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Penn Warranty Corp, Wesco Insurance Company, Service Contract

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Case Description

Buyer, who was located in Hawthorne, purchased a 2011 BMW 535Xi along with a service contract for repairs. Penn Warranty Corp and Wesco Insurance Company were the providers on the service contract. The type of service contract Buyer purchased was the "Highline" Fully Insured Vehicle version, which was the most expensive and inclusive. Coverage specifically included "transfer case on 4-wheel drive vehicles and all internal parts" and "all sensors used to control engine and powertrain functions." The cost of the service contract alone was $1,718.00 and it provided 2 years of coverage.

A few months after purchase, the vehicle began leaking oil out of what is known as a "transfer case." The BMW 535Xi model is a 4-wheel drive vehicle, and a transfer case is a sealed unit of gears which regulates power between the front and rear wheels.

The vehicle also developed electrical faults in the steering column. Specifically, the "steering angle sensor", which provides data to the traction-control and speed-control functions of the engine and transmission, was malfunctioning. These malfunctions were determined when Buyer took the 535Xi to Long Beach BMW and received an estimate for repairs.

Buyer then submitted the repairs to Penn Warranty Corp and Wesco Insurance Company. To Buyer’s surprise, the Providers denied both repairs despite both explicitly being covered. In an attempt to get out of paying for the repairs, Penn Warranty Company wrongfully stated the diagnosis by Long Beach BMW was incorrect and that other, purportedly not covered items, were the cause of Buyer’s issues. Relying on those statements, Buyer did not pursue coverage for those repairs anymore.

A few months later, more components on the vehicle started to malfunction. This time, Buyer took the 535Xi to German Auto Parts & Service in Long Beach, where he received an estimate stating the vehicle had, among other issues, "cracked control arm bushings". The “Highline” service contract Buyer purchased explicitly covered "control arm bushings". Buyer again submitted the repairs to Penn Warranty Corp and Wesco Insurance Company, but again was denied coverage.

Shortly thereafter, Buyer retained’s attorneys to take legal action. With the help of our experienced and aggressive attorneys specializing in Auto Fraud and Lemon Law, Buyer took Penn Warranty Corp and Wesco Insurance Company to trial for breaching their service contract under the Song-Beverly Consumer Warranty Act. The court ruled in favor of Buyer and ordered the providers to pay Buyer monetary compensation for damages, a statutory penalty for willful conduct, and Buyer’s attorney fees and costs.