Competition for your tool-buying dollar has become more intense than ever. In a retail atmosphere where profit margins are razor-thin, shelves are loaded with a multitude of high-quality tools, and educated consumers are less likely to base their purchasing decisions on tool color alone, the latest tool-selling battlefield has become warranty coverage. This has led many manufacturers to risk the potential financial costs of warranted repairs and product replacements to attract and keep customers. And those that are not eager to expand their coverage might soon be influenced to follow suit if such foot-dragging is perceived by buyers as a lack of confidence in their tools.

Focusing on power tools (both corded and cordless) and nailers, we took a look at the enhanced offerings being made by tool companies to determine what has really changed for the customer amid all the hype. In most cases, little additional benefit will be realized by the tool buyer from the new warranties themselves, but new service agreements can add appreciable value.

Our goal here is to equip you with the information you'll need to decide if a warranty brings value to your purchase, and we have intentionally left warranty coverage offered by specific manufacturers unidentified.

Warranties Defined

There are two basic types of warranties applied to tools and other goods: implied and express.

Implied warranties are provided for by state law and include unwritten coverage of both the warranty of merchantability and the warranty of fitness for a particular purpose. These intuitive clauses are based on the legal principle of "fair value for money spent" and simply mean that a product should be good enough to sell and should work like it is intended to. Consumers' rights to such coverage cannot be superseded by more specific express warranties; however, an implied warranty's term can be limited by an express warranty if it is of "reasonable" duration. Also, in some states it is possible for goods to be sold with the implied warranties disavowed; beware of phrases like "as is" and "with all faults."

Express warranties are governed by federal law and are expressed, or written out, with specific promises made by the manufacturer about the remedies they offer if the product is found to be defective. By law, these warranties must be designated as either full or limited and live up to the requirements of each.

Full warranties, (not to be confused with lifetime warranties), are restrictive to the manufacturer and therefore very rare. When we discuss tool warranties, we are talking about limited warranties almost without exception. Such an express limited warranty must explicitly state its terms and conditions, including what is covered and for how long, remedies and their fulfillment, and how state laws might affect customer rights under the warranty. This final item requires the following disclosure: "This warranty gives you specific legal rights, and you may also have other rights which vary from state to state." In addition, if a limited warranty seeks to restrict implied warranty terms or deny liability, similar disclaimers are required. Curiously, even though the use of these statements is legally mandated by the Federal Trade Commission, many of the warranties we looked at omitted the necessary boilerplate.

New Trends in Coverage

In 1975, Congress passed the Magnuson-Moss Warranty Act to make warranty terms available to the consumer before the sale and thus enabling the modern, competitive use of express warranties as marketing tools by manufacturers and retailers. Today, tool buyers are experiencing an upswing of warranty awareness that is unprecedented in scale; never in recent history has the warranty of a tool been so visible, figuring prominently in displays, advertising, and packaging.

From one-year coverage, the standard of just a few years ago, to three-, five-, and seven-year and now lifetime warranties, where will it end? Interviews within the industry lead us to believe that we are riding out the apex of a marketing fad that will settle down in a year or so, but for now, here's how this trend affects tool buyers.

Warranty Term Escalation

The increases in the duration of limited warranty periods typically only cover defects in materials and workmanship. Adding years to this coverage is of questionable value because most true manufacturer's defects are found very early in a tool's service life. Short of a recall situation, it is probably a rare case when an imperfect material or assembly just begins to cause a noticeable problem five years down the road. And by then, depending on the tool, it could already be close to the end of its useful life anyway. One nailer manufacturer told us that only about 1 percent of their tools ever make it in for a warranted repair. This inflation of warranted years seems to be mostly a numbers game without overwhelming tangible benefits. Remember, a warranty is only a contract. A five-year warranty does not guarantee that a tool will last that long, it only says what the manufacturer will do for you if it doesn't.

Warranty Extensionsand Service Agreements

In addition to escalating standard warranties, companies are more and more offering extended warranty terms and/or service programs, some of which are only available if you apply for an upgrade within an allotted deadline. Some of these service programs offer significant benefits with more liberal repair and replacement policies, even replacing common wear items.

Service agreements range from one year to lifetime; some take effect after the original warranty is expired and others start concurrently. Be sure to read the fine print to know exactly what is covered when and for how long. There are pretty surprising exceptions and limitations to some service programs, so check ahead of time to make sure the tool you're interested in is even included. Overall, these "wear and tear warranties," service programs that replace normal wear parts, represent the best added value to the customer, truly the best thing to come out of the warranty wars.

