Popular Auto Extended Warranty Provider Goes Under

I hoped people who were considering 1SourceAutoWarrany had read my post last August and decided not to buy an auto extended warranty from them. Last month, a court ordered PrimeGuard Insurance Company which underwrote 1SourceAutoWarranty policies to liquidate due to its insolvency and hazardous financial condition. On December 21, the Insurance Commissioner of the State of Hawaii issued "Cease and Desist Orders" to 1SourceAutoWarranty and First Assured Warranty Corporation. This prohibits them from conducting business of a service contract provider and from selling any service contract that is insured by PrimeGuard Insurance Company. On January 9, 2006, the liquidator of PrimeGuard sent out a notice of liquidation with information on the cancellation of the warranty contracts insured by PrimeGuard. More information is available at the Hawaii.gov.

In my August post I had researched PrimeGuard's insurance rating. I had emailed them questions about their insurance status, but I received no response. The site carbuyingtips.com recommended them and claimed they were insured by PrimeGuard, Inc. So I checked out PrimeGuard on A.M Best and found it had a NR-1 rating which is a non-rating based on insufficient data. I found this worrisome.

Unfortunately, this lady interviewed by Northwest Indiana News did buy a 1SourceAutoWarranty policy in November. She had paid $1,780 for an extended warrany for her 2004 Yukon. Now she doesn't know if her money will be refunded.