When you purchase an extended warranty (also known as “vehicle service contract”), you are purchasing a type of insurance under Oklahoma bad faith insurance law. This means that you may go beyond the normal contract damages available for failure to perform under a vehicle warranty and seek punitive damages. This is a rapidly changing and evolving area of law in Oklahoma. Our Oklahoma insurance bad faith attorneys have extensive experience in this emerging area of bad faith insurance litigation and have served as a consultant to Oklahoma lawmakers in this emerging field of law.
A vehicle service contract can be particularly attractive during these tough economic times when many consumers may not have the extra disposable income readily available to cover sudden unanticipated vehicle repair costs. Many consumers elect to purchase such vehicle service contracts from third-party companies when purchasing their vehicle. While Oklahoma law permits these third-party companies to be sued for bad faith denial of claims, the law is still unsettled as to whether Oklahoma auto dealerships that sell their own branded service contracts can also be subject to bad faith claims.
In McMullan vs. Enterprise Financial Group, Inc., the Oklahoma Supreme Court held that vehicle service contracts may be the basis of a bad faith insurance lawsuit because they meet the definition of and are designed to function and perform as insurance. Like other insurance policies, extended warranties on vehicles shift the risk of paying the high cost of repair and indemnify the buyer from liability for the cost in exchange for a fixed up-front premium. Extended warranties, like insurance, pool the risk associated with vehicle defects, with the service contract provider agreeing to pay claims from premiums collected and pooled.
Because vehicle service contracts are insurance products under Oklahoma insurance law, the provider owes a duty to deal with those who purchase such protection plans in good faith. A breach of the obligation of good faith and fair dealing by an extended warranty provider exposes the provider to a potential lawsuitwhich may seek not only the cost of repairing or replacing your vehicle, but punitive damages to punish the company for breaching its obligation to deal with you in good faith. Oklahoma’s highest court has made clear that a vehicle service contract provider cannot circumvent its duty to deal in good faith with its customers by simply labeling its risk spreading product a “warranty” when it has a clear insurance-like function.
If your vehicle service provider refuses to repair or replace your vehicle for defects covered by your extended warranty, our Oklahoma bad faith attorneys will help you obtain the compensation that you deserve. We will not only handle your claim in a fair or timely manner, we may be able to file a bad faith lawsuit requesting punitive damages, which may be worth far more than the cost of repairing your vehicle.
Feel free to schedule a free consultation online or call The Bennett Law Firm at 405.272.0303 to discuss your legal options with an experienced Oklahoma City lawyer today. No Recovery, No Fee! We will meet with you face to face and can handle cases anywhere in Oklahoma. We can even come to you!