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The Protective DOWC Program

A superior dealer owned warranty company

A dealer owned warranty company is a domestic warranty company owned by the dealer principal, with day-to-day operations handled by Protective. The owner(s) control the program branding and select which F&I products are offered in their stores. The dealer has total visibility into all investments and transactions. A Protective DOWC is taxed as an insurance company under federal tax laws, leading to significant tax efficiencies.

Business handshake
What is a Protective DOWC Program?

Simply put: It’s a superior participation program.

With a Protective DOWC (Dealer Owned Warranty Company) program, the dealer owns a warranty and service contract company without the challenges of administration. Through the benefit of lower fees and higher investment returns, a Protective DOWC program can capture the highest percentage of underwriting profit and investable assets in relation to other dealer participation programs, while our team handles the day-to-day operations.

Compare the Protective DOWC program to other F&I participation programs – and soon you’ll see there’s no comparison. Protective Asset protection doesn’t just offer a DOWC program. We invented it. Using a consultative approach, our specialists work with you to understand the goals of your program and help design a solution to help maximize the potential of your F&I program.

Significant Tax Efficiencies Without Additional Fees

Because a Protective DOWC is taxed as a P&C insurance company, shareholders realize federal tax efficiencies in addition to the even more important byproduct of enhancing the customer experience and creating customer loyalty:

  • Potentially tax-free underwriting profit for a significant number of years, with proper planning and management
  • Because a Protective DOWC is a U.S.-based company, there are no tax risks associated with overseas funds
  • Because a Protective DOWC is taxed as an insurance company under federal tax laws, policy acquisition costs can be written off from the first year of operations
  • Corporate dividends are treated as qualified dividends and are taxed at the capital gains rate

A Protective DOWC program also increases the bottom line because there is only one all-in administration fee. There are no ceding fees, annual maintenance fees, loss adjustment fees, claims fees, run-off fees, non-disclosed fees, or “just because” fees.

Man at computer smiling from Protective DOWC tax savings
Woman leading Protective DOWC product picking meeting
Call the Shots and Know Where Every Dollar Is Every Day

Similar to ownership of a dealership, a Protective DOWC program belongs to the shareholders. So all the decisions are made by the management team:

  • Pick the products. Select the F&I products that work for the dealership and its customers, from service contracts and pre-paid maintenance plans to road hazard, theft deterrent, and paint and fabric protection, among others.
  • Choose investments. Ownership or the management team decides how to invest money with a Protective DOWC program. And they don’t pay anyone an extra fee to invest it on their behalf.
  • Invest money immediately. Money starts earning interest right away. As the administrator, we don’t hold onto it. No one touches the money but ownership.

In addition to decision-making authority, a Protective DOWC program is the only dealer participation structure that offers total financial transparency. Forget about reinsurance cession statements or quarterly reports. The management team has 24/7 access to the company’s financial information, including balance sheets and income statements.

That means there are no surprises. Only better income opportunities.

Optimize Income Without Being the Contractual Obligor

A Protective DOWC program puts the ownership/management team in the driver’s seat of a company that’s designed to work for them:

  • Forecast better. With a complete understanding of the financials and on-demand reporting, they’re better able to forecast and plan.
  • Improve profit margins. Other dealer participation programs can come with heavy administrative costs. There are no extra, hidden, or surprise fees with a Protective DOWC program.
  • Boost the dealer's bottom line. A Protective DOWC program typically provides up to a 20% increase compared to other dealer participation programs.
  • Increase capital acquisitions. As net worth grows, ownership can take out capital loans from a Protective DOWC program to invest in new dealerships or other growth projects.

What a Protective DOWC program is not is a dealer obligor program, and it does not have the negative accounting treatment of a dealer obligor program. The Protective DOWC program is a separate legal entity, backed by the financial strength of Protective Property & Casualty Insurance Company.

In five decades of managing DOWCs, not one Protective DOWC program has failed or caused loss to the Protective DOWC program shareholders.

Man presenting Protective DOWC financial forcasting

Enjoy Having Control Over Your F&I Program

  • Dealer reserves, consumer contract coverages, and marketing materials, as well as the company name, and state of incorporation are some of the options managed by DOWC ownership.
  • A Protective DOWC program offers the best of both worlds with the tax deferral advantages of a non-controlled foreign corporation (NCFC) and the cash flow benefits of a controlled foreign corporation (CFC)
  • Underwriting profits and investment income are retained solely by the dealer owned warranty company.
  • With less restrictive investment allocations than traditional dealer participation programs, a Protective DOWC program offers the potential of a significantly higher risk-adjusted return on equity and assets.
  • Flexibility to receive current income or long-term capital appreciation.
  • The dealer is not the contractual obligor of service contracts.


Protective Asset Protection helps you with the set-up of your DOWC, and handles all of the day to day operations for the DOWC. This includes: Underwriting, Claims, Financial Statement Preparation and Reporting, and “Real time” Online Entry and Reporting.

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Protective Asset Protection delivers value to agents, dealerships, and financial institutions by building long-term relationships and offering innovative solutions to improve customer satisfaction while increasing F&I revenue. Let us help you increase your F&I profitability.