EXHIBIT 10(e)

                               SECURITY AGREEMENT


THIS SECURITY AGREEMENT ("Security Agreement") is made the 1st day of October,
2002, between Warrantech Corporation, WCPS of Florida, Inc., Warrantech Consumer
Product Services, Inc., Warrantech Home Assurance Company, Warrantech Home
Service Company, Warrantech Automotive of Florida, Inc., Vemeco, Inc., and
Warrantech Automotive, Inc. (collectively, "Debtor"), on the one hand, and Great
American Insurance Company, GAI Warranty Company and GAI Warranty Company of
Florida (collectively, "Secured Party"), on the other hand.

This Security Agreement is entered into with respect to certain financial
accommodations (the "Loan") to be made by Secured Party to Debtor pursuant to a
Support Agreement (the "Support Agreement") dated the same date as this Security
Agreement.

Secured Party and Debtor agree as follows:

Definitions.

"COLLATERAL." THE COLLATERAL SHALL CONSIST OF ALL OF THE FOLLOWING PERSONAL
PROPERTY OF DEBTOR, WHEREVER LOCATED, AND NOW OWNED OR HEREAFTER ACQUIRED:

Accounts; and proceeds and products of the foregoing.

"OBLIGATIONS." THIS SECURITY AGREEMENT SECURES THE PAYMENT OR REPAYMENT, AS THE
CASE MAY BE, BY DEBTOR OF ALL AMOUNTS OWED, NOW OR IN THE FUTURE, UNDER
PARAGRAPHS 2, 3 AND 5 OF THE SUPPORT AGREEMENT.

"UCC." THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF OHIO.

ANY TERM USED IN THE UCC AND NOT DEFINED IN THIS SECURITY AGREEMENT HAS THE
MEANING GIVEN TO THE TERM IN THE UCC.

                           Grant of Security Interest.

Debtor grants a security interest in the Collateral to Secured Party to secure
the payment or performance of the Obligations.

                        Perfection of Security Interests.

FILING OF FINANCING STATEMENT. DEBTOR AUTHORIZES SECURED PARTY TO FILE A
FINANCING STATEMENT (THE "FINANCING STATEMENT") DESCRIBING THE COLLATERAL.

POSSESSION. WHERE COLLATERAL IS IN THE POSSESSION OF A THIRD PARTY, DEBTOR WILL
JOIN WITH SECURED PARTY IN NOTIFYING THE THIRD PARTY OF SECURED PARTY'S SECURITY
INTEREST AND OBTAINING AN ACKNOWLEDGMENT FROM THE THIRD PARTY THAT SUCH THIRD
PARTY IS HOLDING THE COLLATERAL FOR THE BENEFIT OF SECURED PARTY.

Post-Closing Covenants and Rights Concerning the Collateral.

INSPECTION. THE PARTIES TO THIS SECURITY AGREEMENT MAY INSPECT ANY COLLATERAL IN
THE OTHER PARTY'S POSSESSION, AT ANY TIME UPON REASONABLE NOTICE.

SECURED PARTY'S COLLECTION RIGHTS. SECURED PARTY SHALL HAVE THE RIGHT AT ANY
TIME DURING THE OCCURRENCE AND CONTINUANCE OF AN EVENT OF DEFAULT TO ENFORCE
DEBTOR'S RIGHTS AGAINST THE ACCOUNT DEBTORS AND OBLIGORS.

Debtor's Representations and Warranties.

      Debtor warrants and represents that:


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TITLE TO AND TRANSFER OF COLLATERAL. DEBTOR HAS RIGHTS IN OR THE POWER TO
TRANSFER THE COLLATERAL AND ITS TITLE TO THE COLLATERAL IS FREE OF ALL ADVERSE
CLAIMS, LIENS, SECURITY INTERESTS AND RESTRICTIONS ON TRANSFER OR PLEDGE EXCEPT
AS CREATED BY THIS SECURITY AGREEMENT.

LOCATION, STATE OF INCORPORATION AND NAME OF DEBTOR. DEBTOR'S:

chief executive offices are located in the State(s) identified in Exhibit A;
states of incorporation are the states (each, a "Debtor State") identified in
Exhibit A; and exact legal names are as set forth in the first paragraph of this
Security Agreement.

Debtor's Covenants.

