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Used Car Extended Warranties

During my years of practice, I have often heard complaints from consumers having great difficulties with used car dealers and extended warranty companies. Unfortunately, most of the extended warranties written by companies other than automobile manufacturers are not worth the paper they are written upon. In other words, those warranty companies deliberately draft agreements having more exclusions than inclusions for automobile repairs, as well as, include conditions that often make it impossible to satisfy in the event of a claim. For example, one such company provided that it would not cover any repairs that were a result of any leaking fluids (antifreeze, oil, etc.) and where a water pump failed causing the over-heating of the engine and crack of the engine block resulting in spillage of engine coolant and oil, the company refused to pay the claim upon the conditions of the leaking fluids when in fact, it was not the leaking fluids that caused the damage, but the failed water pump and cracked engine block.

I have also noted that many of the after-market automotive warranty companies are out-of-state and that bringing litigation against them would be cost prohibitive and not practical for most consumers.  The good advice and lesson to be learned is as follows:

When buying a used car, a consumer should only buy from the same type of a dealer that sells the vehicle new so that an extended warranty can be purchased from the manufacturer of a certified used vehicle.  In other words, if you are seeking a used Ford, then buy it from a Ford dealer rather than a Nissan dealer and vice versa. That is not to say that all dealers are bad and that you cannot buy a good vehicle from independent used car dealers, however, the best protection and assurance comes when buying a certified used car with an extended warranty from the original manufacturer (e.g., Ford) rather than from anafter-market warranty company that most people have never heard of.

National Auto Warranty Services – US Fidelis (DBA Dealer Services)

The largest after-market automobile warranty company, US Fidelis, formerly known as National Auto Warranty Services and doing business as Dealer Services reportedly sold about a half million service contracts to customers throughout the United States on all makes and models of vehicles.  In news reports stemming from the federal bankruptcy of US Fidelis and the 2011 criminal indictments of its founders, Darian Atkinson and Cory Atkinson, consumers were allegedly defrauded by wrongly convincing people their auto warranties were expired or were about to expire and misleading them into thinking the purchase of these extended warranties would extend or reinstate the manufacturer’s warranty, and worst yet the Atkinsons were alleged to have stripped the company of at least $101 million unto themselves leaving the company bankrupt and failing to pay countless warranty claims.  This is perhaps the greatest example of why consumers are best advised to be careful in selecting extended warranties and to endeavor to purchase same directly from the manufacturer or its authorized dealers.

Consumers are also well advised to run an independent CarFax.com, as well as, have an independent mechanic or inspection service perform a thorough inspection and test drive of the vehicle and issue a written report before purchase.  All of those extra measures will cost some money, however, spending a few hundred dollars before the purchase may well save many thousands of dollars, inconvenience and headaches later.

For more tips and advice to consumers, please refer to my other Blogs and feel free to contact my office to discuss any particular concerns that you may have before or after purchasing a vehicle.

Ligitation & General Practice

Anthony T. Ballato, Esq. on Auto Fraud and NY Lemon Law Part 1 and 2

Consumer Tips & Advice