Friday, November 18, 2011

Warranties and Warranty Coverages

The topic of today's post, "Warranties and Warranty Coverages" is important for several reasons.  First, as I've talked about in earlier posts, one of the elements of a Lemon Law claim is a warranty.  Second, if your car or truck needs to be repaired, you need to know if the repair will be covered by warranty or if you're going to have to pay for it. There are a lot of different things called "warranties", so I'm going to try to clear this up for you.

New Car Warranty:  Besides that "new car smell" and a big monthly payment, one of the things you got with your new car or truck was a black plastic folder full of manuals.  You should read them, particularly the warranty booklet.  The warranty that came with your car provides coverage for certain things for a certain period of time.  What and when are questions that are answered by looking at that warranty booklet (which is why I said you should read it).  A typical warranty actually has several different types of coverages:

Bumper to Bumper:  The first type of coverage is what is called "bumper-to-bumper" coverage.  Its coverage is pretty much what it sounds like--everything.  Except--for the exceptions.  Read the warranty booklet carefully to see what exceptions it provides.  A common example is tires, which come with their own warranty from the manufacturer.  How long does it run?  Your booklet should tell you that.  This will be the shortest warranty period of the different coverages.   A common warranty period is "3/36" or three years, 36,000 miles, whichever comes first.

Powertrain:  Usually, there is a separate, usually longer, coverage for the "powertrain" of the vehicle.  The manual should define this for you, but it typically includes the engine, transmission and differential.   Again, check your manual to find out the time and mileage limitation on this coverage.  I have in front of me a warranty manual for a 2008 Ford F-350 from one of my files, and it provides for 5 year/ 60,000 coverage for the powertrain.

Engine:  There are some vehicles that have a separate, special warranty for the engine.  The diesel F-350 is one example.  The 6.0 liter and 6.4 diesel engines have a separate warranty coverage that runs 100,000 miles, but requires a $100 deductible after the main coverage runs out.

Used Cars:  You will be happy to hear that, even though you bought a used car, it may still be under warranty.  The original manufacturer's warranty goes with the car, so if the coverage period has not expired, you still have the same coverage the original owner had.  However, check the owner's manual for any special rules.  Chrysler products, for example, have had warranty coverages that only apply to subsequent owners if they fill out the right form and pay a fee within a certain time after they buy the car.  Your used car may have other warranties, as well:

Used Car Warranties:  Used car dealers sometimes provide warranty coverage on the cars they sell.  Here, even more than with new cars, you have to read the warranty.  They are typically very limited both in time and in what they cover.  Because of this, it's really important that you take the vehicle back to the dealer at the first sign of a problem, before the warranty runs out.  These warranties also may require you to have the work done by the dealer who sold you the car.  This can be a problem if they don't have adequate service facilities.  These are all things you should find out before you buy the car.

Certified Pre-Owned:  The "Certified Pre-Owned" or "CPO" label is frequently used to attract buyers.  However, this is where you have to be really careful to find out exactly what you are getting, and there are different types of CPO programs.  First, there are manufacturer Certified Pre-Owned programs.  The warranty that you get with such a vehicle is much like a new car warranty, is backed by the manufacturer itself, and gives you the same Lemon Law rights as a new car warranty.  However, don't assume that a CPO vehicle is any better than any other used car.  They will tell you that the dealer "carefully inspects" each of these cars and trucks, but I have found that is not always true.  If you suspect you have a problem with the car, take it right in.  Don't assume that there can't be something wrong with your "carefully inspected" vehicle.  Second, there are Certified Pre-Owned programs through the dealer itself.  These vary widely in the quality of the vehicles and coverages.  As always, read carefully what coverages are actually being given.  Here, even more than with the manufacturer's CPO programs, this is no guarantee of a higher quality used car.  Fortunately, California has enacted laws that provide some protection from used car dealers that use the "Certified Pre-Owned" label fraudulently.

Service Contracts:  Dealers will usually try to sell you something called an "extended warranty" or "service contract".  The first thing to know is that this is not a warranty at all, particularly for Lemon Law purposes.  The next thing to know is that this is a contract and (1) is limited to the coverages specified in the contract, and (2)  is only as good as the company that provides the coverage.  It is more like an insurance policy than a warranty.  Many of the companies that provide this type of coverage go out of their way to deny coverage when your car actually starts having problems, and the contract has more exceptions than coverages.  Again, there are some service contracts sold by the manufacturer, like the Ford ESP, and they tend to be more valuable.  Some of them, though, are little more than a scam.  Keep in mind these are very high-profit items for the dealer, so be skeptical about their sales pitch.

As you can see, this is a complicated area.  The most important point I can make, however, is that you need to read the warranty, and it is better to read it before you need it, and even better still if you read the warranty before you buy the vehicle.

I'll have a new topic for you for my next post.  In the meantime, you can get more information from my websites San Diego Lemon Law and When Bad Cars Happen to Good People.

See you next week!

© 2011 Douglas C. Sohn

Doug Sohn is a San Diego attorney specializing in Lemon Law cases.  He is a native of San Diego and lives in the North County with his wife, Cheri, and 3 of their 5 children.  Cheri also works with Doug in the practice.

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