      Until the Obligations are paid in full, Debtor agrees that it will:

PRESERVE ITS CORPORATE EXISTENCE AND NOT, IN ONE TRANSACTION OR A SERIES OF
RELATED TRANSACTIONS, MERGE INTO OR CONSOLIDATE WITH ANY OTHER ENTITY, OR SELL
ALL OR SUBSTANTIALLY ALL OF ITS ASSETS; PROVIDED, HOWEVER, DEBTOR MAY MERGE INTO
OR CONSOLIDATE WITH AN AFFILIATE SO LONG AS SUCH AFFILIATE HAS DELIVERED A
SECURITY AGREEMENT SUBSTANTIALLY IN THIS FORM TO SECURED PARTY; AND

NOT CHANGE THE STATE OF ITS INCORPORATION OR ITS CORPORATE NAME WITHOUT
PROVIDING SECURED PARTY WITH 30 DAYS' PRIOR WRITTEN NOTICE.

Events of Default.

The occurrence of any of the following shall, at the option of Secured Party, be
an Event of Default:

DEBTOR'S FAILURE TO TIMELY MAKE PAYMENTS TO SECURED PARTY PURSUANT TO PARAGRAPH
2 OR 3 OF THE SUPPORT AGREEMENT, EXCEPT AS A RESULT OF THE ACCELERATION OF THE
OBLIGATIONS BY THE SECURED PARTY FOR ANY REASON OTHER THAN A FAILURE BY DEBTOR
TO MAKE A PAYMENT UNDER PARAGRAPH 2 OR 3 OF THE SUPPORT AGREEMENT, AND SUCH
FAILURE TO TIMELY MAKE PAYMENTS REMAINS UNCURED FOR MORE THAN 30 DAYS AFTER
SECURED PARTY PROVIDES DEBTOR WITH WRITTEN NOTICE OF SUCH FAILURE; OR

DEBTOR'S FAILURE TO DEPOSIT SUMS INTO THE RELIANCE RELIEF FUND (AS DEFINED IN
THE SUPPORT AGREEMENT) AS REQUIRED BY PARAGRAPH 5 OF THE SUPPORT AGREEMENT AND
EXHIBIT A TO THE SUPPORT AGREEMENT, IF SUCH FAILURE REMAINS UNCURED FOR MORE
THAN 30 DAYS AFTER SECURED PARTY PROVIDES DEBTOR WITH WRITTEN NOTICE OF SUCH
FAILURE, provided, however, that Secured Party shall not be permitted to
immediately exercise its rights hereunder if an Event of Default under
Subsection 7.1 or 7.2 arises or results from a "circumstance within Secured
Party's control." For purposes hereof, a "circumstance within Secured Party's
control" shall be defined as:

Secured Party's failure for any reason (A) to process and pay within 5 business
days warranty claims submitted in proper form (as determined by course of
dealing between and among the parties as of the date hereof) by Debtor or
Debtor's affiliates or (B) to pay any amount owed to Debtor pursuant to any
other agreements between or among any of the parties; or

      (i)   Secured Party's setoff of funds owed to Secured Party pursuant to
            any agreement or otherwise against sums owed to Debtor, such that
            the reduced cash flow to Debtor renders Debtor unable to meet its
            obligations under Paragraph 2, 3 or 5 of the Support Agreement.

If an Event of Default arises or results from a circumstance within Secured
Party's control, Debtor shall advise Secured Party in writing of the cause of
such Event of Default, and Debtor shall not be deemed in default hereunder until
Secured Party shall have cured the circumstance within Secured Party's control
and a period of 60 days shall have elapsed. If Debtor remains in default for 60
days or more after Secured Party has cured the circumstance within Secured
Party's control (and such circumstance has remained cured), then Secured Party
may notify Debtor of its default and may proceed to exercise its rights
hereunder.


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Default Costs.

Should an Event of Default occur and be continuing, Debtor will pay to Secured
Party all costs reasonably incurred by the Secured Party for the purpose of
enforcing its rights hereunder, including costs of foreclosure and costs of
obtaining money damages.

Remedies Upon Default.

Upon any Event of Default that is continuing:

      DEBTOR SHALL BE DEEMED TO HAVE GRANTED SECURED PARTY A LIMITED LICENSE TO
      ENTER AND REMAIN UPON DEBTOR'S PREMISES AT 121 AIRPORT CENTRE, BEDFORD,
      TEXAS (THE "PREMISES"), FOR THE SOLE AND EXCLUSIVE PURPOSE OF USING
      DEBTOR'S COMPUTER SYSTEMS AND DATABASES TO THE EXTENT NECESSARY (I) TO
      COLLECT THE COLLATERAL IN WHICH SECURED PARTY HOLDS A SECURITY INTEREST
      HEREUNDER AND (II) TO PAY WARRANTECH CLAIMS (AS DEFINED IN THE SUPPORT
      AGREEMENT) THAT DEBTOR AND/OR DEBTOR'S AFFILIATE BUTLER FINANCIAL
      SOLUTIONS LLC HAVE A LEGAL OBLIGATION TO PAY. IN ACCORDANCE WITH THIS
      LIMITED LICENSE, SECURED PARTY MAY REMAIN UPON THE PREMISES UNTIL ALL SUCH
      COLLATERAL HAS BEEN COLLECTED AND ALL SUCH CLAIMS HAVE BEEN PAID BUT IN NO
      EVENT LONGER THAN 180 DAYS FROM THE DATE WHEN SECURED PARTY FIRST ENTERED
      THE PREMISES PURSUANT TO THIS SECTION 9.

