News Release No. 60, August 2005
By David S. Jones
According to the Gallup Poll, 79 percent of buyers and sellers rate home warranties as one of the most important considerations when buying a home. Home warranties are the fourth most important factor behind location, design and financing options.
But just because you have a home warranty doesn’t mean you have adequate protection. I know this will come as a shock, but all home warranties are not created equal.
The folks at www.homewarrantyexperts.com collect both good and bad experiences on home warranties. Their goal is to educate consumers about the need for home warranties, how to pick the right company and warn consumers of the pitfalls. This column focuses on the latter. Keep in mind that this list is based on opinions and experiences sent in by consumers rather than any scientific data or research.
The number one gotcha to watch out for is a big one for Texans — the air conditioner. While a bad wire may be covered, cleaning the coils is normally a standard maintenance item and not covered. And once the technician reports the dirty coils, your home warranty company may exclude all future air conditioning claims because you haven’t been taking good care of your equipment. Annual maintenance contracts are a way around this gotcha.
Keep in mind that pre-existing conditions are not covered by a home warranty. Therefore, it’s a good idea to have a professional check the air conditioning before you buy to rule out the possibility of a pre-existing problem.
A bad inspector, however, can cost you thousands in gotchas. It helps if the inspector has the warranty contract in hand when he does the inspection. Special attention needs to be given areas that require routine maintenance. The more detail you get in the report, the better. Ask for photos. And ask the seller to repair or replace anything that is excluded in the warranty or may be deemed a pre-existing condition.
Rust and corrosion also are potential trouble areas. Because they are common problems, rust and corrosion are excluded for the first 30 days of most home warranty plans. Some exclude them altogether. This could mean trouble for getting your garbage disposal or hot water heater repaired.
If you examine a home warranty carefully, you are likely to discover that it does not pay a claim unless you call the warranty company before you have the problem fixed. One of the biggest gotchas occurs when you call in a home warranty claim. What you tell the person who answers the 800 number is important because it determines whether or not the problem is covered by the warranty.
What you tell the customer service representative is logged into the computer for reference to the current and future calls. If there’s any doubt, you may be told the broken item is “not covered.” Always be nice and professional when talking to the home warranty folks on the telephone. Keeping your cool nearly always gets better results.
There are many gotchas inherent to home warranties. The service technician answering your call may misdiagnose the problem. The warranty may have payout limits. Multiple items may be covered only at an additional cost. Refrigerators located outside the kitchen usually are not covered. Anything associated with a commercial purpose probably isn’t covered. Mold is not covered. You get the idea.
How do you avoid the gotchas with a home warranty? Do your homework. The best defense is to read the fine print.