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Phil* bought a used car as a gift for his granddaughter in October 2014. He also bought a motor vehicle warranty from National Warranty Company. Phil paid $4500 for the car and $295 for the warranty.

The car broke down in January 2015 and had to be towed. Phil paid for the car to be towed to a mechanic he knew and trusted, and that had dealt with NWC before. The mechanic advised that the transmission needed to be replaced at a cost of $4350. Phil confirmed this quote with a second mechanic, a transmission expert. Phil advises that under the NWC product he bought, the maximum that would be paid for a transmission repair was $1200.

When Phil got in touch with NWC they said he would be required to take the car to their nominated mechanic, which was around an hour’s drive away. Phil was willing to send the car to NWC’s mechanic until he was told that NWC wouldn’t pay for the tow—which Phil understood would cost around $400 as a round trip. The $1200 cap meant Phil would already be out of pocket so he wasn’t willing to spend another $400 on a tow, but NWC wouldn’t budge.

When we spoke to Phil, he emphasised that he was given the impression that the salesman was offering him a manufacturer’s extended warranty, not something provided by a third party. Phil was extraordinarily dissatisfied about the limitations of the NWC even before he knew about the clause that gave NWC complete discretion over whether to accept claims. He was clear that, had he known what this product was, he would have advised his grand-daughter against buying it.

Ultimately Phil bought a second hand gearbox ‘taking a punt’ and had it installed for $2600 total. His granddaughter’s car is back on the road and Phil is ‘trying to forget about it’.

Phil’s assessment of National Warranty Company: ‘They take money and provide no service, no backup. End of story’

This is an excerpt from a Consumer Action Law Centre report into used car warranties. Read the full “Donating Your Money To A Warranty Company” report here.

*Name changed