1. Mechanical Breakdown Insurance

2. Horizontal Marketing Value added marketing strategy
Building customer loyalty
Focus on agent, “I’m here to help”
Now your Farmers Agent can help you with a whole lot more.

3. Horizontal Products Auto loans Auto buying service Education loans
Real estate and mortgage assistance program
Mechanical Breakdown Insurance (MBI)

4. Mechanical Breakdown Insurance

5. The Need Cars are more expensive Customers keep cars longer
Increased demand for warranties
Dealerships offer coverage

6. The Solution Farmers MBI Program Value added product for customer
Agent/customer relationship
Excellent commission opportunity

7. MBI Overview Coverage beyond manufacturer’s warranty
Coverage for specified mileage and time

8. Parties
Agent
Purchaser
Insurer
Administrator

9. Due Diligence Familiarity with MBI product Strong claims operation
Excellent customer service
Expansion of product

10. Due Diligence Continued . . .
Marketing support
Ease of use
‘A+’ rating from AM Best
Flexibility in financing

11. Mechanical Breakdown Insurance

12. Founded in 1922
A+ A.M. Best rating
Extensive claim and policy service experience
Member of Zurich Financial Services

13. MBI Overview Terminology Market Potential
Why Customers Buy MBI Coverage
Reasons to Sell
Sales Oppourtunities

14. Terminology Manufacturer’s Warranty Vehicle Service Contract (VSC)
Mechanical Breakdown Policy (MBI)

15. 1996 Vehicle Market Source: Wall Street Journal 1/7/97.
Breakdown of Sales Volume

16. Reasons Why Customers Buy Mechanical Breakdown Coverage
Don’t want to worry about repairs
Concerned about rising repair costs
No warranty on (used) vehicle
Have bought coverage in the past
Like trip interruption feature
Vehicles are more expensive
People are keeping their vehicles longer
UUG Survey Results Nov. 1997

17. Reasons to Sell MBI
Agents receive 20% commission up to $160 per policy
Commission paid up front
Charge back only if policy is cancelled in first 12 months

18. Sales Opportunities Insurance quote prior to purchase
Vehicle change notification
Can purchase within 30 days of vehicle purchase
Farmers Friendly Review
Can purchase anytime if within manufacturer’s basic warranty (97 or newer) and less than 30,000 miles
Marketing support materials

19. MBI in Detail Coverage Options Rental Reimbursement Trip Interruption
Retail Parts and Labor
Simple Steps for Filing a Claim
Required Maintenance

20. Coverage Provides coverage for mechanical defects and faulty workmanship by the manufacturer
Powertrain (Named Parts)
Engine, Transmission, Drive Axle
Preferred (Named Parts)
Adds: Air Conditioning/Heating, Electrical, Suspension, Brakes, Interior/Exterior, Steering
Comprehensive (All Risk)
Provides coverage for all mechanical failures except those specifically excluded

21. Rental Reimbursement First day rental for covered repairs
Allowance based on labor hours
Up to three days for parts delays
Six days maximum per occurrence

22. Trip Interruption Coverage
Reimbursement for $100 per day for food and lodging.
Maximum of three days.
Must be at least 100 miles from home.
Complements Farm-Tow

23. Wear and Use Outside manufacturer’s specifications
Excessive oil consumption
Engine bearings
Brake pads, shoes, rotors, drums, manual
clutch disks, pressure plate and clutch release
bearings are excluded from coverage.

24. Retail Parts and Labor
Retail parts reimbursement
Posted labor rate

25. Simple Steps for Filing a Claim
Where can the repairs be made?
Any licensed repair facility that warrants its’ work (unless still within mfg. warranty)
Authorize repair facility to diagnose vehicle.
Call 888/ for authorization prior to work being performed.
After vehicle is repaired, customer pays $100 deductible to repair facility.
Three convenient payment options
Direct payment to repair facility
Credit card payment to repair facility
Customer reimbursement

26. Required Maintenance
Must comply with manufacturer’s recommended maintenance schedule.
Customer may perform own maintenance but must retain receipts.
Breakdowns caused by lack of proper maintenance will result in claim denial.

27. How to Complete The Sale
Eligibility
Terms
Payment Options
Rating and Remit

28. Eligibility
Vehicle must have less than 75,000 miles and be a 1992 or newer.
Customer must be a member of Farmers Insurance Exchange and have liability, comprehensive and collision coverage.
The MBI policy must be purchased within30 days of the vehicle purchase unless the vehicle has less than 30,000 miles and is still within manufacturer’s warranty.

29. Examples
Your customer notifies you that they purchased a vehicle last week.
During a Farmers Friendly Review you discover that your customer bought a new vehicle last year that has 24,000 miles

30. TERMS Eligibility Available Terms Mileage Age
6 years/100,000 miles 0-12,
6 years/60,000 miles 0-30,
5 years/75,000 miles 0-30,
4 years/60,000 miles 0-30,
3 years/45,000 miles 0-75,
2 years/30,000 miles 0-75,

31. Coverage Eligibility 0-30,000 30,001 - 75,000 Powertrain Powertrain
Preferred
Comprehensive
30, ,000
Powertrain
Preferred

32. RATING & REMITTING PROCESS
Calculating a rate
make/model
model year
odometer reading
Completing an application

33. PAYMENT OPTIONS
Single premium
24 equal payments

34. SINGLE PREMIUM Complete application
Collect check for total amount made payable to Farmers Insurance Exchange
Mail all the above in pre-addressed remit envelope to Shawnee Mission, Kansas

35. 24 Month Payment Option Complete application
Collect check for first payment made payable to Farmers Insurance Exchange
Complete ACH authorization form
Collect voided check
Mail all the above in pre-addressed remit envelope to Shawnee Mission, Kansas

36. Is the Policy Cancellable?
Yes, at the customer’s request.
Refund computed pro-rata.
Is the Policy Transferable?
Yes, the policy can be transferred in conjunction with the sale of the vehicle.

37. Supplies Available to be ordered from Farmers Materials
Distribution Center

38. AGENT SUPPORT
888/
CUSTOMER SERVICE
and CLAIMS
888/

39. Gets You Back Where You Belong.
Farmers
Gets You Back Where You Belong.