DATE: April 29, 2002

TO: F&I Managers

FROM: Mark S. Krejci

RE: Gray-Market Vehicles-CNA VSC eligibility

We have received several inquiries lately regarding CNA National's policy on new vehicles manufactured for sale in Canada. The CNA National policy on placing vehicle service contracts on these vehicles has not changed. Gray-market vehicles are not eligible for new-car coverage.

Many manufacturers do not honor the factory warranty, either full or extended powertrain, on new vehicles manufactured for sale in Canada and then purchased through various means and brought into the United States for resale. CNA National is aware of other manufacturers who are cautioning their dealers against this practice and are threatening to no longer honor the factory warranty on cross-border vehicles.

However, (and you knew there would be an exception) this policy only applies to new vehicles where all full/powertrain warranties are or should be in place. If the vehicle is a used vehicle and all factory warranties have expired by time or miles, and a speedometer that registers in miles (not kilometers) has been installed, the vehicle may qualify for a CNA National used vehicle contact. All other underwriting guidelines regarding eligibility must be met.

If you have any questions, please contact Laura Reardon at 223-0085 x21 prior to selling a service contract on the vehicle in question.

Thank you for the opportunity to serve you!

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