Insurance or a Service Plan?

[cr0ft]

Hi all. Have had no end of customers talking to me about the hassle they are having with their British Gas service plans. This got me thinking...

To sell an insurance plan in the UK you need to spend £25k to register with the FSA and have £1m in your bank to cover liabilities. Probably out of the reach of even the wealthiest of plumbers (sadly).

If I offer a 'service plan' would it fall out of the scope of insurance I wonder? For instance, if I charge say £13 a month to cover the customers boiler breakdowns (including services - the same as British Gas charge) with the same exclusions that British Gas has (i.e. not covered for damage caused by sludge, pre-existing faults).

I think in most cases you would be quids in at this price which works out at £156 per year. I would take the payments by direct debits and when you get a few people set up on this I think the extra cash would help in the current financial climate.

Does anyone else offer anything like this and if so how does it work for them?

 

[obseen16]

yeah company i work with does them. they havent really taken off yet, we have about 15 customers on the plan. its a bit of a gamble tho cos if you get one bad breakdown it takes all the profit out of it, in our first year we had one baxi go down, repairs cost us about £250 plus we had spent the majority of the cash on the leaflets for the service package, its picking up slowly but not really our bread and butter.

 

[GQuigley67]

was thinking of that also but its very risky if there were a few bad breakdowns in rapid sucsession could wipe you out

 

[obseen16]

if you can get enough customers on board its not to bad we had to secure 10 customers before we could actually start it up properly, trouble is BG are the known name and when a local company advertises to do it for less money but the same level of service the custards just dont want to know.

 

[GQuigley67]

wouldnt advice it if your a small firm though seems too risky

 

[tamz]

Stuff like this really is a numbers game. Big gamble for the small man.

 

[villa_tom]

Stuff like this really is a numbers game. Big gamble for the small man.

Massive gamble. I used to work for a firm called Connaught. They started to run alot of their new contracts like this and look what happened to them, ok not all of their problems where due to this type of contract but they lost alot of money on it. The contract I was on looked after each boiler for £110 a year, round the estate by me there is a lot of suprima's. If a PCB goes on one of them then you have lost money on that job straight away. God forbid you have to look after an Icos/Isar.

 

[Bartdude]

I think modern boilers have too many potential failings to make it viable for anyone other than the national suppliers.

If every customer had a Baxi Bermuda you'd be laughing.

 

[cr0ft]

Yes I think I'm going to err off the idea to be honest, seems a bit too risky.

 

[GQuigley67]

dont get me wrong in an ideal world it would be good ye know enough money coming in to cover your overheads, but in reality if there were a bad winter say you could go bankrupt very quickly