Everybody who’s ever been in the market for a home warranty has asked the question, “Are all home warranty scams?” The home warranty industry has a mixed reputation, and there are both good and bad companies. Some are simply not trustworthy because they provide poor service, or they shut down and don’t even reimburse existing clients. However, other companies are genuinely there because they want to help protect your home, and will be transparent and work with you to get the job done. As a homeowner, you have to know what to look for. Read on to learn about different unscrupulous practices by some home warranty problems.
Types of Home Warranty Scams
- Communication problems
If you’re dealing with a scam home warranty company, you may have trouble connecting with their reps and getting a contractor out to your home. Sometimes, they’ll make it hard or even impossible to reach customer service representatives. It often requires waiting on hold for half an hour or more. Delay due to communication problems can cost you money and time, as well as the inconvenience of not having the broken appliance fixed right away. The worst home warranty companies are the ones where customer service is just not helpful or sympathetic when you’re trying to get in touch.
- Claim denials
Normally, the homeowner requests a claim with the warranty company when a covered item requires repair. Sometimes, a home warranty provider rejects a customer’s request for repair service. While some claims are denied on a genuine basis, some companies deny them without good reason, often citing obscure fine print from the contract. The justification that these companies give for the denial might be pre-existing problems with a malfunctioning item or a lack of evidence that a broken item was properly maintained.
- Tricky terms
Homeowners usually expect a home warranty to cover every item in their house, but they often do not. It’s a good idea to read the fine print in full and ask a lot of questions to make sure the company is not hiding anything from you. Home warranty policies can be worded in such a way that they are unclear and hard to understand. For example, you could submit a claim for a broken air conditioner, but the fine print indicates that your home warranty provider doesn’t cover window units and your claim is then denied.
- Payment delays
This is a less common type of home warranty scam, but at times, it takes unreasonably long to receive reimbursement or repair costs. Additionally, customers may have problems with canceling the warranty and receiving a refund, and may ultimately lose their money if the company refuses to be cooperative.
- Repair delays
Many bad home warranty companies delay repairs as long as possible to lengthen the process and save themselves money. Moreover, even if you’ve managed to arrange a contractor’s visit, he may be irresponsible or incompetent. For instance, in the summer, when the demand for A/С repair and replacement is high, it may take a home warranty longer than usual to locate a contractor to come out to make the repair.
- Unexpected costs
The most frequent cause of unexpected costs is certain components of the appliances and systems not being covered. For example, you may have a policy that covers your heating system, but the filters are not included in the list. Another case where this unpleasant situation arises is when a home warranty policy doesn’t cover a full replacement of an appliance or system. One more example is when the repair exceeds the coverage limit and the homeowner has to pay the difference, which can end up being in the thousands of dollars.
- Unprofessional Contractors
On some occasions, the repairmen sent by your home warranty company are too inexperienced to fix the problem. This may lead you to find your own contractor and pay out of pocket or have to pay your warranty company more money for extra visits. More often than not, a home warranty company will dictate which contractors will you work with. This means you won’t be able to choose who to work with and you might not be getting somebody experienced.
Horror Stories In the Media: American Home Shield Scam
In one home warranty horror story by abc7news, a woman from California had a flooded bathroom. There was a huge bubble on the ceiling and water pouring down the walls and out the window. She called her home warranty company, but American Home Shield told her to wait two days for a repairman. When the woman managed to repair the issue on her own, the company refused to pay back the costs.
The client faced repair delays in an emergency situation, communication problems when the client couldn’t reach the company’s representatives, and when she managed to call them, they didn’t understand the seriousness of the situation. As a result, the woman had to spend her own money even though she had a home warranty.
Old Republic Home Warranty Scam
In another story from abc7news, a family with a baby moved to San Francisco and their furnace broke. After numerous calls to the company’s reps, the repairman finally arrived. However, the company refused to repair the furnace citing a “preexisting condition”. This is a fairly common reason for the refusal to repair, especially if customers have recently moved into the house.
Consequently, the family endured communication problems, unexpected costs as they had to buy space heaters to keep their home at a habitable temperature and pay enormous electricity bills. In this case, the company most likely acted according to its terms and conditions. As a homeowner, you have to read the contract carefully to make sure you’re not getting scammed. However, sometimes companies will deliberately conceal some key points about their policies, so you have to be extra careful and read before you sign.
All in all, most of the unpleasant scenarios of home warranty scams can be avoided if the company you pick is reputable. The best way to prevent something like this from happening is to avoid the worst home warranty companies and only do business with reputable ones that regularly honor their clients.