      SECURED PARTY MAY PURSUE ANY REMEDY AVAILABLE AT LAW (INCLUDING THOSE
      AVAILABLE UNDER THE PROVISIONS OF THE UCC), OR IN EQUITY TO COLLECT,
      ENFORCE OR SATISFY ANY OBLIGATIONS THEN OWING, WHETHER BY ACCELERATION OR
      OTHERWISE.

Foreclosure Procedures.

NO WAIVER. NO DELAY OR OMISSION BY SECURED PARTY TO EXERCISE ANY RIGHT OR REMEDY
ACCRUING UPON ANY EVENT OF DEFAULT WHICH IS CONTINUING SHALL: (A) IMPAIR ANY
RIGHT OR REMEDY, (B) WAIVE ANY DEFAULT OR OPERATE AS AN ACQUIESCENCE TO THE
EVENT OF DEFAULT, OR (C) AFFECT ANY SUBSEQUENT DEFAULT OF THE SAME OR OF A
DIFFERENT NATURE.

NOTICES. SECURED PARTY SHALL GIVE DEBTOR SUCH NOTICE OF ANY PRIVATE OR PUBLIC
SALE AS MAY BE REQUIRED BY THE UCC.

WARRANTIES. SECURED PARTY MAY SELL THE COLLATERAL WITHOUT GIVING ANY WARRANTIES
AS TO THE COLLATERAL. SECURED PARTY MAY SPECIFICALLY DISCLAIM ANY WARRANTIES OF
TITLE OR THE LIKE. THIS PROCEDURE WILL NOT BE CONSIDERED ADVERSELY TO AFFECT THE
COMMERCIAL REASONABLENESS OF ANY SALE OF THE COLLATERAL.

PURCHASES BY SECURED PARTY. IN THE EVENT SECURED PARTY PURCHASES ANY OF THE
COLLATERAL BEING SOLD, SECURED PARTY MAY PAY FOR THE COLLATERAL BY CREDITING
SOME OR ALL OF THE OBLIGATIONS OF THE DEBTOR.

NO MARSHALING. SECURED PARTY SHALL HAVE NO OBLIGATION TO MARSHAL ANY ASSETS IN
FAVOR OF DEBTOR, OR AGAINST OR IN PAYMENT OF ANY OF THE OBLIGATIONS.

Miscellaneous.

ASSIGNMENT. THIS SECURITY AGREEMENT SHALL BIND AND SHALL INURE TO THE BENEFIT OF
THE HEIRS, LEGATEES, EXECUTORS, ADMINISTRATORS, SUCCESSORS AND ASSIGNS OF
SECURED PARTY AND SHALL BIND ALL PERSONS WHO BECOME BOUND AS A DEBTOR TO THIS
SECURITY AGREEMENT.

SEVERABILITY. SHOULD ANY PROVISION OF THIS SECURITY AGREEMENT BE FOUND TO BE
VOID, INVALID OR UNENFORCEABLE BY A COURT OR PANEL OF ARBITRATORS OF COMPETENT
JURISDICTION, THAT FINDING SHALL ONLY AFFECT THE PROVISIONS FOUND TO BE VOID,
INVALID OR UNENFORCEABLE AND SHALL NOT AFFECT THE REMAINING PROVISIONS OF THIS
SECURITY AGREEMENT.

NOTICES. ANY NOTICES REQUIRED BY THIS SECURITY AGREEMENT SHALL BE DEEMED TO BE
DELIVERED WHEN A RECORD HAS BEEN (A) DEPOSITED IN ANY UNITED STATES POSTAL BOX
IF POSTAGE IS PREPAID, AND THE NOTICE PROPERLY ADDRESSED TO THE INTENDED
RECIPIENT, (B) RECEIVED BY TELECOPY, (C) RECEIVED THROUGH THE INTERNET, AND (D)
WHEN PERSONALLY DELIVERED.

