It’s often the day you need to honor an extended warranty that you learn what it covers… or not. At the time of purchase, we rely above all on the explanations and good faith of a seller who has no interest in spending an hour detailing the exceptions if he wants to receive his commission.
In the automobile sector, unpleasant surprises are particularly damaging to the wallet. The slightest repair, as we know, can generate a bill of several thousand dollars.
Nathan Bedford can attest to this. He paid $6,000 to a dealership over the summer to give his new 2016 Jeep Grand Cherokee EcoDiesel an extended warranty. Financing rate: 9.9% over 4 years. A week later, while he was on vacation outside Quebec, the vehicle purchased for $24,000 broke down. It was annoying, but at least he was well protected, he thought.
“I had asked them several times if it covered everything and they said, ‘Yes, it’s bumper to bumper,'” he told me. The insurer nevertheless ruled that the leaking pipe in the cooling system was not part of the guaranteed parts.
Nathan could never have suspected it. For the good reason that he had not yet received the details of his insurance policy from FCA Canada, a subsidiary of the manufacturer Stellantis (Jeep, Dodge, Fiat, Chrysler). The document landed in his mailbox a month later, as is often the case.
Even if he had received the document at the dealership, it would not have changed much, says George Iny, president of the Association for the Protection of Motorists (APA). “Inclusions are very difficult to understand, you have to know the mechanics. »
In his opinion, these “very technical” guarantees are not, “in practice, understandable for the consumer” who must trust the declarations of a seller, even if the latter “never discusses the limits”.
Additionally, this seller may strongly encourage the purchase of a warranty for their own benefit. This has been seen for years with replacement insurance. It is not for nothing that the Quebec government is preparing to withdraw the right of car dealers to sell this type of insurance.1.
Customers are sometimes told that replacement insurance is mandatory, which is false. Others are offered a better financing rate if they take out the insurance, which is prohibited. All reports from the Financial Markets Authority (AMF) published on this issue have reported abusive practices.
One might therefore wonder why the methods of selling extended warranties would be very different.
A member of a private group dedicated to Toyota RAV4s on Facebook wrote this week that when he took possession of his vehicle, he had the extended warranty that his seller had added without his knowledge removed. “He admitted that if he had known before, he would have sold my car to someone else, because there aren’t enough cars, so they choose the best paying deals. »
Marie-Hélène Brassard told me that she had been “pushed for the extended warranty” by the seller of her RAV4 who did not fail to tell her about the famous $6,000 cable which corrodes2. “I already had extended warranties that didn’t cover anything. I told myself “never again”. […] I wasn’t interested at all, but I said yes, thinking it might help me get the vehicle. »
When the time came to sign, this fall, she asked to remove the warranty from the contract and, oh, twist, her SUV had just been sold to someone else the minute before.
Unfortunately, we do not have a clear picture of the situation. The OPC does not publish a report on the sales methods of automobile dealers as the AMF does for replacement insurance. Are we doing surveys? Do we use mystery shoppers? “We must remain discreet about ongoing surveillance activities in specific sectors and not reveal details that could undermine these activities,” the OPC responded to me.
Of course, it is prohibited for a merchant to make “false or misleading representations” to a consumer and to ignore an important fact before signing a contract. Has this happened to you? Please be aware that complaints received at the OPC may lead to the sending of notices of infringement or the initiation of investigations. You can also seek legal recourse. Nathan has also started the process.
Despite everything, this motorist was right to want an extended warranty, judges the APA, which describes the Jeep Grand Cherokee EcoDiesel engine as a “lemon”. Nathan knew what he was getting into, having owned this vehicle before. “I would never have bought my Jeep without a warranty. I like it, but with the air suspension, when it breaks it’s very expensive. » What he regrets is not having been able to trust the seller or the text of the insurance policy (in English) which mentions the conduits (all hoses, tubes and lines) in the inclusion list.
At a time when Quebec is preparing to improve consumer protection in the sale of replacement insurance, we should also take a serious step forward in the extended warranty market.
In closing, here are some extended warranty tips:
- The APA judges that the products offered by auto manufacturers are much better than those of third parties. These generally have a fairly low limit per claim, around $2000 or $3000. That’s not much, considering that an engine replacement can cost $20,000, recalls George Iny.
- Builder warranties offer better protection because the list of inclusions is longer and coverage is available across North America.
- Third-party warranties are much more profitable for car sellers, which can lead to “abusive” sales practices. The commission paid by manufacturers is limited to 35%, according to the APA, while there is no limit to the price that can be charged for third-party insurance.