Recently, your furnace cut out in the midst of the polar vortex. Not fun – $2,000 and a gaping hole in your household budget later, and you’re looking for a better solution. A friend recommended that you check out home warranties, but to be honest, you have no idea what they are.
What are they? Home warranties cover what insurance companies won’t – household wear and tear costs. Unlike the latter industry, we don’t advise going with just anyone – home warranty companies are loosely regulated, if at all.
This lack of oversight has allowed some firms to get away with unethical behavior at best, and at worst, fraud. Review sites have shone sunlight on these practices – in short, reading of these few horror stories is enough to dissuade anyone from getting a home warranty.
However, it is important to remember the internet magnifies negative feedback. Customers who have bad experiences are more compelled to share compared to those who had their expectations met. As a result, it can be easy to discount a home warranty company because a few reviewers had an unusually poor experience.
Yes, Virginia, there are decent home warranty providers out there. In this article, we’ll show you how to avoid bad apples and find the quality ones.
Watch for ‘red flags’ when evaluating home warranty companies
Unsuspecting people used to get scammed regularly. Unless they were warned by their network to steer clear, avoiding a bad experience was a tougher feat before the internet. These days, anyone can search for a company on Trustpilot and see how they treat customers.
When researching home warranty companies, look them up first. Read a few pages of reviews to get a complete picture of a firm’s strengths and weaknesses. For instance, Choice Home Warranty appears to be a good firm, as numerous consumers laud their customer service and professional contractors. Complaints seem to be the occasional encounter with a substandard repairperson or a customer service rep having a bad day.
And then there are the shady vendors. Take American Home Guard, for example – multiple tradespeople claim they have been stiffed by management. They routinely ignore customers, cancel policies when clients hound them, and they have no weekend availability.
Found a few companies that look legit? Combing through their terms and conditions should be your next step. Within them, you’ll discover exclusions that may disqualify certain providers. For instance, neither Select or Choice Home Warranty cover frozen pipe repairs, but Landmark Home Warranty does.
It’s also vital to evaluate coverage caps. Choice Home Warranty covers heating systems up to $1,500, while Select Home Warranty pays up to $2,000. When you consider that 40% of American households can’t afford a $400 emergency, a $500 gap could be problematic.
Home warranty companies assign premiums on a case-by-case basis
Price is another tricky aspect of shopping for a home warranty. Home service premiums depend on your location, your home’s age, and the plan you wish to purchase. If your home is brand new, your annual/monthly premium will be lower than if it is 30 years old.
Home warranty premiums usually cost between $350 and $600– to get an exact figure, however, you’ll need to get a quote. Most reputable home warranty firms offer this service for free – disqualify anyone who asks for payment.
When submitting a quote, you’ll need to supply your name, contact info, and your location. Some will ask for information about your property, but not all. Repeat this process with other top choices – eventually, they will all get back to you with a price.
Be conscious of a company’s service fees
With good reviews, acceptable terms, and a decent price, you can make an informed decision, right? Not so fast – there’s something else you need to consider. Whenever you request a repair person from a home warranty company, they tack on a charge called a service fee.
Home warranty service fees are like insurance deductibles. You pay an x amount of dollars of a claim, and the home warranty firm covers the rest. This figure can vary widely – for instance, Choice Home Warranty charges $60, while American Home Shield bills customers up to $125 per call.
In general, the cheaper the plan, the higher the service fee (and vice versa). However, not all home warranty firms are the same – there are online resources that highlight service fee per company. Look them up and use what you find to make your final decision.
Quality home warranty companies do exist (unlike unicorns)
In 2019, people are more conscious of business malpractice than ever before. However, despite the overwhelming negativity surrounding home warranty companies, firms dedicated to serving the customer do exist.
By combing through review websites, doing your homework, and bargaining hard, you can get a value-priced home service contract that does exactly what it says.