Niagara Gazette

February 21, 2013

TOM'S CORNER: Car warranty wisdom

By Tom Torbjornsen
Niagara Gazette

Niagara Gazette — Isn’t it covered under my warranty?”

This question is asked thousands of times a day in dealership service departments around the country. Many people assume that a car warranty entitles them to repairs regardless of environmental conditions, maintenance requirements, and/or length of time/number of miles on the vehicle.

A car warranty is not an entitlement. It is an agreement between you and the car manufacturer.

The purchaser of the warranty or the product that comes with a warranty is responsible to follow the specified maintenance requirements as set forth by the manufacturer. Then, and only then, is the manufacturer obligated to perform any repairs due to a defect from poor workmanship or a failed part for the time or mileage set forth by the terms of the warranty agreement.

In recent years, because of some questionable practices by dealers, car manufacturers now scrutinize every warranty claim that comes across their desks. Such close inspection of warranty claims is interpreted by the consumer as an attempt to get out of covering a particular repair. However, in actuality, the repair may not qualify under the warranty terms due to a number of conditions, ranging from abuse of the vehicle, expiration of the warranty because of time or mileage, or an uncovered part as per the agreement.

My advice to the buyer: Read your warranty agreement carefully so that you understand what is covered and what’s not for how long and for what mileage before signing, fulfill your part of the agreement which will require certain maintenance operations to be performed, then and only then, can you expect the manufacturer to fulfill their part of the agreement.

Below are some examples of warranty coverage carmakers offer on new vehicles:

• CORROSION WARRANTY: A type of warranty that covers rust-through perforation on sheet metal with actual holes. Surface corrosion from nicks, chips, and scratches are not covered (usually due to environmental conditions). Coverage varies with each manufacturer, so check your warranty information or check with your dealer for specific details on coverage.

 EMMISSIONS WARRANTY: The federal government requires that car makers provide extended warranty coverage on emission systems to ensure lower tailpipe emissions. Typical coverage is seven to eight years and 70,000 to 80,000 miles. If you have a drivability problem on a late model vehicle, make sure to check with your dealer on emissions warranty coverage before paying for the repair because it might be covered.

• CUSTOMIZED CONVERSIONS: Some vehicles (usually vans and limos) are covered under separate warranties for the add-ons not installed by the manufacturer. Be sure to obtain a written warranty disclosure for the conversion when purchasing these types of vehicles. Make sure you (and your dealer) completely understand the ‘ins and outs’ of conversion vehicle warranties.

I have witnessed nightmares resulting from misunderstandings when it’s too late, after the customer has taken delivery of the vehicle!

• HIDDEN WARRANTIES: There is no such thing as the Urban Legend of Hidden Warranties, however, there is a form of warranty coverage called “Goodwill Adjustments.” Manufacturers sometimes allow their dealers or field reps to make “Goodwill Adjustments” once a vehicle is out of warranty time and/or mileage. Decisions to do so are based on certain criteria such as owner’s loyalty, time the vehicle has been in service, maintenance records, vehicle history, mileage, and whether any service contracts are in effect. With a Goodwill Adjustment, customers may be asked to share some of the cost of the repair with the car maker. Never be afraid to ask for assistance. You’ve got nothing to lose by asking.

• CAMPAIGNS: Sometimes a car maker will embark on a “Campaign.” This type of warranty is usually associated with a safety defect and is often a positive PR move. Campaigns can take the form of a repair or a warranty extension. Although it is not a recall, the campaign is either an agreement between the car maker and the NHTSA or it is a course of action the car maker has taken to ensure the safety of its customers without going to recall AND, to maintain good PR with the public.

• AFTERMARKET INSTALLED PRODUCT: These items fall under their own manufacturers’ warranties. For example, tires, after-market stereo systems, and conversion components are not made by the car maker and thus not covered under the vehicle warranty. You will usually find these warranties in the paper work you received at the time of vehicle delivery. Read the paperwork and educate yourself to avoid assumptions and misunderstandings. Make sure you know what’s covered and by whom.

Let’s set a common misconception straight on warranty work done by the dealership on new cars. It’s important to understand that warranty repairs are a revenue source for the dealership. So when dealers refuse coverage, it’s not because they look at the repair as a cost factor to them, they simply cannot, based on the warranty agreement and the very strict adherence to the agreement expected by the manufacturers.

 Extended warranties

If you keep a vehicle beyond its original factory warranty period, then I highly recommend you purchase an extended warranty. Consider the cost of repairs. The average transmission replacement is around $3,500 and up. Engines cost in the neighborhood of $6,000 to $10,000 and higher. In-vehicle electronics can cost a small fortune. Be smart and get an extended warranty on a vehicle if you are going to keep it beyond the factory or dealer warranty.

The arena of extended warranties has evolved in light years. In the past extended warranties were either offered by the carmakers or by obscure little companies selling a bill of goods, virtually denying every claim that came into their “call centers” which were usually located in “Art Bell Land out by Area 51” in the desert!

Today companies like AIG, Allstate, and Interstate have thrown their hats into the ring, adding credibility and offering genuine coverage to motorists. The caveat is to research and know what company your extended warranty is from. Find out who the warranty administrator is. Ask if they have a good track record or, are they difficult to deal with? To whom should you ask these questions? The Service Department Manager or writer. These people work with extended warranty companies all the time and know who is reputable and who is not.

Some companies offer tiered coverage depending on vehicle mileage, year, service description (how it’s used), and condition of the vehicle at the time of contract purchase. Most extended warranty companies require that you have an in-depth inspection of the vehicle performed by a company-approved inspection station before they will allow coverage. If you’re buying the vehicle from a dealership, they have already done the inspection so you’re covered. This is understandable when you consider that there might be pre-existing conditions on the vehicle like engine or transmission wear/damage. The insurance company does have to protect themselves as well.

Some companies offer plans with no deductibles or tiered deductibles. The method of payment of claims varies. Some plans allow for immediate payment to the service provider via the use of a company credit card. These are the best, because the service provider gets paid immediately and therefore is more willing to deal with the extended warranty company. Others plans require that you first pay the bill, and they reimburse you later after you send supporting documentation for the claim into their fulfillment department.

The bottom line? Know whom you are dealing with before purchasing an extended warranty (and read the fine print).

‘Til next time … Keep Rollin’

"America's Car Show" with Tom Torbjornsen airs 7:30 p.m. Wednesday, 9 a.m. Thursday and 11 a.m. Saturday on WBBZ-TV.