Leasing Company Copiers are Underwater

This storm is really exposing the flaws of leasing and their insurance policies. I have a number of clients who are just plain screwed.

In the future I would have the customer take the leasing company's insurance and not send in the insurance certificates. I have customers who sent in insurance certificates only to find that they did not have flood contents coverage on their policy.

One in particular had not even made the first payment on the lease and had only signed the lease 4 weeks before the storm. The leasing company is now after them for the stream of payments plus the residual value of the equipment. Think about this.....the leasing company funded $8,000 for the deal and a month later when the equipment was destroyed they want $12,500 from the customer. They had submitted the certificate of loss payee and found out after the fact that their coverage did not include contents on the flood. Nice. These poor people not only lost their business, they also can not go back to their house.

quote:

Originally posted by Art Post:
Do you think the letter to Great America would help?

There's always a chance he'd be willing to make a horrible business decision for some PR reason.

Marketing aside... no chance.

Let's look at this from the leasing company perspective. Many of these entities will file for bankruptcy, therefore much of this debt will have to be written off anyway and the losses go far beyond any single community as you well know.

In an effort to recoup something, I believe that leasing companies need to at least consider forgiving any revenue above the actual funding amount, or better yet, a pro-rated amount of the funding amount.

I have a question... is the insurance provided by the leasing company any different than conventional insurance? Does it cover the equipmentin the case of "acts of God" like floods?" I was under the impression that the terms were no different from conventional business insurance other than being significantly more expensive.

quote:

I have a question... is the insurance provided by the leasing company any different than conventional insurance? Does it cover the equipmentin the case of "acts of God" like floods?" I was under the impression that the terms were no different from conventional business insurance other than being significantly more expensive.

You bring up a great point, I need to find this out, however the Asurrant (insurance) is not calling me back. I will find out.

quote:

Originally posted by JasonR:

quote:

Originally posted by Art Post:
Do you think the letter to Great America would help?

There's always a chance he'd be willing to make a horrible business decision for some PR reason.

Marketing aside... no chance.

Agreed.

The client (is it a municipality?) either took a risk knowingly "Eh, flood insurance, who needs it" or unknowingly (incompetence). They now have a loss.

But, this is the trend... I made a bad decision, is there someone with the last name ", Inc." who can be coerced or compelled to pay the bill?

quote:

Originally posted by fisher:
The leasing company is now after them for the stream of payments plus the residual value of the equipment. Think about this.....the leasing company funded $8,000 for the deal and a month later when the equipment was destroyed they want $12,500 from the customer. contracted obligations to which the customer agreed.

Fixed that for you...

quote:

Originally posted by CashGap:

quote:

Originally posted by JasonR:

quote:

Originally posted by Art Post:
Do you think the letter to Great America would help?

There's always a chance he'd be willing to make a horrible business decision for some PR reason.

Marketing aside... no chance.

Agreed.

The client (is it a municipality?) either took a risk knowingly "Eh, flood insurance, who needs it" or unknowingly (incompetence). They now have a loss.

But, this is the trend... I made a bad decision, is there someone with the last name ", Inc." who can be coerced or compelled to pay the bill?

quote:

Originally posted by fisher:
The leasing company is now after them for the stream of payments plus the residual value of the equipment. Think about this.....the leasing company funded $8,000 for the deal and a month later when the equipment was destroyed they want $12,500 from the customer. contracted obligations to which the customer agreed.

Fixed that for you...

So, do you think it would be ethical for the leasing company to go after full stream of payments plus residual in the case I described??? I don't begrudge the leasing company a fair return on their outlay of money but to want the full stream plus residual 4 weeks after funding is excessive. That's making 40% interest on their money for a one month investment. Would you be happy as the leasing partner???? I doubt it. Keep in mind your reputation as a salesperson is attached to how your leasing partners treat the customers.

Imagine if you had a mortgage on a new house and your house burned down a month after settlement. Would it be ethical and reasonable for the bank to go after you for the 30 years worth of interest and principal?

Just trying to do the best I can for my client.

It wasn't that long ago that GA's home office was flooded and people were displaced...it maybe that they have a soft spot in their heart for unfortunate situations. I am sure if you look around for the news articles, it was within the past 3-5 years.

