§8-20-7. Warranty obligations to dealers.

(a) Every manufacturer, distributor, or wholesaler, factory branch, factory representative, distributor branch, or distributor representative shall specify in writing to each of its motor vehicle dealers the dealer's obligation for warranty service on its products, shall compensate the motor vehicle dealer for warranty service required of the dealer by the manufacturer, distributor, or wholesaler, factory branch, factory representative, distributor branch, or distributor representative and shall provide the dealer the schedule of compensation to be paid such dealer for parts, work, and service in connection with warranty services, and the time allowance for the performance of such work and service.

(b) In no event shall such schedule of compensation fail to include reasonable compensation for diagnostic work, service, labor, and parts. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. In the determination of what constitutes reasonable compensation under this section, the principal factors to be given consideration shall be the prevailing wage rates being paid by the dealer, in the community in which the dealer is doing business, and in no event shall such compensation of a dealer for warranty services including labor and parts, be less than the rates or prices charged by such dealer for like service to retail customers for nonwarranty service, repairs, and parts, provided that such prices and rates are not unreasonable. This subsection does not apply to compensation for parts, systems, fixtures, appliances, furnishings, accessories, and features of a motor home that are designed, used, and maintained primarily for non-vehicular residential purposes, or parts related to motorcycle repairs.

(c) It is a violation of this section for any manufacturer, distributor, or wholesaler, factory branch, factory representative, distributor branch, or distributor representative to fail to perform any warranty obligations under the motor vehicle manufacturer's warranty, or to fail to include in written notices of factory recalls to dealers the expected date by which necessary parts and equipment will be available to dealers for the correction of such defects, or to fail to compensate any of the motor vehicle dealers for repairs effected by such recall.

(d) All claims made by new motor vehicle dealers pursuant to this section for such labor and parts shall be paid within 30 days following their approval; provided, however, that the manufacturer retains the right to audit such claims and to charge back the dealer for any fraudulent claims for a period not to exceed 12 months from the date the claim was paid. All such claims shall be either approved or disapproved within 30 days after their receipt on forms and in the manner specified by the manufacturer, and any claim not specifically disapproved in writing within 30 days after the receipt shall be construed to be approved and payment must follow within 30 days. A manufacturer shall not disapprove claims for which the dealer has received preauthorization from the manufacturer or its representative nor shall the manufacturer unreasonably disapprove a claim solely based on the dealer's incidental failure to comply with a specific claim processing requirement that results only in a clerical error or administrative error; rather a claim denial must be based upon a material defect and deviation from the reasonable written claim submission requirements of the manufacturer. In the event of neglect, oversight, or mistake by the dealer, a dealer may submit an amended claim, or may submit a claim not submitted within the time required by the manufacturer, for labor and parts up to 120 days from the date on which such claim was first submitted or could have been submitted.

(Acts 1981, No. 81-390, p. 596, §7; Acts 1991, No. 91-212, p. 398, §1; Act 2000-267, p. 415, §1; Act 2010-198, p. 300, §1.)