In Part 1a, we looked at how Indiana law handles the “reasonable allowance for use” calculation and how it encourages manufacturers to delay the resolution of claims. Let’s take a look at how some of our neighbor states handle reasonable allowance for use:
The Illinois statutory provision reads: “A reasonable allowance for consumer use of a vehicle is that amount directly attributable to the wear and tear incurred by the new vehicle as a result of its having been used prior to the first report of a nonconformity to the seller, and during any subsequent period in which it is not out of service by reason of repair.” Surprisingly, it does not appear that this provision has ever been interpreted, at least in a published opinion, by an Illinois appellate court. Since I don’t practice in Illinois, I can’t say how they put this provision into practice, but I believe I’ve heard that they often use the IRS mileage reimbursement figure.
Michigan law seems a little more consumer-friendly. The statute uses the 100,000 mile benchmark used by Indiana, but also provides that any mileage incurred from the date any defect is first reported up to 25,000 miles is excluded from the calculation, as well as any mileage incurred after 25,000 during which the vehicle “did not provide reliable transportation for ordinary personal or household use.” I think these additional consumer protections would make excellent additions to Indiana’s statute.
Ohio’s lemon law has NO provision to account for the use (mileage) of the motor vehicle! If a vehicle is bought back under Ohio law, the vehicle owner is entitled to a refund of the entire purchase price.
Kentucky’s lemon law provides that the manufacturer is entitled to a reasonable allowance for use when refunding the purchase price of a lemon. The only mileage exclusion is for mileage incurred during “those time periods when the vehicle is out of service due to the nonconformity.” (Huh? I guess dealership test drives are excluded. What else????) However, it does not explicitly state, like Indiana’s statute, that the miles continue to accrue even after the owner has tendered the vehicle (by letter) to the manufacturer.
The conclusion? Looking purely at the respective statutes, Indiana’s statute would appear to be the least favorable to consumers among all its neighbors, followed by Illinois and Kentucky, then Michigan, and finally Ohio, because if you have a lemon in Ohio, you can drive the car like crazy and still get a full refund.
Do I think Indiana’s statute should be amended? Yes. I think a reasonable compromise would be to cap the “reasonable allowance for use” to the miles incurred before the defect that caused the vehicle to be a lemon appeared.