It was in summer 2008. GA press release:

GA Press Release

quote:

Originally posted by CopyFax Jax:
It wasn't that long ago that GA's home office was flooded and people were displaced...it maybe that they have a soft spot in their heart for unfortunate situations. I am sure if you look around for the news articles, it was within the past 3-5 years.

quote:

I have a question... is the insurance provided by the leasing company any different than conventional insurance? Does it cover the equipmentin the case of "acts of God" like floods?" I was under the impression that the terms were no different from conventional business insurance other than being significantly more expensive.

Found out today, that Assurant does cover floods, I actually got a document from them about their services and I'll post it here later. Seems like most BOP policies will not cover floods, and Assurant will. However this leads to another issue, when leasing companies ask for "proof of insurance" and get a copy of the rider, do they not check to see if their equipment is covered in case of flood? If they miss this and do not charge for insurance is it then their loss and not the lessee? Some interesting questions here.

As of today I'm now working on the fourth claim for flooded/damaged equipment. Where I omnce knew nothing about this process, I'm sure in a few more weeks I'll be an expert in the process of guiding customers whether to take or not take the insurance companies policy from the leasing company. There was a point in time that I thought this was a "bad" deal for the customer, however I'm now leaning the other direction as of right now.

There is some alarming wording in the Assurant policy which is used by (Wells fargo & great America and I'm sure a few others). I will try and post these later also.

As far as Cash Gaps reference to looking for "inc" to help. The NJ shore is Lousiana's Katrina and then some. The devastation along the shores of NJ & NY is alarming. Many millions of dollars and volunteers have helped with untold hours of labor, materials, support, food and clothes. It's my take that if your're doing business in this region, you should offer some type of help. A gesture from Great America would help keep the tax rate at bay for this small town and would also be a great story for a press release. This is more than turning to "inc" to bail them out for a poor decision.

Art

quote:

Originally posted by fisher:

quote:

Originally posted by CashGap:

quote:

Originally posted by JasonR:

quote:

Originally posted by Art Post:
Do you think the letter to Great America would help?

There's always a chance he'd be willing to make a horrible business decision for some PR reason.

Marketing aside... no chance.

Agreed.

The client (is it a municipality?) either took a risk knowingly "Eh, flood insurance, who needs it" or unknowingly (incompetence). They now have a loss.

But, this is the trend... I made a bad decision, is there someone with the last name ", Inc." who can be coerced or compelled to pay the bill?

quote:

Originally posted by fisher:
The leasing company is now after them for the stream of payments plus the residual value of the equipment. Think about this.....the leasing company funded $8,000 for the deal and a month later when the equipment was destroyed they want $12,500 from the customer. contracted obligations to which the customer agreed.

Fixed that for you...

So, do you think it would be ethical for the leasing company to go after full stream of payments plus residual in the case I described??? I don't begrudge the leasing company a fair return on their outlay of money but to want the full stream plus residual 4 weeks after funding is excessive. That's making 40% interest on their money for a one month investment. Would you be happy as the leasing partner???? I doubt it. Keep in mind your reputation as a salesperson is attached to how your leasing partners treat the customers.

Imagine if you had a mortgage on a new house and your house burned down a month after settlement. Would it be ethical and reasonable for the bank to go after you for the 30 years worth of interest and principal?

Just trying to do the best I can for my client.

Well, of course. We all understand that there is NO question of ethics, both parties signed a contract and agreed to obligations.

Both took on risks. Now one party has experienced those risks.

Is GA entitled to what the contract says they are entitled to after 4 weeks, or only after 5? Five is pretty short... maybe they get what the contract says after 15 weeks, but not 14? Or maybe they get what the contract says if the contract goes to term but they eat it if anything bad happens prior to full term?

People will always try to find a way to move the impact of their bad decisions to the other party. Google "Counter party risk".

And certainly, it would be ethical and reasonable for the bank to demand whatever the mortgage stated the day after closing. They cannot subsidize my failure to adequately insure.

There are only three parties. The shareholders of GA. The other GA customers. The customer who experienced the loss. One of them will experience the loss. Why not the customer who experienced the loss and failed to insure against it, especially since that will be the ruling of any court in the land?

quote:

Originally posted by CashGap:

quote:

Originally posted by fisher:

quote:

Originally posted by CashGap:

quote:

Originally posted by JasonR:

quote:

Originally posted by Art Post:
Do you think the letter to Great America would help?

There's always a chance he'd be willing to make a horrible business decision for some PR reason.

