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Monday, March 21, 2016

Home warrantees – boon or boondoggle?

The Home Warranty is a ubiquitous fellow traveler in many home sales, but not all. A home warranty is just what it sounds like – an insurance policy to protect the home buyer against a number of things that could go wrong in the home during the first year of ownership. Policies differ in what they cost and what they cover and they are usually paid for by the seller; however, the buyer may purchase a home warranty, if he does it at or before closing. Things usually covered include failures in major systems like the HVAC or the hot water heater or many plumbing issues.

The reason that not every home sale carries the protection of a home warranty is mainly due to the unevenness of the coverage of policies from the companies in the business and a history of business practices by some of them that have given the whole industry a bad reputation with many buyers. Much of that bad reputation can actually be traced to the home buyer misunderstanding the home warranty policy coverages or how the company’s business practices work when a claim is made.

Way too many people thought that everything was covered under the umbrella term “Home Warranty.” In fact, each policy has a clear list of items that are covered and those that are not, just like an automobile or home owners policy does. Many people just don’t read their policy to see what is covered and then they get mad when they call in with a claim and discover that the item that just failed is not covered. Some home owners also disagree with the standard policy to repair items rather than replace them, unless repairs cannot be made. Most warranty companies have adopted policies that replace older air conditioning units that don’t meet current standards because their repair people cannot get the parts or the Freon to deal with those older units.

The other sticking point with many is the business practice that requires that the home warranty send out the repair person to evaluate the claim. That call is usually charged to the home owner at $85, however, that $85 is refunded if a repair is needed and covered by the policy. If the repair person gets tot eh house and the “failed” hot water heater just has a pilot lite that blew out the homeowner is out that $85. That makes many home owners mad; and since they can’t get mad at themselves, they get mad at the home warranty company. 
  
The companies in the business also shot themselves in the foot in earlier times by poorly handling claims or providing very poor customer service and explanation of coverages. I hear the terms “worthless” all the time when mentioning home warranties; however, that if far from the truth. They can be lifesavers if items that are covered do fail. I have a neighbor across the street who got a whole new furnace less than 4 months after he moved in because his old furnace failed and the home warranty company couldn’t repair it.


So what should you do if you are buying a home and are offered a Home Warranty? I’d say go for it; but, do a little research first on the company that the seller is offering to foot the bill for. It may be better to negotiate with the seller to switch the warranty to a better company, even if you have to kick in a little to make the switch. Here is a link to an excellent article on Home Warranties and the Companies that offer them on the Reviews.com web site. Check it out and remember to read the warranty to make sure that you understand what is covered and how the claim process works. 

I recommend going to Reviews.com for helpful information about many more topics. Check out their site and all of the reviews that they have on-line there.

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