warranty. Assurance not insurance. Under Chapter 11, GM can break, restipulate, or walk away from these commitments. But the value of these GMPP waranties is quite attractive and someone else should want to pick up the paper. The problem is what are the rules to get your auto fixed if not by GM.

This is what I think will be the problem'a

shopdog

Right. But they re-insure the contract through a dummy Michigan insurance company, also owned by GM. If that sounds like the mortgage fiasco, you're right. It is just another financial shell game.

shopdog

We're talking about pre-paid service contracts sold by GMAC here, not the actual Chevy warranty. The actual car warranty is probably secure unless GM declares Ch 7 bankruptcy and liquidates. Even in Ch 11 bankruptcy, they have to keep honoring product warranties under Magnuson-Moss unless they get out of the car business entirely. But they can dump the service contracts in a heartbeat under a Ch 11 reorganization.

GotVett?

And we're the nuts. As in kicked in the.

Maui

So what happens when Kalifornia goes broke?

LTC Z06

Greedy UAW, I hope they die and never return.

PaulB

I have always heard that when Insurance Companies fail that there is a fund or there will be a charge to other Insurance companies thru each State Ibsurance Dept that will keep the Policyholders Protected. I dont recall hearing anything about that when AIG had problems. Maybe because they received a Bailout they didnt technically fail. I really dont know on this. I guess I am just thinking out loud here.

ben dover

I think warranties, factory and extended (GMPP) will be honored till their dieing breath. This the thing that most concerns the manufacturers about the perception of bankruptcy.

jimchris76

Thats a lot of the problem.