All You Need to Know About Car Warranty Companies
Car warranty companies are businesses that offer extended warranty plans for vehicles, which cover the cost of repairs or replacements needed for certain parts and systems in a car after the manufacturer’s warranty has expired. These companies typically offer a variety of plans with different levels of coverage and terms. For example, some plans may cover only the cost of parts, while others will also cover the cost of labor. The terms and conditions of the warranty will vary depending on the warranty company and the plan selected.
One of the primary responsibilities of a car warranty company is to arrange for the payment of covered repairs or replacements, either by reimbursing the car owner or directly paying the mechanic performing the work . If there are any issues with the warranty—such as a failure to pay for a covered repair—these issues may lead to problems for the car owner such as having to pay out of pocket for work on their car or vehicle or having to pay the mechanic directly.
In some cases, a car warranty company may deny a claim because it believes that the repair or replacement is not covered by the terms of the warranty. This could involve a logic like, for instance, that the part that needs to be repaired or replaced is part of the vehicle’s normal maintenance. Issues that people commonly experience with car warranty companies that might lead them to consider legal action include failure to pay for or reimburse covered repairs, certain actions or lack of action related to maintenance of the coverage itself or the services paid for by the coverage, breach of contract and failure to comply with consumer protection laws.
When to Sue a Car Warranty Company
Those who obtain an extended car warranty generally rely on the business to pay for covered repairs and service, so it’s no surprise that consumers worry about filing a lawsuit against a warranty company. However, when the business refuses to honor a warranty – in some cases, after taking payment for a repair that wasn’t even completed – it often becomes a matter of principle to pursue action.
One of the more common reasons for legal action against a car warranty company is a denied claim. For example, a car owner with the powertrain protection plan on a Saturn Ion may experience problems with the vehicle’s drive shaft; although this problem would be covered under the warranty, under the terms and conditions of the policy, the warranty provider can directly inspect the issue before authorization is granted. While this is not an uncommon provision in the coverage agreement, it does not allow for a denial of the claim or delay in service if the code reader indicates that the drive shaft is indeed the problem. If the company attempts to delay service while waiting for a different part (in this case, the entire transmission system), a lawsuit may be appropriate.
The issue of delays also fits in with a common reason for lawsuits. In another real world example, a consumer may again have a powertrain protection plan, which requires a rental car during a covered repair. The vehicle is repaired by a local dealership in Toledo, Ohio, and the consumer elects to use her plan’s rental car reimbursement, which allows for reimbursement of commuting expenses at $30.00 per day (for up to 30 days). Although the consumer used the Plan to cover the rental car expenses at the local dealership (which is generally a matter of three transactions from the warranty provider), after just six days, the company contacted the consumer and informed her that no further reimbursement would be made since the repairs were not authorized prior to the vehicle’s breakdown. When the consumer contacted the dealership to ask for reimbursement of the remaining balance, she was told by the service manager that there was nothing that they could do, since the consumer had specifically asked them not to contact the warranty company until she returned home, and then proceeded to follow-up the next day.
Any situation where a customer is deceived by the warranty company – including instances in which product was shipped, but payment was never accepted – is also a potentially litigation-worthy situation.
How to Determine if You Have a Solid Case
Before you jump straight to suing a car warranty company, it’s important to first assess whether your claim is valid. For most people, their car is one of their most expensive possessions, which is why most will want every issue with their car to be addressed as soon as possible. However, along with that, consumers also want the experience of getting their car repaired to be as painless as possible. After all, it’s hard to concentrate on your day-to-day life when you have to spend hours on the phone with customer service representatives or worry about how long the repairs will take when you’re without your car. Therefore, before you prepare to sue a car warranty company, you should first make sure that your claim is actually valid; otherwise, you may be wasting your time and your money.
The first step in determining whether or not your claim is valid is to review your warranty contract. Take a look at the fine print of your agreement to see whether or not your claim is covered. In most cases, your warranty will cover any failure due to defects in materials or workmanship for a limited time and/or for a certain number of miles driven, so you’ll want to confirm that your claim falls under those categories.
After reviewing the contract to confirm coverage, get a better understanding of your basic rights. No matter who you are or what you’re trying to do, you have basic consumer rights and insurance rights. For example, most car warranty companies are required by law to resolve issues within 30 days, so if the company has already failed to do so, you are in the clear to seek further action.
After you’ve evaluated your warranty to determine coverage and your car warranty rights to determine that you still have a case even after waiting for the warranty company to pay up, the next step is to collect documentation of your claim. It’s important to do this step to cover your own rear-end. If you later decide to file a lawsuit, you’ll need to bring this documentation with you. Many people are under the impression that they will be able to win their case with just their word, but that’s not necessarily true. Therefore, the next step, after evaluating the validity of your car warranty claim and your overall consumer rights, is to collect documentation of your claim.
