The Colorado Floods and How Extended Warranties Could have Helped You and Your Dealership
In an unfortunate situation like the recent Colorado floods, can extended warranties help?
Although the final cost of damages from the recent Colorado Floods will not be known for at least a couple months and maybe even years, it’s safe to say that the financial damages will far exceed hundreds of millions of dollars and some analysts are even reporting that this could be Colorado’s first $1 Billion disaster. Unfortunately, this 100-year like flood came down on Colorado with fury and vengeance with 15-foot walls of water taking down anything and everything in its path.
One thing that many Americans would not know except for possibly extensive coverage of the region or being a part of the oil industry is that Colorado has become an increasingly popular oil state with many new oil wells being drilled each year. In Weld County, CO, a town right in the heart of the flooding that occurred a little less than two weeks ago, there are about 20,000 registered oil wells. As more resources were discovered out west, many farms took to drilling oil wells to supplement their production costs. And, I mean why not? Finding oil on your land is a guaranteed source of income and could last for a long time depending on how big the oil reserve is.
The Colorado Floods forced 1,900 wells to be shut off and closed up in Weld County alone for fear of hazardous leaks and damage to the pumps and pipes. Many environmentalists are now blaming the state for allowing drilling pads so close to the river. In good faith, there were no reports of failed pumps and any contamination story heard over twitter had apparently been extravagant and false. The true story, however, is that the flood waters completely topped oil storage tanks, construction equipment, and that accounted for about 38,000 gallons of oil to spread out on top of the water and leave an oily dark glare. 38,000 gallons accounts for about 5% of an Olympic sized swimming pool. Clean up efforts of the oil were quick. But unfortunately equipment and infrastructure damages are proving to me more timely and costly.
If you put it in perspective, 20,000 wells in one county could mean even twice as many pieces of construction equipment that could have been damaged. Though the numbers of those damages haven’t come out as of yet, I’d presume that thousands of machines were damaged by the water and probably about half of those will be inoperable as a result. This can be extremely costly to you as a dealer and your customers if you or they did not carry extended warranty contracts on your equipment. If you were a farm that was just managing to stay afloat, and then this flood came along, your extended warranty contract would offer you a glimpse of hope in the stormy waters.
Extended warranties can be offered on most every piece of construction equipment today. It offers an added protection against the life of the machine so that you aren’t left to manage and pay for faulty OEM defects if it happens to be a dud. Most OEMs are getting very good at eliminating these costly malfunctions but extended warranties can help eliminate the headaches when it does happen.
Natural disasters happen all over the world. Storms turn up in random and not so random places. Tornadoes continue to rip through the South and the Midwest and hurricanes and typhoons plague the entire East and West coasts. Make sure you’re construction equipment is protected the next time that 100-year storm comes rolling through your town. Don’t be the one that says it will never happen to him…