Marketing aside... no chance.

Agreed.

The client (is it a municipality?) either took a risk knowingly "Eh, flood insurance, who needs it" or unknowingly (incompetence). They now have a loss.

But, this is the trend... I made a bad decision, is there someone with the last name ", Inc." who can be coerced or compelled to pay the bill?

quote:

Originally posted by fisher:
The leasing company is now after them for the stream of payments plus the residual value of the equipment. Think about this.....the leasing company funded $8,000 for the deal and a month later when the equipment was destroyed they want $12,500 from the customer. contracted obligations to which the customer agreed.

Fixed that for you...

So, do you think it would be ethical for the leasing company to go after full stream of payments plus residual in the case I described??? I don't begrudge the leasing company a fair return on their outlay of money but to want the full stream plus residual 4 weeks after funding is excessive. That's making 40% interest on their money for a one month investment. Would you be happy as the leasing partner???? I doubt it. Keep in mind your reputation as a salesperson is attached to how your leasing partners treat the customers.

Imagine if you had a mortgage on a new house and your house burned down a month after settlement. Would it be ethical and reasonable for the bank to go after you for the 30 years worth of interest and principal?

Just trying to do the best I can for my client.

Well, of course. We all understand that there is NO question of ethics, both parties signed a contract and agreed to obligations.

Both took on risks. Now one party has experienced those risks.

Is GA entitled to what the contract says they are entitled to after 4 weeks, or only after 5? Five is pretty short... maybe they get what the contract says after 15 weeks, but not 14? Or maybe they get what the contract says if the contract goes to term but they eat it if anything bad happens prior to full term?

People will always try to find a way to move the impact of their bad decisions to the other party. Google "Counter party risk".

And certainly, it would be ethical and reasonable for the bank to demand whatever the mortgage stated the day after closing. They cannot subsidize my failure to adequately insure.

There are only three parties. The shareholders of GA. The other GA customers. The customer who experienced the loss. One of them will experience the loss. Why not the customer who experienced the loss and failed to insure against it, especially since that will be the ruling of any court in the land?

We have a disturbing trend in our culture whereby we do not look at "right" or "wrong", rather, who is experience pain and who has "enough".

Let me ask this. What was their response when you immediately offered to give back your commission to help?<G>

quote:

Originally posted by Art Post:

Where I omnce knew nothing about this process, I'm sure in a few more weeks I'll be an expert in the process of guiding customers whether to take or not take the insurance companies policy from the leasing company. There was a point in time that I thought this was a "bad" deal for the customer, however I'm now leaning the other direction as of right now.

There is some alarming wording in the Assurant policy which is used by (Wells fargo & great America and I'm sure a few others). I will try and post these later also.

As far as Cash Gaps reference to looking for "inc" to help. The NJ shore is Lousiana's Katrina and then some. The devastation along the shores of NJ & NY is alarming. Many millions of dollars and volunteers have helped with untold hours of labor, materials, support, food and clothes. It's my take that if your're doing business in this region, you should offer some type of help. A gesture from Great America would help keep the tax rate at bay for this small town and would also be a great story for a press release. This is more than turning to "inc" to bail them out for a poor decision.

Art

I'm in the same boat. I now think that taking the leasing company's insurance is the best option for the customer.

My customers with leasing company coverage have had a delay of a few weeks but next week I will deliver the first unit that was covered. Took a while but its a done deal.

Another customer with their own insurance immediately got new gear right away. They were dead in the water without equipment so they did a new lease. I put on my sales order clearly that it was the customer's responsibility to pay off the previous lease.

Other customers who had their insurance company submit for them a certificate of loss payee found out after the fact that they did not have proper coverage.

Ultimately I think the least risk for the customer is to use the leasing company's insurance. Most will resist that because they have their own insurance and won't want an extra fee. In the future I will be definatly be explaining the benefits of the leasing company provided insurance even if the customer doesn't want it.

fisher:

Call me when you have a chance 732.977.1211

I beleive the T's and C's on all leases says insurance will be billed unless a certificate of insurance is provided regardless of PO or not. Also as a municipality isnt there a standard Fiscal funding out clause maybe the town councel just needs to defund the dept or copier.

Yoda:

I believe and please someone correct me if I am wrong the "out clause" is only good if they do not have enough capital funds, which to me means they wont be leasing any more office equipment