Thought Leadership

The 3 Ws of a DOWC: Who? What? Why (Not!)?

Insight on F&I Structure Options

You’ve likely seen the term DOWC (a safe bet since you’ve landed on our website!), but you may not be entirely sure what irefers toHere’s an overview that you won’t want to miss because understanding what a DOWC is and how it functions may be a direct route to greater wealth for your dealership. 

Who is DOWC? 

We are DOWC®a leading provider and administrator of F&I products and dealer servicesFounded by Michael LaMotta, DOWC is a family-owned company that combines more than 30 years of automotive industry experience with cutting-edge digital process automation. We deliver a full suite of F&I purchase and protection products and solutions to dealers and their customers.  

What is a DOWC? 

A dealer-owned warranty company (DOWC) is a unique structure that brings the tax advantages of the insurance industry to automotive F&I, creating a true wealth-building opportunity for dealers. 


At DOWC, we help dealers create their own DOWC (see what we did there?) to gain significant tax benefits and additional advantages that help optimize their Finance & Insurance program. 

With a dealerowned warranty company, a dealer forms a separate C-corporation that controls the entire service contract transaction and all funds, including investments. This new entity becomes the provider of the contracts, providing an alternative to using a third-party to hold reservesand is treated as an insurance company for tax purposes. 

While it may seem a complicated endeavor, its benefits can be outlined in simple terms. And with the correct administration, a DOWC formation is actually very easy to manage and, most importantly, prosper from. Consider these key benefits: 

  • The tax-deferred nature of a DOWC allows the dealer to take advantage of the same tax laws that insurance companies have been operating under for decades.
  • Essentially, the company has no taxable income for an extended period of time as a result of numerous expenses: administration and acquisition costs in the current tax year; net operating losses are carried forward.
  • Dealers who switch to a DOWC structure are now filing the same tax returns as Property & Insurance companies, which account for the tax deferral created by the compounding net operating losses (NOLs). 

It’s easy to understand why making the switch can seem intimidating. Some dealers may not understand what a dealer-owned warranty company is or how it functions. Or they may find it scary to shift gears after many years in a more traditional reinsurance structure or limited participation with a guaranteed retro agreement. But the time is now to explore the advantages and opportunities for wealth-enhancement that are readily available to all. 

Why DOWC? 

Under a traditional service contract transaction model, a significant portion of the profit is held by a third party that controls the funds to its own benefit. (Why is that a good idea?!) 

The DOWC structure proves there’s a better way: 

  • When a DOWC serves as its provider, the dealer immediately has 100% control over their F&I program, including rates, coverages, and marketing materials, as well as the company name. In addition to increasing profit potential on F&I sales, the ability to customize their F&I offerings means a dealer can build a portfolio of products that caters to a variety of vehicles and consumer needs.
  • Underwriting profits and investment income are retained solely by the dealer’s DOWC. Compare this to other structures where premiums may be exempt from tax, but investment income returns are taxed at normal corporate rates. 
  • A DOWC is not the same as an NCFC or CFC — it is not a foreign company at all. The structure allows dealers to stay onshore and benefit from domestic formation, as opposed to having to maintain foreign companies and being forced to invest with money managers preferred by an administrator. This can provide significant cash flow and a dealer can also borrow for virtually any purpose. 

So, why a DOWC? The better question may be why not? 

And why choose DOWC® as a partner? Because we’re the only company in the market that combines the advantage of the DOWC structure with real access to cash. We bring the business of dealerowned warranty products customizable and compliant F&I products that can be used to your advantage – to dealers on a large scale, along with personalized service and real wealth-building power.  


When it comes to partnering with dealers, we provide assistance during the formation and implementation of their dealer-owned warranty company, as well as regular performance monitoring as a trusted administrator.  

DOWC: It’s our name. It’s what we do. Contact us today to learn more and take the first step on the path to greater control and greater wealth.