On April 16, at a used car dealership in Bristol, Tennessee I purchased a 1993 Toyota Camry with 96118 miles on the odometer. At the time of purchase, I also purchased a 12-month 15000 mile powertrain warranty from Preferred Warranties, Inc. (PWI) through the dealer for a price of $345.00. After driving the car for two or three days, I noticed occasional large amounts of smoke from the exhaust and a clattering noise like a valve noise.
In addition, the car was consuming approximately one quart of oil for each 100 miles driven. I contacted PWI regarding the vehicle problems, and they gave me the names of three local repair shops. I had used one of them in the past and found their work to be excellent. They ran a few tests and said the problem was most likely lack of maintenance, especially regular oil changes. "Bill, " the contact at Preferred Warranties, talked on the phone with the shop several times and asked that I allow them to tear down the engine, which I did. The teardown confirmed their earlier diagnosis, and revealed a great deal of carbon in the cylinder head ("black corn flakes"), worn-out rod bushings and piston rings, and piston scarring and other indicators of lack of maintenance.
Essentially the engine was worn out. PWI sent an inspector on May 29 to inspect the engine, take photographs, and issue a report. On May 30, "Bill" telephoned me and informed me that PWI was refusing to pay anything on the claim because the damage to the engine was there when the car was purchased and the warranty issued. I asked him if I could get a refund on what had proven to be a worthless warranty, and he also refused that request.
The car has been at the shop for well over a month now, and still sits there with the engine removed.
I emailed this information on 5/30 to the dealer urging him to stop selling PWI warranties and also sent a copy of the email to Wayne Herring, President of Preferred Warranties. The dealer felt that PWI should pay the claim and indicated that he would in fact stop selling their warranties if they ultimately denied my claim.
On 5/31, I received an email from Wayne Herring explaining that my claim was being denied because the engine damage (although not apparent at the time of the sale) "... Was worn beyond serviceable limits... At time of purchase from the dealer, " which is specifically not covered in clause 5 of the warranty service contract.
My complaint is that I believe that Preferred Warranties, Inc. Is employing deceptive practices by selling a warranty containing exclusions that potentially could invalidate virtually any claim for repairs. They also added to the delay by requiring a teardown, and they flatly refuse to consider a refund of the price I paid for the "warranty."
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