Monday, May 23, 2022

Loss of Use (Consequential Damages) in Warranty Claims

If your car breaks down, it may be repaired under warranty.  Don't expect them to pay for a rental car or a hotel room, though!

A friend of mine asked for advice - which I am loathe to give - about trouble they are having with their Dodge RAM pickup.  Seems the diesel engine has a cover on or under the intake manifold, made of plastic, and there is a "heater" in there to warm it up.  It is supposed to shut off, but it didn't and it melted this cover, causing the engine to ingest parts.

So Dodge offered to install a new engine, but due to "supply chain" the engine is on backorder for months.  Meanwhile, the truck sits in the dealer's bay, with the cab removed, as apparently the only way to remove the engine on these trucks is to remove the entire body first.  This will not end well.  You have to hope the mechanic replaces every bolt he removed, or the thing will rattle like hell. And all the wiring and other connections?  It is just a recipe for disaster.  Col. Waddington would be appalled.

But that was not their complaint.  Their complaint was it was taking so long to get fixed, and in the interim they had to borrow a friend's truck to haul things.  Is Dodge liable under the warranty for loss of use of their vehicle while it is being repaired?

Generally not.

It is referred to as "consequential damages" and most warranties explicitly exclude it.  Of course, this can often be a State Law question, so you have to ask an Attorney in your State whether such exclusions apply.  But if you think about it, you can understand why most warranties exclude this, as it creates an open-ended liability for the manufacturer.  A truck breaks down under warranty.  It was carrying a shipment of parts to keep a factory running.  The truck is out of service for a day or two and the factory shuts down - costing millions of dollars in losses.  If the truck manufacturer was on the hook for "consequential damages" they would have to factor that into the price of the vehicle.  They are selling a truck, not a trucking service.

This is not to say there is no recourse.  Lemon laws were enacted because of such problems - cars that broke and never could be fixed, it seemed.  You buy a car, and for six months it is in the shop - it is like not having a car at all.  And under most lemon law cases, if the car isn't fixed after three attempts, well, the car company may have to buy it back.

My friend bought the truck used, and at first that would seem like a bar to lemon-law buybacks.  But again it is a State Law question and in New Jersey the consumer protection bureau actually has a lemon law division that will arbitrate such disputes - for free.  There are pretty strict limitations, however, as to who qualifies.  The vehicle can't be from a private seller or sold "as-is" or be beyond certain mileage limits.

But as I noted before, in many of these "lemon" cases, the real issue isn't the repairs or the inconvenience, but buyer's remorse.  We spent tens of thousands of dollars on a vehicle and then are disappointed that it doesn't fly through space or travel through time.  It is just a car and it has its flaws.  And the more you spend on something, the more disappointed you can get.  After seven years, we are very happy with the hamster and have zero problems with it.  It was more car than we expected for the money.  And that is the key - we spent so little we felt we were robbing a bank.  Ditto for our camper.  So you tend to overlook small problems.

Our pickup truck, though - the most expensive vehicle I have ever owned - is nice and all, but it is infuriating when something minor breaks.  It is also scary how the technology, which is fun and all, can break and break expensive and no one knows how to fix it or can get parts.  I was pissed-off that the ride was so bouncy.  I was scared to death when I started it and the main display screen was blank.   I am glad they replaced one of the four cameras under warranty - but annoyed that the cost of the camera and the "special computer" needed to program the truck to accept it - would be beyond my means if it breaks again, out of warranty.

You realize that you spent a lot of money and created a lot of risk for yourself.  If we can put 100,000 miles on this truck without major repairs, we'll be happy - and then we'll dump it.  Because I don't want to drive around in a vehicle with a "this doesn't work anymore" or "that's broken" kind of deal.

But after a while, you get over these problems.  We paid cash for the truck, so we are at least not looking at seven years of payments to go.  Others are not so lucky - and it sticks in your craw that you need these repairs and are making payments on a "garage queen" that you can't even use.

Of course, you can buy less technology.   When we went to buy the Ford, we initially set out to get a pretty stripped-down truck.  We had good luck with the Nissan in part because it as a basic SV model - it had a few toys but was pretty simple.  It got worse gas mileage than the much larger Ford, but then again, didn't have dual turbochargers and an intercooler and whatnot.  The Ford generates 100 more horsepower on 0.5 liters less displacement.   But that comes at a price - technical complexity.

That is the problem when buying any piece of technology.  It isn't until you've bought it and got it home and used it before you find out what it is.  And if it isn't what you thought it was, often you are stuck.  That's why the Japanese had such luck selling cars and took over the car market in the USA.  Americans were tired of buying "lemons" and being stuck with a crappy car for 48 months of car payments.  Their neighbor tells them how worry-free their new Toyota is, and well, another sale is made.

Of course, today it is hard not to buy technology that you don't understand or can fix yourself.  Internal combustion engines are incredibly complex today in order to get the amazing mileage they get.  Electric cars are, in theory, simpler in design but the electronics are beyond the capabilities of most car owners.  You have to hope they never break, and for the most part, they don't.  Routine maintenance includes replacing the tires every 50,000 miles and maybe the wiper blades.   That's it.

But if your Tesla has some more complex problem, well, you are shit out of luck.  Then again, it is kind of hard to feel sorry for someone who spends tons of money on any car.  You buy bleeding edge, you live on the edge - which is why I think the "Big-3" will cream Tesla with their own electric cars (I saw a lot of Mach-E Mustangs in DC!).  Besides, who wants to drive a car from a company owned by a Nazi?   I mean, other than Volkswagen.

It's like Prius drivers being shocked to discover that Toyota lobbied to decrease mileage requirements in the USA.  Sort of a buzz-kill.

I am sorry I didn't have any good advice to give my friend, other than perhaps to sell the truck once it was fixed and buy something simpler - and older Ford Powerstroke, perhaps.  But even then, Ford had its share of esoteric issues with some older models.  Maybe owning less stuff is really the only option!

NOTE:  This is not to say consequential damages are never covered. Some extended warranties explicitly offer to cover consequential damages, but usually cap these at a certain limit per day.  For example, a friend had their RV break down and their extended warranty covered the cost of cancellation fees and a flight home and a rental car.  They were lucky as most "extended warranties" claim to cover these things, but when you call the company you get, "The number you have dialed is disconnected..."

Also, in commercial transactions, warranties may cover some foreseeen consequential damages.  For example, in construction, a warranty may cover loss of use if that is a foreseen damage, but usaally these things are spelled out in detail in the contracts.  You buy a plane from Boeing, and well, if it is out of service for two years because of a control issue, you may be able to recover damages from them for loss of use.

But for your car warranty?  Other than a lemon-law buyback, odds are, not likely.