WARRANTY OWNERSHIPThink about the last system you put in.
Your guy sat at the kitchen table and sold the job. He sold the warranty with it, because that’s what closes. The customer signed, your crew did the install, and your name is the one on the sticker inside the panel.
Then the money for that warranty left your business.
It went somewhere. It’s sitting on somebody’s books right now, and it isn’t yours. You’ve always known something was off about that. Here’s the shape of it.
You’re probably doing one of two things, and both of them cost you
Somebody else runs it
The easy button. You sell it, the money goes out, they handle claims.
Right up until a claim goes badly. Now you’re on the phone arguing with a company your customer has never heard of, about work your crew did, while your name is the one they’re upset with. You carry the relationship. They carry the money.
You handle it yourself
The handshake. You keep the money in the operating account and you cover what comes up, because you always have.
That works fine in a good year. In a bad one, there’s nothing set aside and the claims come out of this month’s cash. And when anybody finally looks at your books — a lender, a partner, a buyer — there’s a promise on them with no number attached and no money behind it.
One of those bleeds a little every month. The other one is fine until it isn’t.
There’s a third way, and it isn’t new
Large companies have done this for fifty years: instead of paying an outside company to carry the risk on things they already control, they set up their own structure to hold it, and keep what’s left over.
It was never built for a shop your size. The legal work, the filings and the pricing work cost more than a smaller book could justify, so nobody offered it to you.
That’s the part that changed. The structure is the same one. What’s different is that it’s now sized for trades businesses — either your own company, or a shared one you take part in, depending on your volume.
What actually changes on Monday
Almost nothing, and that’s the point. Here’s the honest list.
- Your techs sell the same way. Same conversation, same paperwork, same close. Nobody learns a new system.
- Your customer calls the same number. They get the same promise and a person picks up. If anything the promise gets better, because you’re the one deciding what it includes and how long it runs.
- Nobody in your office handles claims. That’s administration and it’s not yours. It runs in the background.
- The money stops leaving. What customers pay for warranties runs into a company you own a piece of, and what’s left after claims stays there.
That last one is the whole article. Same sale, same crew, same customer — different destination for the money.
“Either you keep handing the money to another warranty company, or you own it yourself — an investment for you, your team, and your future. Two and a half years in, my only regret is not doing it sooner.”
— Aaron Gaynor, founder, ECO Plumbers
So what’s it worth to you
That depends on three numbers you already know: how many warranties you sell in a month, what you charge for them, and roughly what share comes back as claims.
Run those and you have the answer. It’s your book, your volume, your number — not an example.
And here’s the uncomfortable part: that number exists whether you own the program or not. Right now somebody is collecting it. The only question this article asks is who.
What to do about it
Run those numbers against your own book, then look at what an owned program is worth when you sell — that’s usually what decides whether this is worth a conversation.
If it is, the conversation is one call and one application. We’ll look at your size and tell you honestly whether it fits — including when it doesn’t. There’s a volume floor and we’ll tell you where it is.
You’ve spent years building something people trust. There’s no good reason the warranty money it generates should end up anywhere but with you.
Questions owners ask
Who keeps the money when a customer buys an extended warranty?
It depends entirely on how your program is set up. If a third party runs it, they collect what the customer pays and keep what’s left after claims. If you run it informally, you keep the money but you also carry the obligation with nothing set aside against it. If you own or take part in a structured program, the money runs into a company you have a stake in and what’s left after claims stays there.
Can a contractor keep the profit on the warranties his shop sells?
Yes. The warranties your techs already sell can run through a company you own or participate in rather than one you don’t. It’s the same structure large companies have used for decades, now built at a size that works for trades businesses.
What’s the difference between handling warranties in-house and owning a warranty program?
In-house usually means there’s no structure at all — you keep the money in the operating account and cover claims out of cash when they come. An owned program puts a real entity in between: the money is held separately, claims are paid from what’s set aside, and there’s documentation a lender or a buyer can actually examine.
How much of my time does it take to set up?
The application and the conversation are the parts that need you. The legal structure, the filings, the pricing work and the ongoing administration are handled for you. Once it’s running, nobody in your office answers a warranty call.
Does anything change for my customers or my technicians?
No. Your techs sell the same warranty the same way, and your customer calls the same number and reaches the same people. What changes is where the money goes after the sale, which is invisible to everyone outside your business.