Home warranty loopholes, don’t be fooled
January 8th, 2009 by Michael AndersonEver heard of a home warranty policy or considered applying for one? Well pay attention so you don’t get burned by this not-so-ethical industry.
What is a home warranty?
- A home warranty is a service contract that covers the repair and replacement costs of home appliances. For an annual fee of $250 to $600 the warranty generally covers equipment and appliances such as dishwashers, plumbing systems, electrical systems, etc. that fail due to normal wear and tear. Air conditioning, pools, spas, wells, and sometimes roofs can typically be added to the basic policy for an extra fee. Coverage varies significantly across warranty companies.
How it works.
- The warranty company contracts with local repair companies to provide service. If something breaks, the homeowner calls the warranty company, who arranges with the local company to dispatch a repair technician.
Here is the problem (loophole).
- When applying for a home warranty many companies don’t require any documentation on the current condition of the home or inspections. They simply take your word for it. Yet when it comes time to file a claim on a faulty item covered on your policy, the company sends out a technician to verify the claim. If the technician finds a pre-existing, condition the claim is denied. There is your loophole — companies that don’t require documentation or inspections leave themselves a safety net to reject your claim since there was no documented proof that everything was in working order originally. It’s your word against the warranty company’s technician. The company will usually side with the technician every time.
Here are some useful links featured on Squidoo with home warranty information for consumers.
- Home Warranties Not Always What They Seem
- My Three Cents
- Consumer Affairs.Com
- Article at Home Warranty Reviews
- Warranty Firm Probed for Fraud
- Complaints.com – Home Warranty Complaints
- American Home Shield Complaints
- Complaints Board
Tags: home warranty
January 9th, 2009 at 11:01 am
I recommend AHS to all my clients. They have a plan called FlexPlan (LA, OK)that offers coverage for pre-existing conditions under the ServicePlus Package for $79. I do not know if they offer nation wide
January 9th, 2009 at 5:09 pm
[...] Home warranty loopholes, don’t be fooled [...]
January 10th, 2009 at 1:11 am
[...] A home warranty is a service contract that covers the repair and replacement costs of home appliances. If something breaks, the homeowner calls the warranty company, who arranges with the local company to dispatch a repair technician. Yet when it comes time to file a claim on a faulty item covered on your policy, the company sends out a technician to verify the claim. Com Article at Home Warranty Reviews Warranty Firm Probed for Fraud Complaints. read more [...]
January 10th, 2009 at 5:12 am
Thank you for a heads-up on a very important subject- we’ve linked to your advice in order to better educate those interested in a home warranty, but unsure of the possible pitfalls.
Keep the great advice coming!
Laurie
February 6th, 2009 at 1:28 pm
Before you agree to any one home warrant you need to make sure they are going to cover what you need them to cover. This article does a great job of giving you a heads-up, follow it’s advice.