Facing a car repair is never welcomed - it's inconvenient and you hope the repair bill is reasonable. Your car is likely a major expense with regular payments, insurance and normal operating costs. You may expect the repair is covered by the vehicle warranty or a service contract, but what happens when there's a dispute over who pays?
Picking Up Repair Bills - Warranties and Service Contracts
Be aware of the differences between warranties and service contracts covering your vehicle. The Federal Trade Commission and other consumer organizations offer resources to help you understand the differences. Knowing the differences can be important if there's a problem with getting a repair covered.
Generally, warranties are promises by a maker or seller of a product regarding its quality, integrity and performance. Warranties include terms for repair or replacement if there's a problem.
An extended service contract may be called an extended warranty; it's not a true warranty but a contract where you buy the provider's services to cover listed repairs. These service contracts can be tailored to fit your needs and budget. Contracts may be backed by a dealer, manufacturer or third party. Depending on state law, some contracts are a form of insurance and are subject to insurance regulations.
Settling Warranty Disputes
If your vehicle is covered by the manufacturer's warranty, it probably requires repairs to be done by your dealer's service department. If you're told the repair isn't covered, start with the service manager and your sales person for help. If needed try talking to the dealer's owner or general manager.
The manufacturer's zone or local representative may have the power to authorize your repair. It's possible there are specific problems with your car model, and repairs could be covered, even if they fall outside warranty terms.
Service Contract Complications
It's important to know the terms of your service contract. When shopping, find out who provides payment, performs repairs, what's covered and how claims are handled. The answers affect how you'll resolve disputes.
Manufacturer-backed contracts. Vehicle makers offer service contracts, and if there's a dispute over repairs, working out a solution at the dealer or with the contract administrator is similar to solving warranty disputes.
Third-party service contracts. An independent provider may back your service contract; often it's an insurance company. There may be more flexibility in choosing a repair shop. You may be free to choose any mechanic, and you'll pay for repairs and submit a claim. The provider may also act as a claims administrator, and it's your dealer performing repair work. Either way, your first step is to contact the party behind the contract. Find out why the claim is being denied based on your contract terms. Be specific and discuss why a part or system repair isn't covered.
If the party behind your contract or the dealer goes out of business, once again, read your contract for solutions. If an administrator closes its doors, the dealer may still have to honor the contract. Your state's insurance regulation agency may be able to help if your contract is treated as insurance in your state and the company goes out of business.
Court and Government Agency Help
You may need to turn to a lawyer and the courts for help. Small claims court is available if the amount involved is relatively low, under $5,000, for example. A consumer law lawyer can help you determine if a federal law, the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, may offer relief. Check with your state's attorney's office to see if there are reported problems with a service contract provider.
Arbitration may be an option. Many local and regional automobile dealer associations offer alternative dispute resolution (ADR)programs. The Better Business Bureau is another source for finding ADR resources.
Questions for Your Attorney
- If my car's warranty expired, but there's a widespread defect with my model, is there still warranty coverage? Does the manufacturer decide?
- How long do I have to pursue a lawsuit against a dealer, manufacturer or service contract issuer?
- If there's a lawsuit over a warranty or service contract, what damages are included? Just the repair cost or legal fees and related expenses? How about punitive damages?