Additional Coverage

"Repair cost limitation" is another feature popping up in some warranties. These clauses can limit the amount you pay for repairs either during the warranty or after it has lapsed and are based on a set price per tool or a certain percentage of the price of a replacement tool. Cheaper repairs will still remain cheaper and in some cases, you can decide to forgo the repair and use the trade-in value of the tool toward a new one.

An honorable mention goes out to companies that warrant their repairs independently from the overall tool warranty, especially when it has lapsed. And at least one manufacturer even adds a six-month warranty to the entire tool after any out-of-warranty repair is made.

An extra special coverage, perhaps unique to one nailer brand, is a replacement policy for tools destroyed by natural disaster. The tools must have been registered and proof of purchase and disaster documentation are required, but for the poor guy who returns to a flooded-out shop filled with ruined tools, this replacement policy would be worth a little bit of paperwork.

Limitations & Conditions

With limited warranties, the manufacturer gets to call the shots for a lot of the little things. According to the FTC, you can be required to send in a warranty card or abide by a certain registration date to enact a limited warranty or an additional service agreement. Most manufacturers try to make it easy for their customers though and don't push these things, but some do; always read the fine print. If you have to send in a warranty card, only fill out the essential information required and request that your personal information not be sold or shared for third-party marketing purposes. Many mail-in card programs are run by an outside contractor that makes its living this way.

Manufacturers don't have to keep a supply of parts for an infinite time to honor lifetime warranties or service agreements. In fact, the fine print will usually specify that the lifetime is limited to as long as replacement parts are in stock. After this, the company can offer you a substitute tool, perhaps even a used model. These considerations can be checked out ahead of time if you are concerned; one power tool brand told me their policy is to keep more than seven years' worth of inventory for tools covered by their one-year service agreement and more than 15 years supply for tools with two-year service coverage.

Another limitation allowed manufacturers is to reduce coverage to certain user categories. For example, a major brand of stationary shop tools offers a five-year term but then limits it to one year if used for commercial, industrial, or educational purposes. Who decides what constitutes commercial use can be a thorny subject. In general, however, ambiguity of conditions or limitations is usually decided in favor of coverage if a legal dispute ensues.

Legal Rights

Fortunately, since federal law governs express written warranties, the FTC says there are certain inalienable consumer rights that cannot be disclaimed by manufacturers or retailers. An important one to note is the specific prohibition of "tie-in sales provisions" in which part or all of a warranty is denied because the consumer didn't use accessories, service, or even parts from the manufacturer. You cannot be limited to using something that will bring more sales to the brand if a suitable substitute is used. Remember, this even includes parts and service. You can take your tool to anyone for service or even do repair work yourself without affecting your warranty coverage under federal law as long as you don't screw it up. Manufacturers are not required to cover under warranty any problems caused by faulty workmanship or material by someone else. Certain parts such as specific switches and accessory batteries can be required by manufacturers legally, but replacing the correct brushes or a suitable power cord should be fine.

Manufacturers also cannot actually preclude or limit implied warranties of their product. This is a common violation found in writing on many warranties, and even if it is presented with a suitable-looking disclaimer, all states provide for implied warranties and you are covered regardless of the verbiage on the express written warranty of the manufacturer.

Warranty Fulfillment

One of the most important things to remember is to keep proof and date of purchase along with the most comprehensive wording of the warranty available at the time of your purchase. The version written in your owner's manual is not always complete. Don't rely on a customer service person to know what the warranty coverage was five years ago. Claims cannot be pursued in some cases without having all the documentation. Some manufacturers will just go by the date code on the tool or by the filing date of a mail-in card if it was sent, but not all.

When taking a tool to a service center, keep in mind that they make a lot of "warranted" repairs based on their own judgment. Being polite, cleaning up the tool, and presenting it in a clean case can mean a lot more than what year a card was mailed in. Many repairs are made and not charged as a goodwill measure by service centers but be prepared to follow what you have in writing.

Priorities

In our 2006 Tools of the Trade reader survey, professional tool users like you rated the importance warranties have in their purchasing decisions behind quality, durability, precision, performance features, ease of use, brand reputation, versatility, availability, price, ease of maintenance, and service–in that order.

So whether this trend is seen as a marketing ploy or not, tool companies are clearly confident enough in their tools to expand their product coverage, which is great news for all of us.

–Michael Springer is senior editor of Tools of the Trade.