HEADINGS. SECTION HEADINGS USED THIS SECURITY AGREEMENT ARE FOR CONVENIENCE
ONLY. THEY ARE NOT A PART OF THIS SECURITY AGREEMENT AND SHALL NOT BE USED IN
CONSTRUING IT.

GOVERNING LAW. THIS SECURITY AGREEMENT IS BEING EXECUTED AND DELIVERED AND IS
INTENDED TO BE PERFORMED IN THE STATE OF OHIO AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE


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<PAGE>

WITH THE LAWS OF THE STATE OF OHIO, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES
FOR THE APPLICATION OF THE LAW OF A DEBTOR STATE.

RULES OF CONSTRUCTION.

No reference to "proceeds" in this Security Agreement authorizes any sale,
transfer, or other disposition of the Collateral by the Debtor.

"Includes" and "including" are not limiting.

"Or" is not exclusive.

"All" includes "any" and "any" includes "all."

INTEGRATION AND MODIFICATIONS.

This Security Agreement is the entire agreement of Debtor and Secured Party
concerning its subject matter. Any modification to this Security Agreement must
be made in writing and signed by the party adversely affected.

WAIVER. ANY PARTY TO THIS SECURITY AGREEMENT MAY WAIVE THE ENFORCEMENT OF ANY
PROVISION TO THE EXTENT THE PROVISION IS FOR ITS BENEFIT.

FURTHER ASSURANCES. DEBTOR AGREES TO EXECUTE ANY FURTHER DOCUMENTS, AND TO TAKE
ANY FURTHER ACTIONS, REASONABLY REQUESTED BY SECURED PARTY TO EVIDENCE OR
PERFECT THE SECURITY INTEREST GRANTED HEREIN, TO MAINTAIN THE FIRST PRIORITY OF
THE SECURITY INTERESTS, OR TO EFFECTUATE THE RIGHTS GRANTED TO SECURED PARTY
HEREIN.

TERMINATION. THIS SECURITY AGREEMENT AUTOMATICALLY SHALL TERMINATE AND BE OF NO
FURTHER FORCE OR EFFECT WHEN ALL OBLIGATIONS HAVE BEEN PAID OR PERFORMED IN FULL
AND DEBTOR HAS ADVISED SECURED PARTY IN WRITING THAT DEBTOR NO LONGER REQUIRES
THE EXTENDED PAYMENT TERMS SET FORTH IN THE SUPPORT AGREEMENT.


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The parties have signed this Security Agreement as of the day and year first
above written.

"DEBTOR"

WARRANTECH CORPORATION
WCPS OF FLORIDA, INC.
WARRANTECH CONSUMER PRODUCT SERVICES, INC.
WARRANTECH HOME ASSURANCE COMPANY, INC.
WARRANTECH HOME SERVICE COMPANY
WARRANTECH AUTOMOTIVE OF FLORIDA INC.
VEMECO, INC.
WARRANTECH AUTOMOTIVE, INC.


By:/s/ Joel San Antonio
------------------------------
Its: Chairman
Printed Name: Joel San Antonio


"SECURED PARTY"

GREAT AMERICAN INSURANCE COMPANY
GAI WARRANTY COMPANY
GAI WARRANTY COMPANY OF FLORIDA, INC.

By: /s/ Rene Henderson
------------------------------
Its: VP
Printed Name: Rene Henderson


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                                    EXHIBIT A

                              TO SECURITY AGREEMENT
<TABLE>
<CAPTION>
----------------------------------------     ---------------------------      ---------------------------
Debtor's Name                                Chief Executive Offices          State of Incorporation
----------------------------------------     ---------------------------      ---------------------------
<S>                                          <C>                              <C>
Warrantech Corporation                       [300 Atlantic Street             Delaware
                                             Stamford, CT  06901]
                                             [121 Airport Centre
                                             Bedford, TX  [76021]]
----------------------------------------     ---------------------------      ---------------------------
WCPS of Florida, Inc.                                                         Florida
----------------------------------------     ---------------------------      ---------------------------
Warrantech Consumer Product Services,
Inc.                                                                          Connecticut
----------------------------------------     ---------------------------      ---------------------------
Warrantech Home Assurance Company                                             Florida
----------------------------------------     ---------------------------      ---------------------------
Warrantech Home Service Company                                               Connecticut
----------------------------------------     ---------------------------      ---------------------------
Warrantech Automotive of Florida, Inc.                                        Florida
----------------------------------------     ---------------------------      ---------------------------
Vemeco, Inc.                                                                  Connecticut
----------------------------------------     ---------------------------      ---------------------------
Warrantech Automotive, Inc.                                                   Connecticut
----------------------------------------     ---------------------------      ---------------------------
</TABLE>


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