Home warranty companies have topped the list of most-complained about services for three years in a row.
Common complaints heard from Angie’s List members stemmed from misunderstandings over what is covered under the warranty or unhappiness with the contractor sent out to diagnose or fix the problem. Not surprisingly though, 82 percent of poll respondents admitted they had only a general idea of the contract details or hadn’t read it at all.
What is a home warranty?
- A home warranty, or home service contract, provides service, repair or replacement on a home’s major systems and appliances for a usual term of one year.
- Annual cost to the consumer runs around $250 to $400, depending on the company and type of plan. Service visit fees, typically one per repair or replacement, range from $35 to $100.
- Often the purchase of a home warranty takes place during the home buying process. Many times, realtors either throw it into the deal for free or the buyer purchases it at the suggestion of the realtor. As well, sometimes the seller includes a home warranty in the sale price.
- Basic and optional coverage varies. A typical plan includes: heating/air conditioning systems, electrical systems, ductwork, over/range/stovetop, garage door opener, interior plumbing, water heater, dishwasher and garbage disposal. Additional options could also include: washer/dryer, pool/spa equipment and refrigerator.
Issues not typically covered include:
- Pre-existing conditions that existed prior to the effective coverage.
- Items that fail due to occurrences other than normal wear and tear.
- Improperly installed or modified items.
- Consequential damages caused by failure of a system or appliance (such as hardwood floor damaged caused by a plumbing leak).
- Items not mentioned as covered in the terms of the contract.
To help navigate the ins and outs of home warranties, Angie’s List offers the following considerations:
- Is the warranty company licensed? The company should be licensed in your state as a home service contract company, a home warranty company, a home protection company or a residential service company - depending on the state. Not all states license or regulate, but it’s still important to do a little investigating on your own.
- Is the warranty company a member of the NHSCA? The National Home Service Contract Association www.homeservicecontract.org requires member companies to use local contractors who meet state and local licensing regulations.
- Get personal recommendations. Check Angie's List to find out as much as you can about other homeowners’ experiences with the warranty company.
- Read the contract carefully. Don’t make assumptions about coverage. It’s important to understand what’s covered and what isn’t.
- Who’s making the decisions? The home warranty company will make decisions on whether something will be replaced or repaired and which contractor is sent out to diagnose the problem. Recommendation: Ask the warranty company for the names of three contractors they could send out, check those contractors out with Angie’s List and other resources, then call the warranty company back and tell them which contractor you prefer.
- What are the alternatives? If you think something should be replaced, and the warranty company says no, you might be better off having the item replaced by another contractor. Even though the warranty company won’t cover it, it could save you time and money in the long run.