topic Re: Home warranty and claim denial in Personal Finance

Home warranty and claim denial

xenon3030 — Fri, 10 Dec 2021 23:54:39 GMT

I purchased a home warranty plan during my home purchase. One of the appliances (refrigrator) failed after ~4 months and the home warranty company denies to repair it. Their comment is that the appliance needs to be in a good shape and in its original shape while my appliance seemed to have prior repairs by the prior owners using non-OEM parts (~10 years ago). It was not mentioned in the home report at the time of purchase (possibly unnoticed). The home warranty company says due to using non-OEM parts in prior repairs, they will not repair it.

The home warranty service for a year was ~600$. Each request submission from the home warranty costs 85$. Based on my first experience, I think it is a waste of money to purchase home warranty, since they look for various reasons to deny it. It is better to simply purchase another appliance, if prior ones fail. I am also looking at their yelp reviews and it is a signle star (1374 reviews!!!).

What is the recommendation for this case? Is there a chance to dispute the denial? Do you purchase home warranty, at the time of signing home purchase contract?

Re: Home warranty and claim denial

sccredit — Sat, 11 Dec 2021 00:02:35 GMT

On our last purchase our realtor paid for a home warranty. We had a number of problems with our water heater leaking, which the home warranty "repaired" twice. The third time the water heater flooded the garage and the home warranty denied the claim, blaming it on a faulty pressure regulator. We were on the opposite side of the country at the time and my brother was at my house dealing with it. Tried disputing it and was basically told "not gonna happen". Complete waste of money

Re: Home warranty and claim denial

xenon3030 — Sat, 11 Dec 2021 00:27:23 GMT

I think, it is a waste of time for me to try to dispute the denial. I left a negative review on yelp on the way that they denied a service. I purchased one "garage ready" refrigrator in garage as a back-up. I see whether I can fix the door manually. Otherwise, I may buy a trustworthy refrigrator for the kitchen.

For leakage issues, you may purchase some leak and drip detectors and place them in various locations (under sink, garage, etc). I purchased 5 from Amazon for under sink in kitchen and rest rooms. I may purchase more for garage and other places. It is better to check their batteries in a monthly basis. Some of them can alert via Wifi. The RO in kitchen is one of risky items that may easily result a flood!!!

Re: Home warranty and claim denial

4sallypat — Sat, 11 Dec 2021 17:00:19 GMT

This is good info.

We just closed escrow 2 weeks ago and the seller paid for a 1 year home warranty by First American Home Warranty.

We took over a newish LG refrigerator and LG washer & dryer so hoping we won't have issues.

Almost makes me want to take along our 10 year old Whirlpool appliances to the new house but then we don't have the room for them.....

Re: Home warranty and claim denial

xenon3030 — Sat, 11 Dec 2021 18:17:17 GMT

It looks strange because the buyer should pay for the optional home warranty. Anyway, you may see the Yelp reviews of FAHW. It is a waste of money to buy a service from that company.

After my home purchase, I also received some calls from other companies for a home warranty. I may look into them for next years, since some issues like plumbing might be very costly, or may just go without using any warranty service.

Re: Home warranty and claim denial

mike-fico — Mon, 13 Dec 2021 13:20:39 GMT

Our regional utilities all tend to have service contracts that include some warranty coverage that I would expect is more useful than a general warranty from a national company.

You might check with your regional utility to see what is offered.

Re: Home warranty and claim denial

CA4Closure — Wed, 15 Dec 2021 06:58:16 GMT

I made that mistake once. After that miserable experience, each home I have bought after this first home, I told the sellers take the appliances because I was going to buy new ones (washer, dryer, dishwasher, refrigerator, micrwave oven, etc.

Home warranty is very profitable for the insurance company and now you see why the extended warranties are worthless.

Re: Home warranty and claim denial

xenon3030 — Wed, 15 Dec 2021 07:25:22 GMT

@mike-fico wrote:
Our regional utilities all tend to have service contracts that include some warranty coverage that I would expect is more useful than a general warranty from a national company.

You might check with your regional utility to see what is offered.

Purchasing home warranty on appliance is waste of money. I also never waste money on extended warranties, when I purchase anything for myself (laptop, electronics, car, etc).

The concept is simple. The home appliances are under the original warranty only for a year and with a high chance, a few appliances in the new home that are several years old, may fail easily, due to prior tears and wears. This is the business models of home warranty insurance companies that they say they only insure appliances in a good condition, when you submit a claim and it gets denied easily. Do not waste your money on home warranty (very low chance that they cover anything on old appliances) and if e.g. an old fridge fails, the cost of a new fridge is ~1-2.5k, without hassle.

Re: Home warranty and claim denial

Anonymous — Wed, 15 Dec 2021 19:40:43 GMT

I have found that home warantee's are a total waste of money. I used to get them on my rental houses. Not only was it like $600 per year you also have to pay for a service call just to have your claim denied. They will claim (well they did with me) there was some rust on a a/c unit so claim is denied. Water heater, un even water pressure, claim denied.

So you end up paying for the year, then the service call just to be denied. You then have to go out and purchase a new appliance even though the warantee says they will replace an appliance if they can not repair it. Lies lies lies.

Thanks

Mark

Re: Home warranty and claim denial

xenon3030 — Wed, 15 Dec 2021 20:20:36 GMT

Typically any appliance failure rate by time follows a bathtub curve (google it). In the first year of using a new appliance, the rate of failure is high (infant mortality) and its orinigal company provides a warranty typically for a year. If an appliance worked fine after a year, the chance that it can fail is very low till e.g. ~5 years. After~5 years, the appliance starts to fail due to tears and wears (end of life wear-out).

When you purchase a new home, the prior appliances are possibly a few years old and since they were working fine in the home report, the chance of fail is low (no need to purchase a home warranty). If an equipment is e.g. 15 years old, it already received lots of tears and wears and it has a high chance to fail. Do not expect that the home warranty companies repair or replace any 15 year old appliance, since they say the appliance needs to be in a good shape (e.g. they can cite a rusty part, non-OEM screws, etc).

Re: Home warranty and claim denial

creditfan — Wed, 15 Dec 2021 23:52:59 GMT

yes indeed, it's a waste of money. I canceled mine and got prorated back

Re: Home warranty and claim denial

xenon3030 — Thu, 16 Dec 2021 01:17:13 GMT

I also called and canceled my contract immediately and I will receive a prorated check. It was a waste of time and money.

Re: Home warranty and claim denial

pauldc73 — Sun, 26 Dec 2021 22:11:10 GMT

I have had an American Home Shield warranty, and ended up cancelling it after a denied claim. The adverts look good on TV, but the claims process can be frustrating, especially once you get a denial notice. The smallest things can trigger them to not pay a claim.

Re: Home warranty and claim denial

xenon3030 — Sun, 26 Dec 2021 22:47:43 GMT

The entire of this home warrantee service is a sham. After claim denial and my request to cancel the contract, they issued a small prorated check and they deducted whatever that they could (50$ for cancellation, ~250$ for the contractor visit). The follow-up call to the cancellation department on the reasons for these deductions did not go anywhere, since I assume they receive their salary from these resources. Practically, they got money without providing any service. They said that these deductions during cancellation are mentioned in the contract. Due to covid, I did not keep the contract book (several pages) and they also refused to provide a copy of the contract, due to the cancellation.

I do not plan to do further follow-ups with them while I wrote whatever they did as a public review. If somebody thinks that it is incorrect and there is a way to get the correct prorated check after cancellation, please inform.