Action Line: What a home warranty can do for you
| Friday, Oct 09 2009 10:56 AM
Last Updated Friday, Oct 09 2009 11:01 AM
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Editor's note: Action Line is a weekly column from the Better Business Bureau answering consumers' questions and concerns about money and business issues.
Dear Action Line:
We own our home and have had homeowners insurance with the same company for 10 years. Recently our air conditioner went out and we wanted to file a claim, but our agent said that wasn't covered under our policy.
A neighbor suggested that we invest in a home warranty. I have looked at a few companies online, but they all seem to have really angry comments from dissatisfied customers. Any suggestions?
Dear Reader:
You are not alone. Even though we are told to read everything, many of us (including myself) have wrongly assumed that our homeowners insurance covers everything about our home.
Homeowners insurance covers personal belongings and the entire house in case of burglary or natural disaster such as fire, lightning, tree fall etc., but it does not cover regular maintenance and replacement costs of appliances, and that is where home warranty coverage picks up. A home warranty is a normal wear and tear insurance policy for equipment and appliances such as refrigerators, stoves, heater, A.C. unit, plumbing and electrical systems.
A home warranty policy usually costs $500 to $1,000 per year. You pay a deductible (averaging around $50 to $60) for each service call. Coverage is generally effective 30 days from the date of buying the policy. However, you should be aware that claims can be denied be the warranty companies for various reasons, including what they call "maintenance negligence." This is when an appliance or system is already in failure or about to fail due to owner neglect in providing regular maintenance.
Your BBB suggests going to bbb.org to check the reliability report of any home warranty company you are considering rather than just reading the complaints available online. You should be cautious about reviews that are overly negative or wildly positive. Such reviews are not likely to offer a balanced view and some of them could be fake reviews posted to demote or promote a company.
In a service industry that covers thousands of claims each year, there are always going to be dissatisfied customers and you should check the overall record of each company before deciding where to purchase a policy. You should also make sure the company is licensed to do business in California by going to www.insurance.ca.gov.
Finally, ask your friends and neighbors if they have a home warranty policy and what their experiences have been like with that company.
Vickie Sanders is assistant director of business services for the Better Business Bureau serving Central California. Send your consumer concerns, questions and problems to Action Line at the Better Business Bureau, 1601 H St., Suite 101, Bakersfield, CA 93301 or vickie@bbbcencal.org.
