Lifetime Warranty MYTHS

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The offer of a "Lifetime Warranty" is a HUGE promise. Before you make a purchase decision based on that offer, investigate to make sure you're actually getting something real and not just two words that sound good together.

The intent of LifetimeWarrantyMyths.com is to provide general background information for you and "food for thought" to consider when purchasing a product with a lifetime warranty.

This site is not intended to dispense legal advise. The content assembled here merely organizes and summarizes information readily available throughout the internet and through the judicial system. All of this information is of public record.  In some cases we added commentary that is our opinion.

A recently trendy "Lifetime Warranty" is one being offered by some automotive dealers. A quick way to read between the lines on these so called no-extra cost offerings is to determine which company is behind the warranty. In most cases, these "lifetime warranties" are NOT backed by the original manufacturer nor the selling dealer. More typically, these warranties are from third party companies with names no one has ever heard of before. 

What's the definition of a Lifetime Warranty?

Think about it - the term is frequently used by companies and individuals, but there is no standard definition for the term. Therefore, the concept means something different to everyone. The net result - consumer confusion. That works for the marketers exploiting the term, but against you, the consumer.

A good place to start the definition is whose lifetime does the warranty cover?  The purchaser's?  The manufacturer's?  The product's?

The answer is (here is the big surprise!).....it depends.

The duration and applicability of a lifetime warranty depends solely upon the person or company who is implying the warranty.  A consumer's expectations of that warranty is completely irrelevant.

The Federal Trade Commission Weighs In.

Although the Federal Trade Commission does offer suggestions as to how the guarantee should be used, there are no laws or penalties for it's misuse. The Federal Trade Commission has indicated that you should never assume that a warranty means YOUR lifetime, because, it RARELY does.  Sadly, the term which once stood for something, has become nothing more than a casual marketing tool. 

Lifetime Automotive Warranties

Circling back to automotive "lifetime warranties," as an example, it is our opinion that the strength of the underlying companies has yet to be tested. in most cases these are relatively new products from relatively new companies. Their products dovetail the manufacturer's warranty coverage, so, in effect, they don't begin to offer coverage until the original warranty concludes. In many cases that means the "lifetime warranty" isn't on the hook until at least 5 years or 60,000 miles has accumulated on the owner's vehicle. 

What's it all mean? Well, it's nice to offer the promise of a Lifetime Warranty, but with the offer coming from an untested company that is years away from entering it's "claims zone," the question is what happens if they fail? Without a lifetime warranty company, do you have a Lifetime Warranty? It's not a factory program, so the factory won't honor the Lifetime Warranty. 

Take a close read of those Lifetime Warranties.  Who are they from?  Many times, the warranty is actually from the dealership.  Therefore, if a dealership entity merely changes ownership structure, does that warranty cease? 

Some dealerships use a company to administer the warranty - that is, handle the claims.  Some of these administrators, or claims handlers, are backed by insurance companies.  But, is the warranty itself backed by an insurance company.  If so, what documentation do you have?

Sometimes, the selling dealer has no liability, so they won't need to honor the Lifetime Warranty. So even with a nice piece of paper that says "Lifetime Warranty" there's a real possibility that the consumer will end up paying for repairs out of pocket.
Why Don't Other Companies Do It?

We contacted several very well known automotive service contract companies to inquire if they would provide a limited lifetime powertrain warranty on a vehicle.  The answer was a firm "NO".  These reputable insurers indicated that they couldn't make the math work - it would take thousands of dollars of contingency per car to properly fund such a program.

When we were speaking with these companies, we did additional research.  According to websites, such as that of the Federal Trade Commission, numerous companies that offer lifetime warranties have been fined for bad business practices.  This is not to say that every company offering a lifetime warranty doesn't stand behind their warranty, but the great preponderance of companies that do offer lifetime warranties are using it as a marketing tool to compensate for inherent deficiencies in either their product, their process or both.

......If it sounds to good to be true, it probably IS too good to be true.

The Strength Test - how to gauge the power of their Lifetime Warranty

Here's a great way to test the strength of a Lifetime Warranty. Ask the dealer if you swap their Lifetime Warranty for a lesser 20-year, 10-year or even just a 5-year powertrain warranty from the manufacturer that makes the vehicle.  Wouldn't you agree, a 5-year/100,000-mile powertrain warranty from the manufacturer that builds your car would cost less than a "Lifetime Warranty." And therefore they selling dealer would take that deal in a heartbeat. What you might find interesting is that while these dealers may be willing to provide you with Lifetime Limited Powertrain Warranty at "no cost" or, "included with the purchase", they are reluctant to provide you with a shorter term powertrain warranty from the manufacturer at "no cost." The true value of that Lifetime Warranty beings to reveal itself. And in the light of day it doesn't look like much.

The true power of a Lifetime Warranty is in the marketing appeal of the implications that those two words seed in a consumer's mind. The simple "manufacturer warranty swap" test reveals that in reality, these Lifetime offers aren't even as strong or as valuable as a manufacturer's 5-year/50,000 mile coverage.

ALWAYS READ THE FINE PRINT

Is is important to always read the fine print.

For example:

- Who is the warranty from?  Remember, the organization providing the warranty to you could be different from the administrator of the warranty.  The administrator may simply be an organization retained to handle claims and paperwork.

- Is there a deductible?  We have seen multiple lifetime warranties across product lines that have deductibles of $100 or more.  Basically, the imposition of a deductible ensures that you don't bring it in for smaller repairs and that you have "a little skin in the game".

- What is their requirements for "proof" of maintenance?  For example, when dealing with an automobile, if you lose any receipts associated with the maintenance of your vehicle, you may not be able to obtain any benefit under the warranty.  Many companies indicate that "it is your responsibility to retain all maintenance and repair records".  Be careful, they may want them all.

- What is NOT COVERED under a warranty?  For example, we saw the following "Not Covered" language on the internet governing a "lifetime warranty" for a vehicle:

This warranty does not cover damage or failures resulting directly or indirectly from fire, accidents, theft, abuse, negligence, misuse (racing or overloading), improper repairs, alteration or tampering, including installation of non-genuine accessories, lack of proper maintenance, including use of fluids other than those specified in the Owner's Manual, installation of non genuine parts, airborne chemicals, tree sap, road debris (including stone chips), rail dust, salt, hail, floods, wind storms, water contamination, lightning and other environmental conditions

So, with the above "not covered" language - does this mean that if you use a "non-factory" oil filter, such as one installed by a quick change oil place, are you not covered under this warranty?  What is the definition of "non proper" maintenance?  If you miss an oil change by 500 miles, are you not covered?  If you decline a rotation of tires, or fuel service that is offered by the dealer, are you not covered?

- Check for Replacement Parts - For example, in an automotive lifetime warranty we saw on the internet, it said "At our discretion, replacement parts used in covered repairs may include non-original equipment manufacturer parts, new remanufacturerd or used parts that meet the quality standards of the repairer or us".  So, under this particular warranty, if you own a Toyota, or Subaru, or any other car, and need a repair - you cannot count on a new part from the manufacturer of your car.

- Watch for "limits of liability" language - for example, in a lifetime warranty we saw on the internet for vehicles, the following "limits of liability" were imposed:  "Our limit of liability is the aggregate of paid repair cost to repair or replace any covered break down; but in no event shall this cost exceed the average retail value of your vehicle as determined by the NADA (Official used car guide) at the time of loss.

Now, you should check for yourself, but, the above language sounds like it ends your life time warranty.  So, in other words, if the value of the car is less than the cost of the repairs, the lifetime warranty ends! 

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