In Car Warranty Mixup, an Example of Good Service

Bill Stegmaier, service director at the Midway Ford auto dealership in Los Angeles, and Dan Mallut, executive vice president and general counsel at Western General Insurance Co. in Encino, have this in common: They are ready to perform good customer service, even if there are costs.

I happened on these two professionals after receiving a letter from Hector Morales of Los Angeles, who was having difficulty collecting under a five-year extended warranty on his Ford Escort.

The 75,000-mile “Gold Seal” service contract Morales had purchased for $995 in 1995 still had a year and 17,000 miles to run.

Yet Morales said Western General had told him that a $487.93 bill for a new water pump, timing belt, serpentine belt and idler pulley, minus a $100 deductible, would not be paid under the warranty since the insurer had not been properly contacted first.

“Mr. Reich, can you help us,” Morales asked. “We are a working family who cannot afford such expense, especially since we paid for an extended warranty.”

I dropped in at Midway Ford, speaking first to Donn Bailey, the director of operations, who explained that, “We only sell these policies,” and the insurer, Western General, decides whether the work qualifies for payment.

But Bailey suggested I see Stegmaier, head of his service department. He was likely to remember the case, Bailey said.

I meet many folks in positions like Stegmaier’s in preparing these columns. But I rarely run into one who is as determined from the opening moment of the conversation to be so accommodating and assertive in resolving the matter.

Yes, he said, he did remember the Morales case. The car had been towed in Oct. 6 for a 48-hour stay, but Midway Ford had dealt only with Morales’ wife and brother-in-law, neither of whom had the warranty with them, nor knew it was Western General rather than Ford that had issued it.

Still, he said, by using the vehicle identification number, and knowing how many Western General warranties Midway Ford sells, he had called Western General, and through its computer, had verified that a Morales warranty did exist and that the work called for did qualify under it.

But by the time Stegmaier got back to the Morales family members, they had already had the car towed on to Santa Monica Brake, where someone had told them they could get the work done a little cheaper. They had not been persistent enough in pushing for the warranty at Midway Ford, he said.

Still, Stegmaier said, “This is an open-and-shut case. I’m sure, when I explain the situation to Western General, and my earlier call, they will honor the warranty” and pay Morales for the work in Santa Monica, minus the deductible.

And, with me sitting there, Stegmaier phoned Sam Johnson, assistant manager for warranty claims at Western General.

He didn’t get a commitment to pay right away, but he expressed confidence he would get one the next working day.

I went myself to Western General on Monday, the next working day. Within minutes, Johnson ushered me into Mallut’s office.

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Mallut was precise. “This is pretty simple,” he said. “We needed to see the invoice [from Santa Monica Brake]. There was some question if they had had the work done without our prior approval, which is required.

“On Oct. 27, we informed her [Mrs. Morales] we would deny, because of that factor. But then we found we had been notified initially by Midway Ford.

“So, we’ll go ahead and take care of it. We’ll pay the entire bill and waive the deductible, because this family has been through quite a bit of trouble. . . . We’ll send out the check this week.”

Midway Ford, Mallut noted, “has sold almost 2,000 of our extended warranties,” so, he indicated, it and its customers deserve some consideration in close calls like this.

None of these service contracts cover routine maintenance, he observed. But in this case, the timing belt, for instance, was broken, not worn out, and it happened when Morales’ car had 58,565 miles on it, before the 60,000 miles Ford sets as the time for replacing a timer under recommended maintenance.

“Had this car gone 62,000 miles and the timer not been replaced at 60,000, then the warranty would not have applied,” Mallut observed.

Western General has a half-million customers, he said, “and we want them to be satisfied.

“The customer in this case really didn’t handle this properly, but we will waive the requirements this time only,” he said.

He got out the Gold Seal policy form and pointed out a box on making a claim.

This states, “It is a condition for coverage that BEFORE ANY REPAIR or replacement is made the . . . Purchaser or the chosen Repair Facility MUST GIVE NOTICE TO THE CLAIMS SERVICE. NO REPAIR OR REPLACEMENT SHALL BE PERFORMED UNLESS FIRST APPROVED BY (OUR) CLAIMS SERVICE.”

But Mallut said, “We consider ourselves very customer friendly and when someone can explain why the rule should not be stressed, we’re willing to be reasonable.

“We have a lot of pride in our level of customer service. Unfortunately, you can’t say yes to everybody. But we feel we owe our customers the benefits of the contracts they buy.”

Mallut also noted that “the squeaky wheel,” the customer who persists, often gets attention.

His attitude reminded me of advice by Microsoft’s Bill Gates that I’ve quoted before: “Focus on your most unhappy customers. . . . You should examine customer complaints more often than company financials.”

By the time I returned to the office, I already had a message from Stegmaier, who had been independently in touch with Western General. He was pleased as punch that things had worked out for the Morales family.

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Ken Reich can be contacted with your accounts of true consumer adventures at (213) 237-7060, or by e-mail at ken.reich@latimes.com