Home Warranty Plans: Are They Worth It?

Posted January 25, 2017

Many people—especially first-time homebuyers—purchase home warranty plans, which are supposed to cover certain issues that come up in the house, such as plumbing or air conditioner problems. In fact, in some areas, even your real estate agent may purchase it for you when you buy your home through them. For many, it’s peace of mind in case anything goes terribly wrong with the house or something in it.

But what are the hidden catches with plans like these, and do they end up paying for themselves? All of them come with what’s called a “service fee” (or deductible for each claim) every time they send someone out to fix the problem, and many plans don’t cover issues when you need them to. In addition, they home warranty company reserves the right to choose whichever contractor they send out, which sometimes means you aren’t necessarily getting the plumber, etc. you yourself would choose. Like all other insurance companies, home warranty companies also deny claims in bad faith from time to time.

Service Fees

Every home warranty plan requires that a fee be paid per claim, usually around $100. Of course, this is a reasonable investment if the plan is covering major damage that will end up costing in the thousands; however, it is also possible that the work itself would not cost as much as the service fee if, for example, your own handyman took care of it.

Choice of Contractors

The home warranty company also chooses which contractor to send out to fix your problem, potentially inviting in a contractor who you wouldn’t choose. If this contractor does not do the job right, while the home warranty company will typically send someone else out and omit the service charge, they cannot necessarily do so right away, and most will not cover any secondary damage that that contractor is responsible for. This can lead to serious issues if the problem was related to a plumbing problem and, as a result, you now have significant water damage in your house.

Exclusions

When you call your home warranty company, you also sometimes hear that a particular issue or appliance isn’t covered under your plan, such as a refrigerator. In addition, if the contractor they hire causes problems, the home warranty company declares that it isn’t responsible for the damage; instead, you have to go after that contractor directly. This can be extremely frustrating, especially for some issues in the home, where poor workmanship can end up costing homeowners thousands.

Lawsuits

Litigation has been brought against some of the biggest home warranty plan companies for denying claims based on “preexisting conditions” and/or with the justification that a problem arose out of normal wear and tear and/or a lack of proper maintenance by the homeowner.

Contact Our Experienced Oklahoma Bad Faith Insurance Attorneys

If you find yourself the victim of a poor decision related to a home warranty, our experienced insurance lawyers can help. Focusing exclusively on representing victims of bad faith insurance, we’ve filed countless lawsuits securing damages for our clients. Contact us today for a free consultation, (405) 272-0303.