Our Take on Home Warranties: Read the Fine Print!
Last summer, at the height of the season, Oscar Montez and his family were enjoying a beautiful afternoon splashing around in the backyard pool of their South Jersey home when they heard a harsh knocking sound from the side of their house.
Oscar went to investigate and found the noise was coming from their AC compressor, and it was getting louder. Just as he turned his back on the unit to run inside and shut everything off, the unit delivered one last sluggish knock and pathetically ground to a halt. The compressor motor had failed.
Oscar knew this could potentially be one of the most costly repairs of them all for a home central AC system. But although he was irritated this happened in the dead of summer, he wasn’t too upset because he had a home warranty. He’d decided to get one a year previous when he’d watched his brother shell out thousands of dollars to fix a similar situation.
A home warranty is supposed to cover the kinds of things your homeowners insurance does not. Big appliances like your fridge, washer and dryer…and also your home’s internal systems, like electrical, plumbing, and air conditioning.
Or so Oscar thought.
“Initially, when the guy doing the inspection came everything was fine,” Oscar explains. “He was friendly, he said the job looked pretty clear cut. He told me he just had to submit the report and someone would be by soon to do the repairs. He also said he’s lean on the company to hurry as it was the middle of summer.”
Weeks passed. Because the Montez family lived in an area on New Jersey where the home warranty company had no technicians, they had to wait for the company to find an independent contractor.
“It was ludicrous,” Oscar’s wife Ellen says. “Can you imagine? Three kids? August heat? We went and bought like 6 stationary fans from Costco. They were running 24/7 and you couldn’t hear yourself think!”
But the worst was yet to come. When Oscar’s home warranty provider finally called with an appointment time they told him to surrender his yearly maintenance reports to the repairman.
“They wanted five years’ documentation of independently conducted maintenance inspections from inspectors certified by the manufacturer!” Oscar reveals. “Can you believe it? I totally thought I was being scammed, but they told me to read the fine print.”
When Oscar looked at his service contract, sure enough it all was there. What’s more, the more he read, the more he realized that the stipulations and qualifications were so specific, as it stood basically nothing in the house was covered.
“What was I paying for? Half the appliances I have had parts that were excluded or required yearly maintenance records. I would have had to spend half my life documenting the upkeep of every damn thing in my house for the coverage to work!”
One month and three hot and cranky kids later Oscar ended up shelling out $1800 of his own money to fix his AC. He immediately decided to cancel his policy but the company even made that hard.
“That was the icing on the cake,” he smiles exhaustedly. “What a scam.”
Oscar’s story is not entirely untypical. The home warranty business is rife with complaints and many view the whole industry skeptically. Oscar and his family, however, were particularly unlucky. The following winter Oscar’s warranty provider was slapped with $800,000 in penalties by the NJ state attorney general.
“It’s good I got the money back, but I’d rather have not gone through the whole situation in the first place,” he reveals. “You pay for something and it’s supposed to work. I should have read the fine print.”
And that’s CA’s advice to you. Read the fine print!
Make sure you get a copy of coverage restrictions up front so you can make a informed and sober assesment as to whether or not you can meet the requirements. Stay away from companies that have excessive, complicated, and confusing stipulations, as these are more likely to give you a hard time.
If your warranty has a maintenance component, make sure you to do the routine maintenance and document it. Including pictures would be a big plus too.
Also, ask if the company contracts with technicians in your area. This can potentially save you a lot of time waiting for them to find an outside contractor.
There are plenty of solid and reputable home warranty providers in this game, and not everyone has the experience of the Montez family. Just go into this area with your eyes open, ask questions and do your research. You can potentially save yourself a big headache.
American Home Shield is the industry leader in home warranties and one of the companies we partner with. They are a solid home warranty provider with an excellent reputation for more than 40 years. (For the sake of full transparency we receive a small commission if you give them your business.)