Angie's List: Home Warranties

First-time home buyers may wonder if it's necessary to purchase a home warranty.

It’s important to read the fine print before making a decision.

"For the 8th year in a row the home warranty category has topped the most complained about categories on Angie's List. When looking at the reviews the most common complaints we hear are in regard to people not understanding exactly what is covered in the warranty and then also the quality of the work when they do use their warranty,” says Angie Hicks.

Homeowner Ernest Goss was lucky. He had a good experience and his home warranty worked out for him.

"I had to use my home warranty because it was almost July when it was 100 degrees outside and my air conditioner just completely shut down and stopped working. They came out, they did charge a service fee of $85 to come out and look at it. They came out, looked at it and said the whole unit was bad. They said they could either do just the unit or they could redo the whole system. They gave me an option, one was a little more expensive than the other. I choose the more expensive route just to go ahead and fix any other problems that may occur and it ended up costing me, I think $800 for a whole brand new air conditioner, install with all the fees covered,” explains Ernest Goss.

Because the warranty companies get to pick the service companies they send to their clients' homes, its important homeowners know beforehand which company the warranty company is sending and do their research to ensure it's someone they want in their home.

"If you are considering purchasing a home warranty you want to make sure that you really understand the contract. It all comes down to the contract so read the fine print so you know exactly what is covered, what appliances, what types of service calls will be covered and then also understand the how the payment works. Is there a deductible and also, who makes the decisions about repair or replacing,” says Hicks.

Home warranties can be a good option for home buyers purchasing a previously lived-in home, provided they understand what they're purchasing. Warranties aren't designed to act as insurance to protect homeowners from loss. Rather, they're intended instead to provide service, repair or replacement on a home's appliances and major systems, such as heating and electric.

"When shopping for a good home warranty you want to find a company that obviously covers all of the mechanicals of your home so you want to be sure that you have an apples to apples comparison when looking at warranties. Does it cover the heating and cooling system, be sure you understand that part. Then it comes down to will they include an inspection before the warranty so you know exactly the condition of everything in your home. Also, do they have a low deductible and 24 hour customer service because you never know when that water heater will break,” describes Hicks.

She continued, "There may be limits to your home warranty so it's important to read the contract in its entirety. For example, maybe you have a plumbing issue that is inside the house the warranty may cover it, but if it's the plumbing outside of your home it may not."
Most home warranty plans cost between $350 and $500 for a one-year contract.

Adding enhanced coverage, if available, could increase that cost by one hundred to three hundred dollars.

Homeowners typically pay an additional service fee ranging from $50 to $75 for each repair job.

Home warranty companies topped the Angie's List worst-graded categories list in 2012 for the eighth-consecutive year. Read your warranty thoroughly and double-check what it actually covers and your deductible. Home warranties can protect you when you buy an existing home, especially if it's older or the mechanicals haven't been properly maintained or are outdated.
Warranties are not designed to act as insurance to protect homeowners from loss. Rather, they're intended to provide service, repair or replacement on a home's appliances and major systems, such as heating and electric. Consumers have told us they've had whole air conditioning units replaced by home warranty companies. It all depends on your individual warranty and the company who provides it.
Grades on Angie's List, the nation's leading provider of consumer reviews, are based on overall experience, price, quality, responsiveness, punctuality and professionalism.
4 most common complaints about home warranties:
· Homeowners don't understand or feel misled about what their warranty covers
· Poor customer service
· Long wait times
· Issues with the quality of the work done by the contractors sent by the home warranty companies

7 ways to get the most out of your home warranty:
1. If you are considering adding a home warranty or home service contract to your purchase, be sure to read the contract carefully. Find out what the warranty covers, and what it doesn't cover.
2. Check with your state's department of insurance to verify if the home warranty company you're considering is properly licensed to do business. If licensing isn't required in your state, inquire about the company's status with your local consumer protection agency, as well as Angie's List.
3. Compare multiple policies, as coverage can vary significantly and check company reviews to find out as much as you can about other homeowners' experiences with the warranty company.
4. If you have a service issue, ask for the names of three contractors they could send out. Then, research those contractors, call the warranty company back and tell them which contractor you prefer.
5. If your warranty is purchased through your real estate agent, tell your real estate agent about any denied claims. Oftentimes, he or she will have a relationship with the home warranty company and can make a call on your behalf.
6. If there are deductibles for service calls in addition to the initial warranty cost - typically between $350 and $500 a year - you might decide you're better off without the warranty.
7. June, July and August are typically their busiest months for claims. To reduce wait times call late in the day or later in the week when call volumes are lower, provided it's not an urgent issue. Also make service requests online or use an automated voice system.

7 components of a good home warranty
1. Get an inspection before you sign: Many home warranty companies will advertise that inspection is not necessary. This leaves a large loophole for companies to avoid paying claims. Most warranties have a clause stating that pre-existing conditions are not covered. If the company doesn't inspect the home before you purchase your warranty, it's your word against theirs. Make sure a home inspection is included if pre-existing conditions aren't covered under the warranty agreement.
2. Appliance coverage: Home warranties companies vary in what they cover. Appliances such as the refrigerator, stove and dishwasher should always be included. A good home warranty will also cover your washer, dryer, garbage disposal and built-in microwave. If you have other appliances, review the contract to determine whether they will be covered.
3. HVAC and ducts coverage: Air conditioners and furnaces built-in to the home should be covered in a home warranty agreement. Heat pumps and duct work would also be included in the home warranty plan. Heat lamps and other portable devices that aren't built into the home are usually not covered.
4. Plumbing and electrical coverage: This coverage should include electrical panels, wiring, drains and pipes. The home warranty company may decide not to cover these systems if they're not installed according to code. If you're buying a home, ask the seller for plumbing and electrical contractor information.
5. Low deductible: The length of a home warranty is generally one year from the closing date of the sale. The price generally runs from $250 to $500. Your deductible for a good warranty should be no more than $100. Do the math to determine if paying $600 to the warranty company before any work is done is worth it.
6. Around the clock customer service: A home warranty company with a 24-hour service line allows you to get in touch with somebody immediately to get the process of repairing something started.

What to do before you need to use your warranty:
· Who you gonna call? Keep the phone number and policy number with you. Program it into your phone or computer. If you have an emergency situation while not at home, you need to be able to contact your home warranty company.
· Round the clock? Try your home warranty company's 24-hour help line before you have a problem. If your company does not have one, call them and ask them what to do in case of emergency on a covered repair.
· Show me the money: Ask for if there is a cash-out option on items that you want to replace or upgrade yourself. You may get significantly less than what you will pay for the new item, however the price they give you reflects the wholesale price they are getting on a lesser-valued item. If you want to upgrade, though, it might be the way to go.
· Maintain & document it: Maintain your home equipment regularly and document service dates. Keep written documentation on air conditioning and furnace servicing, cleaning the water heater, and other home maintenance records.
· DIY: Attempt to tackle small problems, like a dripping faucet or or running toilet on your own. No matter how small the repair, a warranty company charges a set service-call fee no matter what. Additionally, the warranty company contracts its work out to local repair company, but charges their own fee. For small repairs, inquire as to a local company's service fee before contacting the warranty company.

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