Vehicle Warranties: The Devil's in the Detail

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Aftermarket car warranties are sold as "peace-of-mind" items, but can fall well short of offering the same protection as manufacturers' warranties. Whether you're buying a new vehicle, or adding a warranty to a used car, it's best to read the small print very carefully

The large print giveth and the small print taketh away.

I wish I’d come up with that brilliant line, but Tom Waits beat me to it 40 years ago in the lyrics of his song Step Right Up.

The sentiment is particularly apt when it comes to motor vehicle warranties.

Granted, the manufacturers' warranties, which contractually oblige them to repair your car if it goes wrong within the warranty period, offer pretty good peace of mind, in that they cover repairs to most things, apart from wear and tear items such as brakes, clutches, windscreen wipers and tyres.

That’s if you don’t inadvertently invalidate the warranty by failing to read the policy’s small print.

Manufacturer Warranties

In order to keep manufacturers' warranties valid, vehicles must be serviced at prescribed mileages, or every 12 months, whichever comes first.

But the either/or stipulation “catches” quite a few people, on both ends of the mileage spectrum.

Someone who does less than average mileage, but concentrates only on the mileage part of the service interval – 20 000 km, for example – could well fail to get the car serviced within a year, because they won’t have come close to reaching that mileage within a year.

Likewise, someone who travels excessively would reach the mileage service interval in under a year, and, if they don't keep a close eye on their mileage, could fail to get it serviced at the stipulated mileage.

Most dealerships will allow a small grace period, but beyond that, your warranty is history.

Be careful with modifications

Modifying your car may also invalidate your warranty.

A Durban man unwittingly voided the manufacturer warranty on his new Audi S3 last year by installing a “plug-and-play” device, a unit he described as “completely safe; all it does is help improve fuel economy and performance”.

Within two months the car’s turbocharger was broken and he was presented with an invoice for R71 000 and informed that the modification had voided the car’s Audi SA warranty.

Having “too big” rims put on your car will have the same effect.

Another thing: If you’re buying a new car, check that its warranty didn’t start “ticking” a few months earlier when the dealership bought the car. Day 1 must be the day you purchased the car, or you’ll be short-changed.

The length of the manufacturer’s warranty has become a highly competitive factor, the longer ones potentially sparing the owner many thousands in repair bills, plus increasing the vehicle’s resale value.

Volkswagen is still offering a warranty of just three years or 120 000km on its vehicles, Honda’s warranty is 5 years/200 000km, Nissan’s 6 years/150 000km and in February this year, Hyundai leapt into the lead once more with its warranty of seven years/200 000km.

And when that runs out, the third party mechanical warranty policies are waiting to step in.

Aftermarket warranties

Many consumers make the mistake of thinking that third-party warranties provide them with the same blanket cover as the manufacturers' warranties, but sadly they don’t; not even close.

So much so that former Ombudsman for Short-Term Insurance (OSTI) Dennis Jooste issued a warning about mechanical warranty policies in late 2014.

“A mechanical warranty policy is a policy that covers certain mechanical failures on a vehicle after the factory warranty has expired. It is not an extension of the factory warranty,” he warned.

Oh, how I wish that it was legally mandatory for that paragraph to be uttered by the second-hand car sales people who sell the policies, and printed in bold, large font on the cover page of all such policies. With the addition of: “Now read the exclusions very carefully.”

Jooste went on to say that in many cases, the way these policies are sold doesn’t comply with the provisions of the Policyholder Protection Rules, which state that a direct marketer must provide the consumer with exact details of the cover, including any special terms and conditions before the inception of the policy, so that the consumer can make an informed choice.

“Often the consumer completes a one-page application form and is then given a booklet with the terms and conditions of the policy and is advised to read it at his or her leisure, or is told that a copy of the policy will be forwarded to them within 30 days,” Jooste said.

The small print

Failing to plough through the small print before signing the agreement means being in the dark about the policy’s trip-up exclusions, waiting periods, penalties, excesses or restrictions.

Or it could be that the warranty that you paid thousands for is, unbeknown to you, dead in the water from the start.

A Durban motorist contacted me last week, having been told that his R34 000 mechanical warranty claim on the 2012 model year SUV he bought just four months ago, had been repudiated, because the vehicle didn’t have a full service history.

It turns out the SUV owner had been misled by the dealership about the vehicle’s patchy service history and he didn’t do his own checks before signing the policy, for which he paid almost R7 000.

The mechanical warranty company paid the claim after my intervention (happily for the SUV owner), but the case highlights one of the many pitfalls of these policies and the way they are sold.

Tread carefully before signing on the dotted line: insist on seeing the policy documents first, and read every word of the exclusions.

As with hiring a car – the subject of a future column – it’s best to proceed knowing how exposed you are, than for it to come as a nasty shock.

Want to suggest a consumer topic for Wendy to write about? Mail us at editor@cars.co.za

Any views or opinions expressed in this article are solely those of the author and do not represent those of Cars.co.za or its editorial content team.

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