So as I said, my BMW was about to be out of warranty back in 08, and I started looking around regarding extended warranties. I was calling around between BMW dealers (they can have a wide variance in price for the same warranty, depending upon how much profit they're willing to give up), and even researched some of the more respectable third party extended warranty companies. I also considered simply gambling and having no warranty (which is what I'm doing right now for one of my cars, and so far it's worked out).
I happened to have my car in for service at a BMW dealer in Vegas, shortly before the warranty was over, and I asked them about their extended warranty.
"Well, I can offer you two options", said the service adviser. "I can sell you the BMW warranty, or I can sell you this third-party warranty which is just as good, but cheaper."
I was shocked to hear this. An authorized BMW dealer competing with BMW's own warranties? Interesting. I figured I could trust this one because there was no way a huge dealer would sell me an outright scam warranty, especially because BWM of North America punishes dealers for corporate complaints about them.
Still, something felt off. The price difference was very large. Why would anyone buy the BMW warranty for so much extra money, when this third-party warranty was just as good? Even more perplexing, the third-party warranty had an additional strength -- you could take it to any mechanic to fix your car. The BMW warranty required an authorized BMW mechanic to work on it. So the third party warranty was more flexible, too.
I kept repeatedly asking the guy, "So you're sure this is the same as the BMW one, right? Everything covered in the BMW one is covered here, right?"
The service adviser repeatedly said yes.
And this wasn't some sort of scam where the guy was selling these on the side without his bosses knowing. I bought the third party warranty, but had to interface with the guy's manager to do it, and I filled out paperwork indicating that the sale came through this BMW place.
Of course, I repeatedly read the long contract which specified all the coverage and exclusions. Seemed totally legit. All the stuff you'd expect to be covered was covered, and the only exclusions were obvious items such as tires, paint, glass, windshield wipers, damage to the vehicle caused by accident or vandalism, etc.
I walked out feeling like a Jew who might have just gotten the best of both worlds (an extended warranty not marked way up by BMW, but at the same time, has the credibility of a major BMW dealership selling it), but also feeling like maybe I was just a huge chump.
The warranty was good for 3 years, meaning it lasted through mid-2011.
In 2010, while visiting my parents, my car started acting extremely weird, and was barely driveable. I brought it to the nearest BMW place, and they gave me a loaner car (free) for the duration of the repair. I felt comfortable that this would be covered by the extended warranty, and if it wasn't, I was going to call the Vegas BMW place and raise hell.
Then I got the bad news. My worst fears came true: It wasn't covered. Why? Because my car had a problem with the throttle body, and the throttle body was excluded by my extended warranty.
Throttle body? What is that?
A throttle body is a butterfly valve located between the air intake filter and the intake manifold. It regulates how much air can go into the engine, based on driver input through the gas pedal. As more air flows into the engine, it injects more fuel, thus allowing for more power.
But how could the throttle body have been excluded? I had remembered checking the contract very carefully to make sure that all mechanical elements were covered.
I asked the service adviser to point me to the section of the extended warranty which excluded it, and he told me where to look.
Under "exclusions", I did find something like this:
"... windshield wipers, headlight bulbs, floor mats, glass, throttle body, paint, tires, hood ornaments ..."
How dirty!
They purposely buried "throttle body" (mechanical) in between a bunch of super obvious cosmetic stuff which clearly would never be covered by a warranty, hoping you'd glance at it, and your eyes would skip by, as you'd think to yourself, "Yeah, of course that stuff isn't covered!"
And it worked! I never saw "throttle body" when I read it prior to purchase. My eyes did skip right over it, as it blended in with all of the cosmetic stuff.
This was completely intentional.
Why was throttle body excluded? No idea. Strangely, it was the ONLY mechanical item excluded, and I ran so bad that my car's only mechanical problem for the duration of the warranty was with the throttle body.
I then asked the service adviser if the standard BMW warranty would have covered it.
"Yes, it would have," he replied.
I was furious! The "it's the same thing" spiel I was given simply wasn't true!
However, I also figured that perhaps the guy selling it to me was also fooled by this throttle body trick, and he also believed he was really selling me the same coverage. Still, that wasn't my problem. An authorized BMW dealer in Vegas repeatedly promised me the coverage was the same, and I verified it with him multiple times prior to purchasing it.
I called the BMW place in Vegas. Unfortunately, in the two years that had passed, that service adviser had either left the company or was fired. Instead, I was given his manager.
The manager did admit that they sold these third party warranties in 2008, and he even conceded, "We don't sell those any more. There were too many problems with them."
So I was off to a good start. If the warranty he sold me was no longer sold by them due to "problems", clearly they had some kind of obligation to help me here. (And by "obligation", I mean how they'd look to BMW North America if they didn't help me.)
Unfortunately, the guy initially refused to help, telling me that it was my responsibility to have read the contract and coverages prior to purchasing it.
"As far as I can see here, the item being excluded is listed as an exclusion in the contract you signed, so I'm not sure what your problem is", he told me.
Okay, fair point.
However, at the same time, I was promised by the sales employee of his dealership that the two warranties were the same, which they weren't. That would supersede the contract itself from a legal standpoint, but the problem is that I had no proof of that. For all this manager knew, I could be lying about it because I simply ran into bad luck that the one mechanical exclusion was what I needed covered.
Still, I knew I was telling the truth, and furthermore, the contract was written in a really dirty fashion, attempting to bury the "throttle body" exclusion in a place where it would be missed. So I definitely had a moral right to demand some kind of compensation here, and perhaps a legal one, too.
We went back and forth a lot. There was actually some other mechanical work related to this problem which WAS covered, and the warranty did pay promptly. So it wasn't an outright scam. But the throttle body portion was something like $1000, and the local BMW place didn't want to release my car until I forked over that money. I also didn't want to fork over that money until this matter was settled, figuring that my negotiation position would be weaker if I paid first and asked for reimbursement later (even though these were two different dealerships with two different owners). Basically, I was hoping the dealership by my parents would help pressure the Vegas one into doing the right thing.
Believe it or not, a month passed with this whole stalemate going on. Credit to the dealership by my parents -- they were incredibly patient with the whole thing, and their only issue was that I was driving their loaner car for a month. Finally they told me I couldn't have the loaner for free anymore -- that I'd need to return it or start paying for it, which was obviously a reasonable demand at this point, as it had been a month, and this wasn't their problem. At this point, I called the Vegas BMW place and threw down the gauntlet. I told them I would need a decision in the next 24 hours, or I would be filing both a complaint to BMW North America and a lawsuit regarding this matter. I also made the general manager aware of this.
Later that same day, they told me they decided they would pay $500 toward the $1000 or so outstanding bill. I was told that they determined that the $500 was the "fair" resolution because:
1) I signed a contract agreeing to this exclusion
and
2) They had no proof of what I was actually promised, and the employee in question had been gone for a long time
So they felt a half/half approach was the fair resolution at that point. I wasn't thrilled with it, but I accepted it, especially knowing that a little of the responsibility was mine for not catching that throttle body exclusion in the contract.
So that was done, I paid the other $500, and I got my car back.
And that was the first and last time I ever purchased a third party extended warranty.