Warranty pro-ration: Buyer best beware

Oct. 27, 2014

The rules of warranty and policy have been changing and will continue to change. Yet, “Buyer beware” remains solid advice when looking at warranty coverage. You need to understand what you are looking for and what you may be purchasing with a vehicle if you are considering extended coverage. I would strongly suggest that you clearly understand what you are considering.  The average cost for a warranty period purchased—which I call “insurance pre-pay”-- is $.02 per mile. The key to getting your money’s worth is to read the small print and dissect the coverage.

Let’s talk about what you get with the purchase of the new vehicle. There are OEM warranties and then there are component warranties. I would also suggest that this be understood for what it is. That is, how is it determined and whether hours, miles or time will be the guillotine for what you think you have received with the purchase of a new vehicle.

One of the things that confuse me is when a warranty nears the finish line and there is a major failure. When you purchase a vehicle, in my opinion, you have purchased it with the life of the component already been paid for. So, why does pro-ration come into effect when it is time to cover the expenses under warranty, standard or extended? Why do we get into, “We will pay for the parts, you pay for the labor”? Or the warranty is 80% of the warranty period but the reimbursement is pro-rated-- like a battery.

Did we not pay for that warranty coverage in the original price of the vehicle? Did we not plan on operating this vehicle for x miles and to trade it at some mileage and our rates were predicated on $x purchase and $x traded dollars and an operating cost based on the included warranty period? Why then is pro-ration part of any consideration of payment? We purchased the vehicle for the life up to at least the length of the warranty period, as described in the agreement to purchase. So, pro-ration is-- in my opinion-- paying up to twice for what we already paid for.

In summary, understand what you are paying for and what you expect and understand that pro-ration will be. Although you already paid for the component life, that is not always discussed or understood in terms of warranty. Buyers beware. It is what it is.

About the Author

Darry Stuart | President

Darry Stuart has more than 45 years of experience in the transportation industry. As President/ CEO of DWS Fleet Management Services, he has been providing “Limited Time Executive" services in transportation and fleet equipment management to a variety of companies.

An ASE-certified master technician, Stuart began his career on the shop floor before moving on to fleet management executive positions at Perdue Chicken, BFI (Browning-Ferris Industries), United Truck Leasing, the  Keen  Companies, and Cumberland Farms/Gulf Oil.

For 35 years, Stuart has been an active member of the Technology & Maintenance Council (TMC) of the American Trucking Assns., serving as the group’s general chairman from 2007-2008. He is the recipient of numerous industry awards, including TMC's Silver Spark Plug, which is given in recognition of an individual's outstanding contributions to the cause of excellence in heavy-duty vehicle maintenance management. He has been cited as an industry expert or authored over  250 articles on equipment and fleet management topics.

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!

Sponsored Recommendations

Leveraging telematics to get the most from insurance

Fleet owners are quickly adopting telematics as part of their risk mitigation strategy. Here’s why.

Reliable EV Charging Solution for Last-Mile Delivery Fleets

Selecting the right EV charging infrastructure and the right partner to best solve your needs are critical. Learn which solution PepsiCo is choosing to power their fleet and help...

Overcoming Common Roadblocks Associated with Fleet Electrification at Scale

Fleets in the United States, are increasingly transitioning from internal combustion engine vehicles to electric vehicles. While this shift presents challenges, there are strategies...

Report: The 2024 State of Heavy-Duty Repair

From capitalizing on the latest revenue trends to implementing strategic financial planning—this report serves as a roadmap for navigating the challenges and opportunities of ...