When selling extended warranty, dealers are required to ensure they comply with all requirements under the MVDA. Dealers can only sell extended warranty products that are secured or insured.
It is the dealers responsibility, to provide accurate information to their consumers. To achieve this, dealers have the option to clearly distinguish between secured warranties and underwritten warranties when communicating product and service details to consumers. This practice not only ensures transparency but provides consumers with truthful and accurate descriptions of the products to make fully informed decisions.
Extended warranties must be insured by a company licensed under the Insurance Act. Alternatively, dealers opting to sell uninsured warranties can mitigate risks by providing a letter of credit to OMVIC. In the event that a warranty company goes out of business and the sold warranty does not meet specified requirements, the dealer assumes responsibility for all claims under the warranty.
Contracts for extended warranties and service plans must include specific information and be signed by both parties. Purchasers must receive a copy of the contract immediately after signing.
Within seven days of selling a warranty or service plan, dealers must furnish the warranty or service plan provider with all relevant documents, including contract details and received payments. For extended warranties, a statement describing the condition and mileage of the motor vehicle must be provided if available.
Dealers must ensure compliance with all MVDA requirements when selling extended warranties. They are permitted to sell only those products that are insured or for which a letter of credit has been provided to OMVIC. Clearly communicating the nature of secured warranties versus underwritten warranties can further enhance transparency and align with the legal obligations imposed on dealers.
Dealers must ensure compliance with all MVDA requirements when selling extended warranties. They are permitted to sell only those products that are insured or for which a letter of credit has been provided to OMVIC.
Registrants can verify whether a warranty company is secured by an LOC by contacting the Industry Standards & Conduct Department at 1-800-943-6002. Selling warranties from unapproved providers will result in compliance action.
Clearly communicating the nature of secured warranties versus underwritten warranties can further enhance transparency and align with the legal obligations imposed on dealers.
