Many homeowners like to buy a warranty or home service contract to protect their appliances and electrical systems. When your washing machine goes on the fritz, it’s nice to be able to call a qualified contractor for a relatively quick fix.
It’s great when it works. Unfortunately, when Maureen Owens’ ice maker stopped working a couple years ago, the warranty let her down.
“The ice maker would freeze up and leak so we would have water dripping out … and you couldn’t get ice,” recalled Owens, of Ocean City, N.J.
She called her company, Choice Home Warranty, and about a week later, a technician was sent to her house. He took the ice maker apart and said he needed to order a part and come back. After he returned a month later to install the new part, the appliance was broken irreparably.
“When he left, I didn’t realize he was leaving us with a nonworking refrigerator, freezer and ice maker,” she said. “It’s June, the height of the season, we have company planned, and now we don’t have a refrigerator.”
That’s when the finger-pointing began. Choice told Owens that the company was not responsible for the technician’s actions and that the problem was one Owens needed to take up with the appliance’s manufacturer, Samsung. To make matters worse, the company charged her $500 for the repair.
“I said, ‘We can’t choose the technician who you send out, but you don’t stand behind the work they do?’” Owens recalled. “No amount of pleading with them made any difference.”
She spoke with the Better Business Bureau, which pointed out the clause in her contract that said the company was not responsible for their contractors. Owens learned the hard way to read the fine print of any contract.
She is among many homeowners who choose home service contracts, though there aren’t specific data available. Art Chartrand, executive director and counsel for the National Home Service Contract Association, guesstimates less than 10% nationwide. Home warranties are especially popular in California and the West Coast, he said, and are rapidly gaining popularity in the East.
“In Pennsylvania, we have well over 100,000 contracts in the state,” he said, noting that not all warranty companies are NHSCA members.
Separate from a warranty that covers your home’s structure, a home warranty or service contract is designed to service, repair or replace major household systems and appliances that fail due to normal wear and tear, said Chartrand, who is based outside of Kansas City, Kan.
“A classic home service contract will cover mechanical and electrical components,” he said. “That includes your heating, ventilation and air-conditioning system, and your major household systems and appliances — things like ranges and refrigerators, stoves, garbage disposers and water heaters.”
Stores, manufacturers and utility companies also offer warranties for a fee on individual appliances.
A typical plan costs about $500 a year, Chartrand said, though many are customized to cover certain appliances or systems, which affects the cost. Costs also differ regionally. He urges homeowners to get recommendations from a Realtor or other homeowners; read the contract, including the fine print, and be sure the company belongs to the NHSCA.
“You need to have a reasonable expectation as a consumer,” Chartrand said. “Don’t expect that just because something breaks, you’re going to get a brand new one. If the item can be repaired, it’s likely to be repaired. And be aware that there can be limits on the coverage.”
About 60% of home warranty contracts are sold in conjunction with the sale of a home, Chartrand said. Home warranties are transferable. When a seller transfers the warranty over to the buyer, that contract typically covers that buyer for a year beginning at settlement.
About half of Compass Realtor Kristen Foote’s deals include a home warranty, she said. A seller may offer to pay for the buyer’s warranty to sweeten a deal.
“It doesn’t hurt to accept the warranty, but don’t accept a home warranty in lieu of a home inspection,” Foote said. “You need to have your home inspection done first, and you’ve got to really read the contracts to see what they are covering.”
Peter Costa’s first home warranty came with the new house he purchased 21 years ago. He renewed it each year, using the warranty for many appliance repairs, including a furnace, garbage disposal, electrical system and pool filters.
“Back then it was maybe $30 a month,” said Costa, who lives in Cherry Hill. “Now it’s about $100 a month, but we have an in-ground pool that is covered, and we had pool filters that went. We made out really well with American Home Shield.”
Costa did have a bad experience with a contractor who came out several times to work on his air conditioner but wasn’t fixing the problem. He ultimately chose a different repair person from the company’s approved list.
“For a home buyer, those service contracts can be especially helpful to offset some of the costs of a covered repair or replacement, especially after they’ve made such a large investment,” said Cristal Avitia, account executive at Home Warranty of America (HWA).
Covered claims are assigned by the administrator to an independent contractor in the customer’s area, and those independent contractors are chosen to be included in the network by customer ratings to help ensure high-quality service.
HWA customers are allowed to request the name of a contractor assigned to handle the claim. If a contractor is unavailable and the customer would like to hire an independent contractor that is out of network, in some instances, the homeowner will be reimbursed for parts and labor at the administrator’s rates, subject to the limits and coverage of the customer’s service contract.
Yet, in a dispute, the homeowner may have to work directly with the contractor to seek a resolution.
Choice Home Warranty, Owens’ home warranty company, did not return requests for comment.
Owens is trying to put her experience in the rearview mirror. “I would not get another home warranty,” said Owens, who ultimately received a partial refund from Samsung. “I would encourage everyone to read the fine print before engaging in a contract.”