When you’re facing repairs, the last thing you want is to get into a disagreement with the dealer or service provider about warranty coverage because let’s face it—car repairs can get quite expensive. In fact, that’s the reason why most people pay for plans in the first place. Fortunately, understanding the repair claim procedure will help you take the steps necessary to increase your chances of getting the repair bill paid. Read on to learn more.
What Are the Differences Between Warranty and Service Contract Policies?
It’s important to understand the differences between a warranty and a service contract, because although the two terms sound similar, they’re not, and the repair claims process depends on the type of policy.
Vehicle warranty. When you buy a car (especially a new car), the dealer or manufacturer promises to repair any defects within a specified period. This pledge is a “warranty” that is a part of the purchase price. For instance, a warranty might cover repairs or defects for the first three years or 36,000 miles. Dealers typically offer warranties on new cars; however, some also offer them on newer, reconditioned used cars (often referred to as "certified used" cars).
Service contract. A service contract, or "extended warranty," is separate, additional coverage that you elect to purchase. Unlike the vehicle warranty, it doesn’t automatically come with the car—you must pay for it. It’s common to finance the coverage (roll it into your loan) when you buy the car, but it’s possible to purchase it from another company at a later date, too. If your vehicle is under warranty when you buy the service plan, it usually takes effect after the warranty expires.
General Tips for Resolving Claim Disputes
When dealing with a warranty or service plan claim, the first thing that you’ll want to do after a claim denial is to ask the dealer or plan administrator to provide you with the reason for the denial in writing. Because it’s important to create a document trail, your request should be in writing, too.
Once you know the reason for the claim denial, you might be able to dispute it by providing supporting documentation such as receipts and repair records. For example, if the warranty or service plan denies your claim because you didn’t properly maintain the vehicle, you can provide copies of documents such as timely oil changes and routine maintenance. Keep in mind that you can also propose a compromise, such as splitting the cost of the repair.
Resolving Warranty Claims
It most cases, if your car is under warranty, you’ll have to take it to the dealer's service department for an assessment and repair. If the service department agent claims that the warranty doesn’t cover the repair, consider taking the following steps:
- Speak with the dealer service agent's supervisor.
- Take the car to another authorized dealer's service center.
If you can’t resolve the issue through one of these channels, the next step is to contact the vehicle manufacturer's warranty department. It’s important to realize that in rare cases, the manufacturer or dealer might still repair the car after the warranty expires—especially if a defect common to a particular make and model caused the problem.
Service Contract Claims
Your service contract will contain instructions for making a claim under the policy, as well as information about the overall process. For example, you’ll review your policy to determine the following:
- the person you should contact to authorize the repair (often called the “administrator”)
- shops allowed to make the repair
- the repairs covered by the plan
- actions that will void your claim (such as the use of non-covered parts)
- how to make a claim, and
- the steps to take to dispute a claim denial.
The procedures won’t be the same in every policy. For instance, in many cases, you’ll seek repair authorization from the plan administrator before you take the car to an approved mechanic. With other policies, the administrator will make a coverage determination after the dealer or authorized mechanic diagnoses the problem.
If you’re denied coverage under a dealer-serviced plan, you’ll follow the steps discussed above for resolving warranty claims. If your service plan is through another company, refer to your service agreement for your dispute rights.
Other Ways to Seek Help
Many states have programs designed to help consumers with automotive issues. In Ohio, for example, the Automotive Consumer Action Program provides mediation assistance for dealer disputes, and in California, the Consumer Mediation Services Program helps new car owners resolve dealer disputes at no cost. To find a consumer protection organization in your state, visit the USA.gov site.
You might also consider filing a complaint with the Federal Trade Commission (FTC), the agency responsible for enforcing violations of automobile warranty laws. The FTC will conduct an investigation and if appropriate, take measures against the plan provider, dealer, or manufacturer.
If you’re unable to resolve the matter, you might have to take legal action. Before doing so, it’s essential to determine whether you must file a complaint with a particular administrative agency (or use some other program) beforehand, because if you fail to meet such a requirement, the judge will throw your case out of court. A practiced consumer lawyer is in the best position to advise you about the steps to take to enforce your rights.
Lemon Laws: When the Problem Won’t Go Away
Sometimes you get stuck with a new car that continues to have problems, despite many attempts to repair it. Many states offer special protections called “lemon laws” for consumers dealing with new vehicles with persistent problems. The requirements to prove a lemon law case vary by state so you’ll want to consult with a local consumer law attorney, or contact your state's attorney general's consumer division, for more information.
Questions for Your Attorney
- Does my service plan have a mandatory arbitration or mediation clause?
- Do I need to file a complaint with a state or federal agency before I sue the dealer or service provider privately?
- How long do I have to file a lawsuit against a dealer, manufacturer, or service contract issuer?