Home warranties are a type of protection you can use to avoid spending a small fortune on repairing home systems and appliances. At least, this is the theory behind these plans. However, not all of them live up to the promises and being able to find the ones that do is what will make the difference between getting actual protection and wasting your money.
What Do Home Warranties Promise You?
Home warranty providers are very big on their promises. If you only get your information from them, you’ll think that these policies are your once-and-for-all salvation from all appliance and home system breakdowns. However, this is usually not the case. Their advertisements are very often misleading. In some cases, this problem has gotten so bad that providers were sued for their advertisements. For example, Choice Home Warranty had to pay $780,000 in settlement for their line “Never Pay for Covered Repairs Again”.
Of course, that promise sounded like something too good to be true right away. The majority of home warranty providers are much more subtle in their marketing promises. But even less boastful companies make out their services to be the ultimate defense for homeowners.
Let’s take Blue Ribbon, for example. It’s a rather experienced home warranty company from Colorado that’s been around since 1985. For a firm in this business, that’s considered a good sign of trustworthiness. And the company doesn’t miss a chance to capitalize on that mentioning that fact several times on its home page. Moreover, it goes as far as to define its services as “the best defense” for a homeowner in case of unexpected repairs.
That sounds reassuring and doesn’t have anything that appears outright unrealistic. After all, protecting you from paying a lot out of pocket for unexpected repairs is what home warranty plans should do by definition.
However, if you take a closer look at this company, you’ll see that Blue Ribbon is not all roses. It appears to be trustworthy and has a good standing in its niche, but its contracts are extremely tricky and full of limitations. This gives the provider a chance to deny your claims on legal grounds, thus its standing doesn’t go down by much officially.
It’s details like this that make home warranty plans far less the “best defense” than they claim to be.
What Are Home Warranties Like in Reality?
Home warranties are inexpensive plans that make sure you don’t overspend when an appliance or some structural system in your house suddenly breaks down. That’s the idea and it seems great for the cost of $319-$894 a year. But, before you run to get a home warranty coverage for your property, you need to consider some important issues that often occur with these plans:
1. Contract Policies Are Constraining
That’s the nicest way to put it because in some cases, the limitations of those plans are outright ridiculous. One of the main issues is that many of them only allow filing a claim during the first 24 hours after the problem occurs. Even the best companies often have this limitation.
Another major issue is the extent of coverage limits. If you don’t read the policy carefully, you might end up with a plan that will cover nothing of import. Meaning you’ll be giving your money away without getting any of the protection you need because all the issues that actually happen to appliances aren’t covered.
2. Claim Denials
Home warranties aren’t the same as home insurance, but they have the same huge problem, which is that a great number of claims get denied. Companies that offer these plans never miss a chance to avoid responsibility and having tricky contracts with extremely complicated Terms and Conditions is one of their main tools for doing this.
3. Bad Contractors
One of the main benefits of having a home warranty is that the company you buy it from is the one dealing with all contractors. Thus, you only need to file a claim with this single firm and they will be the ones coordinating plumbers, electricians, and other repair contractors necessary to fix whatever problem you have. Therefore, you get to avoid a lot of stress and save time searching for contractors.
However, the contractors used by home warranty companies often do a poor job of actually fixing the problem. They are also most likely to do a patch-job at fixing instead of replacing the broken unit. So, it will break down again soon but at this point, your contract will let the company avoid paying for the now inevitable replacement.
As you can see, home warranties definitely aren’t perfect, and even trustworthy companies have some issues. They are also not beneficial for everyone, but if this policy makes sense in your case, you need to focus on finding the one you can really trust. The best way to do this is to study independent reviews that explain both the pros and cons of every company.