A home warranty is a contract that agrees to provide a homeowner with discounted repair and replacement services.[1] However, the words "home warranty" are not always used explicitly to mean a legal warranty is being conveyed. In many cases, at least in the United States, a home warranty is not a warranty at all, but rather a home service contract that covers the repair and/or replacement costs of home appliances, major systems such as heating and cooling, and possibly other components of a home, structural or otherwise. Coverage varies significantly across home warranty companies.

Coverage

Most companies cover plumbing, electrical, heating systems, as well as refrigerators, dishwashers, and Microwave ovens. Some charge additional coverage for appliances, such as clothes washers and clothes dryers. Home warranties exist to repair or replace old worn-out systems that have been properly cared for by the homeowner.

Limitations

Many home warranty companies have limitations within their contracts. Some home warranty companies have an overall limit set, where anything in the contract is covered up to a certain amount of money.

Exclusions

Generally, home warranties exclude coverage on systems and appliances that have been misused, intentionally damaged, or not maintained.

Known conditions

Most home warranty contracts will state that repairs and replacements will not be covered if the problem was known prior to the date of coverage.[2] This is sometimes referred to as a known condition. Most often, homeowners run into this problem when purchasing a home. After getting a home inspection, some real estate agents will mistakenly tell the buyer that any problems found in the home inspection will be covered with a home warranty. Instead, if the home inspection notates that something needs to be repaired or replaced before the date of closing, most home warranties will not repair or replace it.

State rules and regulations

In some states, such as New Jersey[3] for example, builders of new homes are required to provide a home warranty to those purchasing homes. Though the terminology is identical, these home warranty plans differ from the ones offered to existing home owners or through real estate transactions involving the purchase of existing homes. The coverage may be very different from other similarly named agreements.

Home warranty is one of several terms for a contract between homeowners and companies that cover some of the costs associated with specific repairs and replacements of household objects. Related industries often use such terms as residential service contract and appliance warranty plan. Just as is the case with home warranty in states such as Florida,[4] residential service contracts are regulated in some states such as Texas.[5] It is of value for consumers to understand their state's regulations for companies that offer to provide maintenance or repair services and/or coverage for related costs since some companies may be operating without proper licensing.[1] Consumers may sometimes avoid falling prey to unlicensed companies by consulting their state's policies and other information regarding home warranty and similar services. In some cases, current lists of licensed companies are available for consumers to check on the applicable state government agencies' websites.

In NSW (Australia), a homeowners warranty must be taken out by your builder and a certificate of insurance must be provided to you if the value of work is over $20,000.

Controversy

The State of California Department of Insurance issued a cease-and-desist order # VA202100169 and monetary penalty against Complete Care Home Warranty

Some common complaints that home warranty clients have:

Home warranty companies deny systematic denial and claim that customers need to pay close attention to the contract. Warranty contracts specify that pre-existing conditions and problems arising due to lack of proper care and maintenance are not covered.

It is not too uncommon to find companies that open the business for a short period of time and then vanish.[6] Around 20 companies went out of business between 2013 and 2014. Buyers are encouraged to check the provider reviews and ratings of the companies selling the product.[7]

In some cases, companies operate in jurisdictions without the required licensing or registration.[8][1][9]

References

  1. ^ a b c "California Department of Insurance Issues Cease And Desist Orders to 4 Companies". 2022-03-18. Archived from the original on 18 March 2022. Retrieved 2022-03-18.
  2. ^ "Home Warranty Insurance Claim Denied Lawsuit". www.lawyersandsettlements.com. Retrieved 2022-03-18.
  3. ^ "NJ Department of Community Affairs". www.nj.gov. Retrieved 2022-03-18.
  4. ^ "Specialty Product Administration". www.floir.com. Retrieved 2022-03-18.
  5. ^ "Service Contract Providers and Home Warranties". www.tdlr.texas.gov. Retrieved 2022-03-18.
  6. ^ "How to identify home warranty scams?". Home Warranty Reviews. 2021-12-21. Retrieved 2022-05-21.
  7. ^ "CDI Issues Cease and Desist Orders to Four Home Warranty Companies". California Statewide Law Enforcement Association. Retrieved 2022-05-20.
  8. ^ "California Department of Insurance Issues Cease And Desist Orders to 4 Companies". Insurance Journal. 2021-09-08. Retrieved 2022-03-18.
  9. ^ "eDOCS DM". legaldocs.insurance.ca.gov. Retrieved 2022-03-18.
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