Ford Motor Credit Co. has resolved a dispute with Allstate Insurance Co. over claims procedures. As a result, the captive will continue to finance Guaranteed Asset Protection, or GAP, contracts insured by Allstate and its affiliates.
Ford Credit had threatened to stop financing the products last year.
"We had some differences with Allstate, but we have worked them out," Ford Credit spokeswoman Meredith Libbey said in an e-mail message to Automotive News. "There was no break in our financing of GAP products underwritten by Allstate or its affiliates."
Libbey would not discuss terms of the agreement.
Allstate is a leading provider of GAP insurance. The coverage protects customers whose vehicles are wrecked or stolen by paying off the difference between a vehicle's loan balance and its cash value.
In a bulletin to dealers last September, Ford Credit warned it would stop financing Allstate-backed GAP products on Nov. 1.
The bulletin said Allstate was shorting Ford Credit on claims reimbursements.
When a customer canceled a GAP contract after filing a claim, Ford Credit said, Allstate and its affiliates reduced the claim check to the captive by a portion of the dealer's commission on the contract.
"Ford Credit is then expected to collect that amount from the selling dealer," the bulletin said. "Ford Credit did not anticipate or agree to a claims process that requires collection of a portion of the GAP settlement from the dealer."
That practice annoyed both dealers and customers, Ford Credit said.
Said the bulletin: "Consumers expect prompt payment of the full GAP settlement to the lien holder."
You may e-mail Donna Harris at [email protected]