Understanding Equipment Warranty

By
Updated: October 12, 2016
Equipment Warranty

Words / Jon Gibson

In order to lower operating costs many equipment owners look to make savings by reviewing and streamlining their maintenance practices.

Knowing where to draw the line is key – you don’t want to gamble with reliability or risk affecting warranties because this may result in increased costs in the event of an unsupported failure. Warranty is realistically quite similar to an insurance policy because it does not come free with new equipment; it is factored into the price when the dealer purchases the equipment from the factory and the cost of which is passed on to you, the end user. Your warranty is a product you’ve purchased that has the potential to save you thousands of dollars. Therefore, you need to treat and maintain it accordingly.

It is essentially a contract between the buyer and the seller, and there are certain obligations on both sides.

The qualifying terms and conditions to successfully lodge a claim are set down in the warranty agreement at the time of purchase. We all know to read the fine print when evaluating insurance policies, yet when it comes to warranty agreements it would seem the same is not true. Although Australian law is geared towards protecting the buyer, it is the dealer with the backing of their supporting factory that ultimately makes the call with regards to the validity of a claim. It’s wise to ensure you’ve read and understood the terms of the warranty agreement prior to signing the order, particularly if you plan to perform your own maintenance. Once you’ve ordered your new item of plant you’ve legally accepted the terms of the warranty. You therefore have no legal claim to any parts or service outside of the qualifying terms and conditions.

Interestingly, in most cases the warranty coverage does not pass from the first to the second owner if the machine is sold by the original buyer within the warranty period.

While most warranty policies share similarities it’s important to evaluate them on their points of difference. How many years and how many hours is the easy stuff, what you need to look at is the inclusions and/or exclusions. Some warranties list powertrain and electrical components individually beyond a certain point in time or meter reading, some will state “extended powertrain warranty” but not itemise the exclusions. Some warranty policies will cover travel and/or overtime differential, while others don’t. Where attachments are being purchased with the machine, particularly if they’re not supplied by the same OEM as the host machine, it’s vital that you establish the terms of the attachment warranty and who will administer it. Some warranties are bumper to bumper and some are powertrain only. Some OEMs do a very poor job of supporting the engine in their equipment, and in some cases a separate warranty document is provided on behalf of the engine manufacturer. Make certain that this warranty has been registered with the engine manufacturer and has not been left in the pack for you to do. It is important to understand how an engine issue will be handled if the American engine in your Japanese machine experiences a failure. Your best chance to clarify any of these points is prior to putting the ink on the order.

Using the insurance policy analogy, think of the equipment dealership as the policy broker and the OEM factory as the underwriter. The broker, or in this case the dealer, has no power to force a claim back on the factory if the claims criteria have not been met in accordance with the policy document. Just like your insurance broker, the equipment dealership acts as the conduit between you and the party that will ultimately make the decision regarding the validity of your claim. And, just like your insurance broker, they generally want the best outcome for you in order to retain you as a customer.

Your best chance of achieving a positive result with regards to a warranty claim is to maintain your professional courtesy and remain a customer that the dealer is eager to retain. The old adage: “the squeaky wheel gets the oil” does not apply when it’s your responsibility to provide the oil.

In the event that a warranty claim is rejected during the warranty period, it is usually due to there being no “failed part” to blame. This may occur if an adjustment was required that either resulted from an oversight on the part of the dealer, or an abnormal operating parameter. Where the customer/operator has misunderstood the operating capacity, controls, functions of the monitor etc. and no fault is found, again this will not go through on warranty.

If “proof of proper maintenance” is listed as a qualifying factor in the approval of warranty claim submissions, you need to establish in writing, up front, what exactly is required. The key elements to consider here are: use of long drain oil for extended service intervals, the micron rating of any non-genuine filtration, the provision and correct interpretation of compartment oil analysis reports and the grade of lubricant for use in your ambient temperature range.

All of these pose opportunities to make savings and lower your overall ownership and operating costs, but you need to involve the dealership in the development of your strategy.

In order to get the best level of protection from your warranty policy, it is vital that you understand what it is you’re buying. Read the fine print and educate yourself with regards to the law and your rights specifically.