3 year used car warranty, refusal to refund on cancellation

[nicaboo]

Hi. My son has unfortunately had his car written off as a total loss after being rear ended by a drunk driver. He's had the car since August 2018 and paid £750 for a 3 year warranty. He's asked if it can be cancelled and a pro-rata refund made for the 2+ years remaining but the company have refused. The T & Cs state -
"In the event that you wish to cancel the warranty at any other time (outside the initial 14 days cooling off period), you will not be entitled to a return of any part of the fee"
To me this seems grossly unfair. Does anyone think we have any grounds to challenge this and how best to go about this? The warranty was sold by Ford and it would appear that T & Cs were subsequently changed on warranty plans sold after August 2018 so that a refund could be claimed following cancellation.

[paulajayne]

Can the warranty be transfer to another car?

[des8]

I doubt he has any recourse over the warranty, but in any case why not add it to his claim against the third party who caused the accident?

[nicaboo]

Hi, thanks for the replies.

No we can not transfer it to another car, only to the new owner if it was sold.

We may be able to claim off the third party but we don't have his details yet (refused to give name and address to my son and the police), nor do we know whether he was insured (My son's insurance still trying to establish this). He has now appointed a legal firm to pursue his uninsured costs and personal injury claim and we'll make sure that this warranty is included if necessary.

Just been looking up the CRA and to me the terms of this warranty may fall under their 'unfair terms' as I'm struggling to see how they could justify not refunding any money. I accept there may be some admin costs but to withhold the whole amount, in these circumstances, seems very unfair.

I'm going to prepare a formal complaint to send off to see where that gets us. He has GAP insurance as well so we're going to explore whether that might cover it as well.

[des8]

Re the GAP insurance it only covers against losses that can arise when the amount of compensation received from a total loss does not fully cover the amount the insured owes on the vehicle's finance agreement. Is it invoice gap or replacement Gap?

Re the Warranty it seems that the Ford Warranty is issued by the Ford motor Co and not an insurance company. If it had been an insurance product provided by an insurer following the Association of British Insurer’s Good Practice Guide for Extended Warranties they would allow a pro rata refund for cancellation.

Ford have changed their warranty, so can you post up a copy of the warranty wording your son has so we can have a look at it?

[nicaboo]

warranty T & Cs link added.

The Gap paperwork states-

"Your policy will pay the difference between the Motor Insurers Settlement at the point of Total Loss and the higher of:
1. The amount outstanding on finance; or
2. The original Net Invoice Selling Price you paid; or

3. The cost of a Replacement Vehicle, matching the original Vehicle specification or an equivalent superseding model in the event this is no longer available. If You purchased the Insured Vehicle under a finance agreement and do not have the legal right to own the Insured Vehicle at the end of the
agreement, any settlement would be based on the amount of outstanding finance at the point of Total Loss.
Your policy will pay up to £250 towards the cost of your Motor Insurance Excess."

It then goes on the state that the "net invoice selling price" is -

"The purchase price of the Vehicle (including factory and up to £1,500 of dealer fitted accessories endorsed by the manufacturer; paintwork protection applications; and non-transferrable warranty) including any discount given."

We can not transfer the warranty as the car has been written off.

[des8]

Assuming the third party was uninsured, if your son has comprehensive insurance he might have to claim on his GAP cover so don't rush to cancel it.
He will be able to claim for his uninsured losses from the third party (but whether or not the third party has assets to pay for those losses is another matter.

If he has suffered injury, indemnity will need to be sought from MIB, which unfortunately seems to take forever!

I'm not sure which of the unfair terms in CRA 2015 you refer.
The warranty clearly states there will be no refunds if the purchaser cancels (although refunds will be made if the company cancel)
That clause should have been brought to his attention at the time of purchase.
These clauses were made illegal with reference to domestic goods warranties, and following that many offerors of extended warranties brought in similar changes to their policies.
Whether or not that can be argued to apply in principle to car warranties others might like to comment

[nicaboo]

Thanks for the advice.

I've told him to make his GAP claim asap and to include the warranty.

Re the CRA. Although the warranty states there is no refund if he cancels after 14 days I'm struggling to see how this can be fair. In effect they're applying a cancellation fee of approx £580 on a £750 plan. So although the warranty states this it presumably doesn't stop me pursuing a complaint / case along the lines that I consider this to be an 'unfair term' as it seems weighted considerably in the provider's favour, to the detriment of my son? That was my reasoning.

Anyway like you say we'll see how the GAP claim goes first, or possibly pursue it via his uninsured losses claim. With a bit of luck the other driver is insured. However I'm not happy that Ford are selling warranties like this (or were, perhaps they've now changed), and as far as we can remember we were not told at the time that it was non refundable should something happen.

My son has now told me that the warranty company told him that if he buys another car from a Ford dealer they may give him 'credit' for this warranty, as a sweetener.!! Really? Be much better if they just refunded him.

[des8]

I agree with you that it seems unfair, but I'm not sure it is a claim that will win in court.
However if you pursue it Ford might offer an acceptable compromise, or if you take it to court you might win.

Whilst you consider the clause weighted in Ford's favour, the corollary that if Ford cancel they will pay a prorata refund balances it out.

[nicaboo]

I'm hoping Ford will offer something without having to threaten any action.

I see what you mean re Ford cancelling. Interestingly my son asked under what circumstances they would cancel, the woman he spoke to said she didn't know and was not aware that they had ever cancelled a warranty, I wonder why?