Some experts claim that the only true car warranty available to consumers is the warranty that comes with a car when it is sold new. A manufacturer’s warranty, or new car warranty, is a type of car manufacturer’s guarantee. It generally states that if problems occur within a certain period of time or number of miles after the purchaser buys it, the manufacturer will assume responsibility for the repairs.
The cost of the warranty is basically included in the price of the new vehicle.
A new car warranty also gives the purchaser of a new car the confidence that the manufacturer stands behind their product and that it is designed to last. Vehicle warranty laws endorse this promise by the manufacturer and the dealer.
According to these experts, every other kind of warranty is nothing more than a prepaid service plan. It is a mistake of terminology to refer to it as an “extended warranty.”
Be that as it may, a prepaid service plan is a form of insurance. A car owner pays a monthly fee in order to avoid having to pay a huge bill in the event that something big and expensive goes wrong with their car after the original new car warranty expires. If the vehicle requires a repair, the company that offers the prepaid service plan should cover the cost of fixing it.
California regulates these prepaid service plans. First, it requires that companies that sell these plans be licensed car dealers. If a business that is not a licensed car dealer sells a service plan, it is perpetrating a felony criminal offense.
California law also requires that the administrators of prepaid service plans have a Vehicle Service Contract Provider license. The fee for acquiring this license in California is $5,000. The annual renewal fee is $847.
The administrator must also have a backup insurance company to guarantee that it can pay all claims for which it is responsible. Or, they must show that they have at least $100 million in assets to guarantee their obligations.
Companies providing vehicle service contracts in California must submit copies of the contracts they provide to the state. Contracts have to be insured to guarantee that claims from the car owners who have the contract can be paid when necessary.
The insurance company must have a certain minimum rating. The name and address of the insurance company that guarantees its payment of claims must be in the contract.
There are other requirements in California law that aim to ensure the financial solvency of vehicle service contract suppliers. An individual who has a complaint may contact the California Department of Insurance.
Unlicensed companies, or companies that do not adequately insure their contracts, can be fined or charged with a felony or both.
There is another type of auto warranty available in California and it is referred to as “mechanical breakdown insurance” (MBI). It works for the most part just like a vehicle service contract but is regulated like insurance.
A seller of MBI does not have to be a licensed car dealer to sell mechanical breakdown insurance. They have to be a licensed insurance seller. The company that administers the insurance has to be an insurance provider licensed in California. They can be purchased online.
To the consumer, the main difference between the two types of auto service contracts is that the Department of Insurance regulates the pricing of an MBI, and car dealerships determine the pricing of the service plans that they sell.
What Are Express Automobile Warranties in California?
As noted above, express automobile warranties in California are basically a type of insurance that covers car repairs. There are vehicle service contracts and mechanical breakdown insurance policies.
But essentially, they both offer the same type of product. They promise to pay certain costs associated with repairing a mechanical breakdown of the consumer’s car.
What Are Implied Automobile Warranties Under California Law?
An implied warranty is something that state law implies in a contract. This means that the warranty is not expressed in the contract. A consumer does not find it by reading their contract, but state law determines that it is implied in the contract.
There are two different types of implied warranties:
- Warranty of Merchantability: The implied warranty of merchantability provides that a vehicle should operate reliably and if it does not, the dealer has to fix it.
- Warranty of Fitness for a Particular Purpose: The implied warranty of fitness for a particular purpose provides that a vehicle is suitable for use for a certain purpose, such as hauling a boat or recreation vehicle.
Both warranties are implied in a vehicle service plan contract.
How Can I Enforce My Warranty Rights in California?
An individual can negotiate with a car dealership or MBI administrator, file a complaint with the Department of Insurance for an MBI, or with the Bureau of Automotive Repair for a warranty.
If neither of these steps produces the desired result, an individual can always file a car warranty lawsuit in California. They would allege that there was a breach of their warranty when the service contract provider failed to do what is promised in the contract.
How Can a California Auto Warranty Lawyer Help?
A California auto warranty lawyer is familiar with California vehicle warranty laws. A lawyer can read your warranty contract and advise a car owner as to whether it should cover the cost of repair in a given situation or not.
What Are Some Common Auto Warranty Legal Violations in California?
Clearly, the most common violation is for a company to deny coverage for a repair when the warranty or mechanical breakdown insurance should pay for it. A company might try to short a vehicle owner and offer less than the full amount of the repair.
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What Should I Do if My Auto Warranty Is Not Honored in California?
If a car dealership or MBI administrator does not honor the warranty when the customer thinks they should, they should make a demand in writing, stating their case for why a repair should be paid for pursuant to the warranty. They should point to the language in the warranty that obligates the insurer or warrantor to pay for a particular repair.
The vehicle owner should probably have a legal consultation in California with a California lawyer who can help them read and understand their warranty and apply it to a particular situation in which a repair is needed. In fact, the vehicle owner might have their lawyer
draft and send the letter.
Sometimes, a letter from a lawyer is more effective than one from a private individual.
If the letter does not produce the desired result, the vehicle owner may file a complaint with the Department of Insurance if the warranty is an MBI or the California Bureau of Automotive Repair. Complaints can be filed online.
If these measures do not produce the desired result, a person can file an auto warranty lawsuit against the car dealership or the MBI administrator for breach of warranty.
Can an Auto Warranty Be Voided in California?
A vehicle manufacturer makes a guarantee to the purchaser of a new vehicle regarding the condition of the vehicle. If a part malfunctions or does not work as it is designed to do, the warranty should cover the cost to repair or replace the part.
In addition, the warranty covers the cost of a rental car while the owner’s car is undergoing repairs.
It is important to keep in mind that manufacturers pay close attention to the owner’s record of maintaining and servicing their vehicle so that warranty coverage applies. So an owner wants to keep a detailed record of the fact that their vehicle has had all the recommended service, e.g., oil changes, etc., on time as recommended.
This would prevent the manufacturer or administrator from claiming that the owner’s negligence caused a problem and the warranty does not apply to pay to fix it.
Do I Need a Lawyer for Help With an Auto Warranty Issue in California?
If you are having problems getting a car dealership or other company to provide the repairs promised in your warranty, service plan, or breakdown insurance policy, you want to talk to a California auto lawyer.
LegalMatch.com can connect you to a lawyer who understands the complexities of California warranty law and can get you the best possible result for your vehicle.
Jose Rivera
Managing Editor
Editor
Last Updated: Apr 21, 2025