PrimeGuard Insurance Co., a failed insurer of tens of thousands of extended vehicle service plans, does not have enough money to cover outstanding claims.
A court in Hawaii, PrimeGuard's home state, declared the company insolvent last December. The court liquidated the insurer in January.
Hawaii Insurance Commissioner Jeffrey Schmidt, the court-appointed liquidator, wrote in a recent notice that "PrimeGuard does not possess sufficient assets to pay all of the anticipated claims."
The notice does not state the value of the insurer's assets available to pay claims. Lanson Kupau, an attorney for Schmidt, estimates PrimeGuard has $7 million in reserves. More than 40,000 parties could file claims against the company's assets, Schmidt says.
Hawaii's First Circuit Court has approved a procedure creditors must use to file claims against PrimeGuard's assets. The deadline for filing claims is Nov. 30.
PrimeGuard's potential creditors include consumers who bought service contracts, dealerships, repair facilities and vendors, Paul Yuen, deputy liquidator, told Automotive News. Yuen would not discuss the company's finances.
PrimeGuard started doing business in 1998. Since then, the Hawaii Insurance Division says, the company insured almost 40,000 extended service plans sold by 1,154 U.S. dealerships.
Schmidt has ordered PrimeGuard's marketing affiliates -- First Assured Warranty Corp., 1SourceAutoWarranty.com Inc. and WarranteeWise Inc. -- to stop selling PrimeGuard contracts.
You may e-mail Donna Harris at [email protected]