Read your warranty carefully before assuming the Dealer will replace bulbs for free. Volvo has different warranties for different markets, and even different states within the USA. In my booklet, bulbs are covered but the labor to replace tham is not. I have a 2001 S80 and my Dealer quoted more than $20 to replace a "free" tail lamp bulb. Since I could buy the same bulb for less than $2 at Wal-Mart, and change it in less than 5 minutes, I found it more cost-effective to do it myself.

The body computer senses the current flow into the 4 rear tail lamps (which Volvo calls "position" lamps). If that current is too low, it assumes one or more of the 4 bulbs have failed. It could just be a corroded connection in the socket. If it appears all 4 lamps are working, look for one to be slightly less bright than the others. As a last resort, you could just replace all 4. They are accessible from within the trunk without any tools; see your owners manual for instructions.