Documentation should include your warranty contract, receipts for all related repairs and services, any written or email communication you’ve had with your car warranty company, and even proof that you filed complaints with outside sources like the BBB or your state insurance commissioner. With this information, you’ll be better prepared, should you later choose to take legal action against the warranty company.
Necessary Legal Procedures Prior to Filing a Lawsuit
Before proceeding toward legal action, consumers should consider various avenues for redress. As with general consumer disputes, most vehicle service contract companies have access to mediation or arbitration services to resolve consumer claims.
When an account holder files a complaint with a consumer protection agency such as the Better Business Bureau (BBB), a window of opportunity opens for the company to respond and perhaps remedy an issue without protracted litigation. Similarly, write a letter to the business whose product or service failed within warranty terms before contacting an attorney. Keep in mind that every contact with the company or its representative is subject to documentation or otherwise convertible to a written record. Make written notes of all phone calls, including the person’s name for the record, and don’t hesitate to ask for a supervisor when the call does not go well. Electronic communications are also very important, particularly when they convey information in the company’s possession about previous contact. Request an electronic copy of the agreement and ask for vehicle repair records on the same day as submission of an official complaint to the BBB or other consumer agency. The communication indicates that the account is important enough to invoke arbitration and that the company may otherwise have to incur greater expenses through the additional processing. If no offer is forthcoming after these initial contacts, consider formal demands for relief before proceeding toward lawsuit. A certified letter to the company’s registered agent may accomplish a quick resolution when other contacts fail. Make copies of the letter for personal records and its return receipt upon delivery to the company. Don’t forget to document everything that is happening with the car and the warranty. Take pictures of repairs, show-off warning lights on the dashboard, and record any other problems that delay repairs or signal deficiency. Failing to speak up about an ongoing issue may play negatively on a case later when the vehicle service contract company suggests that the problem was only a minor inconvenience.
How to Initiate a Lawsuit Against the Car Warranty Company
If you have exhausted all other avenues and are seeking to file a lawsuit against a car warranty company, you must file the necessary documents in the appropriate court. You will have to file a complaint, summons, and other documents that vary by state. You should be aware of the deadlines for filing such documents, such as statutes of limitations or other filing deadlines. Many cases can be addressed in small claims court; however, most other cases will be filed in civil court, which includes district and superior courts in most jurisdictions . In a small claims court, you cannot recover damages for emotional injuries, except in very narrow circumstances, nor can you file a class action. Many small claims courts do not allow lawyers to represent clients.
If your case is more difficult, you may wish to hire a lawyer to assist you with your claim. Lawyers specializing in consumer protection, contract law, or similar types of cases will have the most familiarity with car warranty claims.
The Potential Conclusion of the Lawsuit Attempt
When you file a lawsuit against a car warranty company, there are typically two possible outcomes: you win, or you settle. In the great majority of cases when there is a lawsuit regarding an extended auto warranty, the consumer is victorious. However, in some situations, the case may be dismissed. The potential outcomes are discussed below.
Winning the Case
Most of the time, the consumer wins when a car warranty company refuses to pay for repairs and the consumer sues. A judge or jury will decide whether the warranty company actually refused to pay the valid claim and if so, how much the consumer can expect in compensation. The amount of compensation may include the cost of the repair, plus damages. Damages may include loss of use of the car, any rental car costs, emotional damages, etc. Many times, the consumer will also be awarded attorney fees. The actual results vary on a case-by-case basis.
Cases Are Settled
Often times, a company that the consumer is suing will simply agree to settle the case out of court. In most cases, they do this once they see that you have hired a skilled auto fraud attorney. The company will then work with the attorney to come to agreement regarding the amount of compensation that will be paid to fully reimburse the consumer for their expenses. Sometimes consumers are offered a lump sum payment and other times they are reimbursed in payments made over the course of several months.
It Can Be Dismissed
In certain situations, the case may be dismissed. This is not very common, but can happen in limited circumstances. For example, if a consumer files a lawsuit without having the right paperwork (according to the court in which the lawsuit was filed), the case may be dismissed. If the plaintiff fails to show up for the trial (without a valid reason), the case may be dismissed.
Options Other Than Bringing A Lawsuit Against the Car Warranty Company
Consumers have several options available to them if they don’t want to bring litigation against a car warranty company. Consumers can bring claims in small claims court, file a complaint with a state consumer protection agency, or negotiate a settlement directly with the warranty company.
Small Claims Court
Small claims courts are a division of the courts in your county and are designed to handle low-dollar value claims quickly and without the need for an attorney. Every state has rules that govern small claims actions and the process for filing a claim in small claims court. While the rules vary from state to state , the procedure is relatively simple and you typically don’t need an attorney.
State Consumer Protection Agencies
If you feel that you have been wronged by a car warranty company, you may be able to file a complaint with your state’s consumer protection agency. In most states, the consumer protection agency is part of the Attorney General’s office.
