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-Neil, from Messicks here.
We're going to have a short conversation today about KTAC insurance.
Several years ago Kubota started coming out
with their own insurance product to sell along with a financing contract.
If you've ever financed a tractor or a piece of equipment before
you would have find that financing goes hand in hand with insurance.
The reason for that is because the money
that's being used to finance your tractor isn't held
by the tractor company themselves it's packaged and sold off to banks.
When that's done, certain guarantees have
to be made about the nature of the loan
the nature of the products on the loan.
One of those guarantees is that things are covered
by insurance so that there's some kind of loss.
The bank isn't necessarily going to be out the money
and the value of that machine.
Financing and insurance have always gone hand in hand for a long time.
In the past, it had been that we had to go to outside sources
in order to get insurance and now a couple years
ago Kubota came out with the KTAC product.
Selling insurance has always been something that has never felt good to us.
When you go through the sales process
we try to be as "unused-car-dealery" as possible.
There's a sense when you sit down at a salesman's desk to wrap up a sale
but when he comes to you with the extra charge
that you're being sold something that's a way for them to pad their profits.
KTAC insurance currently today costs $1.30 per thousand dollars value
of the tractor that's on the contract.
We as a dealership make $25 for selling KTAC.
It's not something that we necessarily are doing to line our profits.
Kubota themselves has always told us that it's a revenue neutral program
the goal is to cover the equipment
make the financing process happen quickly and seamlessly
so it's priced really aggressively.
When we take the dollar value that the insurance costs
and have customers go and shop with other insurance companies
it's very rare that we find an insurance company that's selling
the kind of coverage that KTAC offers at the price point that they do.
That's a little bit of an explanation about what it is
and why we have to sell it
but what has really turned to our opinion on this thing
is now that we're years into this process and we're making claims
and we're seeing the customers experiences
it's really become a very positive thing for our dealership.
I'm going to give you four different examples here
of machines that are in our shop today that we're making claims against
and what the customer stories are behind them.
As with any insurance product
you're going to get that long list of things
that are covered and not covered.
The one thing that we need to always remember
about insurance on tractors is that homeowners
is typically not an adequate product for insuring any piece of equipment.
The main reason for that is because equipment is portable
you can easily drive it off your property into another location
and as soon as you do that it's no longer insured.
A simple homeowner's policy is never adequate for insuring equipment.
KTAC is going to give you coverage on and off your property for theft
fire, breaking of glass falling objects, collisions
hails, tornadoes, hurricanes, flood, vandalism
rolling the machine over which is important
an earthquake, water damage and more.
There's a lot other things that you would normally
think of like acts of God and that kind of stuff
that are actually covered under KTAC
things like tornadoes, hurricanes and that kind of stuff are included.
Things that are excluded would be anything fraudulent.
You can't go purposefully destroy your tractor in order to get a new one
that doesn't work. If it happens to be seized
by the government for some reason that doesn't happen, that doesn't cover.
Mechanical breakdown is not covered by KTAC
because that is something that's covered by your warranty.
Mechanical breakdowns are covered
by warranty where other kinds of conditions are covered by insurance.
Simple wear and tear for the machine wearing out
if you happen to be somebody who could put hundreds
and hundreds and thousands of hours on a tractor
wearing the machine out is not an insurable thing.
Lastly, nuclear accidents we are 10 miles from Three Mile Island
war and terrorism are not covered conditions.
Most anything that you can come into as an operator
as a homeowner, as those kinds of things
are going to be insurable conditions for KTAC.
Another important thing to remember too
is that there's no insurance adjuster.
It's going to come out and look at your equipment
and insure down the value of what it is.
These are full replacement policies of the equipment.
You're being given new machines, new functional stuff
not some kind of reduced value. In the case of KTAC
we are the ones that function as the insurance company
when relating with you the machine and your customers.
It should be said that many times when we have Kubota products out in the field
that we're selling a very good quality product
one of the best on the markets.
Kubota does a very good job of delivering equipment to us without problems.
While we do occasionally make warranty claims
they are really few and far between given the volume of tractors that we sell.
More often than not when we see issues with machines
they're often induced by the owner and by the operator
and that's something that insurance is going to help you with
that warranty would not.
This L-series tractor here is a good example of that.
A couple weeks ago we had a tornado go through over here locally
and the customers in a place where they had a bunch of trees
that fell down on the property.
Then, in the course of lifting, moving and pushing some of those trees out of the way
they managed to pinch a large branch all center
between the tractor's grill guard and the loader.
They pinched that branch in there and pushed the hydraulics down
it caused the loader to hydraulically tweak and push to the side.
Where that caused a problem right back here was in the quick attachment
it caused these two pieces to pull open
and so now the mount doesn't sit properly on the boss that's behind it.
This was an easy solution for a KTAC claim
there was a damage type incident from the customer operating the tractor
so for a $250 deductible, KTAC is taking care of repairing this guy's loader.
You won't believe how long it took us to find this loader
because we were walking around out here looking for the orange mangled loader
but here it is, it's clearly not orange anymore.
In the case of this customer, this gentleman had his loader stored in his shed.
His tractor was parked elsewhere
because he had been out mowing with it and at the time the shed caught on fire.
You can see here, it did a lot of damage to the loader
melted off all the hydraulic lines
melted the loader stands everything is completely mangled.
In the case of this loader, this is a total loss.
KTAC is going to fully replace this loader for this customer
and a brand new loader will go right back on his tractor.
Our next tractor here is a total loss as well.
This is a Kubota BX25 Tractor Loader and Backhoe.
The case of this customer here this machine was out crashing
through the woods and somehow managed to smash down on top
of some rocks hard enough in order to break his transmission housing.
The repair that would have taken here for this machine given its age
put it to the point that it was a total loss.
Kubota insurance is a total loss replacement policy
so this customer is going to receive a new tractor.
Not a depreciated amount for what the tractor is worth today, a new tractor.
You should know too that because this insurance
is tied to your financing, or can be bought separately away from the tractor
any kind of financing agreements directly through KTAC themselves
it doesn't necessarily go in lockstep with your warranty.
While your warranty on a tractor like this expires at two years for the full machine
or you have an extended power train warranty in there
the insurance portion of it can go a lot longer.
That is actually the case for this machine.
This would have been out of the manufacturers normal product warranty
but this gentleman with his damage now happening five
and six years down the road while it was still insured
is still covered by KTAC and thus this will be taken care
of with the regular$250 deductible.
You notice that this BX25 is lacking a rear end and that's because it's over here.
In the case of this customer this guy was out using his tractor
and somehow managed to get his differential shredded.
If you look inside the transmission case back here
the gears for the differential are all laying right here in the bottom of the transmission.
Again, another KTAC claim because the customer
was operating the machine in the fashion that destroyed the differential
and so the guy's transmission is going to be repaired
or replaced for a $250 deductible.
That's a little explanation of the kind of claims that we make with KTAC.
As you could see, these are all major repairs
expensive stuff that because the customer
was carrying a good insurance policy
these repairs can be made at very little cost to the customer.
Next time you're in one of our dealerships and going
through the sales process and the conversation of insurance
on a financing contract comes up
don't feel like we're looking for extra profits
and trying to push you into something to pad our wallets, that's not the case.
It's something that we've really come to appreciate
because of the good customer experiences
that we've been able to have because of it.
It's really become a positive for our dealership
in the end and the kind of customer service
that we've been able to provide with these protections in place.
If you're going through the purchasing process
and we can help you look at a tractor give us a call at Messicks
we're available at 800-222-3373 or online at messicks.com.
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