Lawsuits Against Car Warranty Companies
Car warranty companies provide peace of mind for drivers by agreeing to cover expensive repairs of car problems within certain limits. However, these companies are still bound by the law and must follow certain rules when providing services. It is possible to sue a car warranty company for breach of contract, intentional misrepresentation, or for failing to act in good faith.
Background Information
The success of car warranty companies stands on the premise that they will accommodate their customers’ needs and requests in a timely and reliable manner. Customers must also understand their obligations and responsibilities ranging from payment of premiums to their potential liabilities. As a result, when car warranty companies fail to uphold their end of the bargain they can be sued.
Relevant Data
When you purchase a car warranty, you enter into a legally binding contract with the warranty company. The contract outlines the company’s responsibilities and what it will cover. Without an enforceable agreement, it is difficult to sue the warranty company. Another piece of relevant data is that in some cases, the repair shop or a third-party administrator may have caused the issue and, in these cases, the car warranty company can be held liable for those damages.
Perspectives From Experts
According to consumer law experts, the most common reasons for suing car warranty companies include failure to disclose information, intentional misrepresentation of coverage, failure to pay for covered repairs, or denial of claims without good cause.
Attorneys specializing in consumer rights suggest that if a customer experiences a problem with their car warranty company and cannot resolve it, they should review their policy for specific language about filing a lawsuit. If the customer is covered, then legal action may be needed to enforce the policy.
Lawrence Pope, an attorney who has won more than a dozen cases against car warranty companies, suggests that any customer considering a lawsuit against a car warranty company investigate if the company is registered and licensed. Also, have proof of all important documents such as purchase contract, repair shop bills, and so on.
Insights and Analysis
One must also consider all options available to address the issue. In many cases, filing a complaint with the state’s attorney general, consumer protection agency, or Better Business Bureau is done before any litigation. Another option is to negotiate a settlement with the car warranty company, but this approach often takes a great deal of time, effort, and money.
Most of the time, the consumer comes out ahead when these cases head to court. This is because car warranty companies must prove that their denial of the claim was valid or consistent with the policy’s language. If the company is unable to do so, then the consumer can receive compensation for damages caused by the car warranty company.
Misleading Marketing
Misleading marketing such as making false promises about coverage or failing to properly disclose important details about the policy can be grounds for litigation against car warranty companies. Consumers should be provided with proper disclosure of the car warranty’s coverage, deductible and any other important details.
In addition, companies must comply with all state and federal regulations. Companies are not allowed to engage in deceptive practices such as making false statements or statements that are likely to deceive the consumer. The Federal Trade Commission (FTC) will take action against car warranty companies that infringe upon these regulations.
What to Look For When Purchasing a Car Warranty
When looking for a car warranty company, it is important to do some research and read reviews to ensure the provider is of good quality. Ask questions about the company’s coverage and check to see if it is licensed in your state. Also, see if the company has good customer reviews, as well as a good reputation for paying claims.
Finally, make sure you know all the details and fine print before you sign a contract. Carefully read the entire agreement and review the fine print for any exclusions or limits on coverage.
Inadequate Investigation Of Claims
Sometimes a car warranty company will deny a claim without investigating it or without conducting a proper investigation. If the company failed to provide adequate access to documents or perform their investigation according to the terms of the policy, they may not be able to deny the claim.
The insured’s lawyer can make an argument that the car warranty company’s investigation was inadequate and the claim should be paid. Car warranty companies must act in good faith and use reasonable care when investigating a claim. If not, their decision to deny the claim could be deemed wrongful.
Late Beneath Of Claims
The law requires car warranty companies to process claims in a timely manner. If the company fails to acknowledge receipt of the claim or delays in processing, the customer can sue the company. The customer’s attorney can argue that the company was not acting in good faith and was in violation of the terms of the policy.
The court could award the claimant damages in the form of legal fees and damages caused by the delays. Also, the court can issue an injunction to the warranty company to compel them to act in a timely manner in the future.
Unreasonable Denial Of Claims
It is legal for car warranty companies to deny a claim if it is not covered under the terms of the policy. However, they must be able to prove that their decision was reasonable and based on sound evidence. If the company fails to provide this evidence, the claimant can sue the company for unreasonable denial of the claim.
The court can rule that the company violated its contract and award the customer damages. The customer’s lawyer may also argue that the company was using its contractual terms to deny claims without any reasonable justification.
Refusal To Renew A Policy
When a policy is set to expire, the car warranty company must offer to renew the policy. If the company refuses to renew the policy without any valid reason, the customer can sue the company.
The customer’s attorney can argue that the company was acting in bad faith by refusing to renew the policy and that the customer was entitled to a new policy. The court could then order the company to renew the policy or award the customer damages.
Conclusion Of Coverage
When a policyholder has reached the conclusion of coverage and is no longer eligible for a new policy, the car warranty company must notify the customer in writing. If the customer does not receive the notice or if it is sent late, they can sue the company.
The customer’s lawyer can argue that the company was in breach of its contract and failed to fulfill its obligation to notify the customer when their coverage had ended. The court can then order compensation for damages and order the company to pay the customer’s attorney fees.
