Unlicensed ‘Vehicle Service Contract’ Business Ordered to Cease and Desist

The Insurance Commissioner’s office is still investigating, but so far 1,044 Californians were found to have paid a total of $2.3 million in extended vehicle repair contracts that were sold outside the state’s insurance rules. Seven people in Santa Barbara County were on Commissioner Ricardo Lara’s list as having bought the policies, which ranged in price from $1,300 to $2,600.

Lara charges that Delta Auto Project was not licensed by the California Department of Insurance to sell vehicle service contracts, often called “extended warranties.” Lara claims the group, led by Charles Seruya of New Jersey under the name Omega Vehicle Services of Pennsylvania, improperly denied claims, used a backup insurer not approved by the state, and illegally sold contracts online directly to consumers that they did not first file with the insurance department.

Delta and Seruya were ordered to stop selling the policies in California at the risk of a $5,000 daily penalty for “transacting insurance business without a license.” The company’s website today states the vehicle service contracts are not available in California and five other states.

The contracts date back to 2015 and offer the replacement of covered parts or the repair of a breakdown up to the price paid for the vehicle. One person who bought a contract in 2016 said his Mercedes-Benz was fixed under the policy. The customer, who asked not to be identified, was curious and checked back with the service manager three weeks after the work was finished; the manager told him the bill hadn’t been paid but not to worry about it. Another Delta Auto Project customer who bought a policy in 2017 said they covered initial work on her Lexus. Recently, she tried to have repairs performed under the contract, however, and all were declined.

The California Department of Insurance continues to review customers’ claims. Purchasers of a Delta Auto Protect Vehicle Service Contract who’ve been denied a refund can contact Lara’s agency at DeltaAuto@Insurance.ca.gov before November 13. The department needs the name of the contract holder, the amount paid, and a copy of the contract.

“Consumers should be careful when purchasing warranties like Vehicle Service Contracts over the phone or online,” Lara said in an announcement of the Cease and Desist Order. “If something seems too good to be true, most of the time it is.”

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