A broken appliance or a problem with a major home system can get expensive fast. A home warranty may help with the repair bill, but it might not cover as much as you expect.
Consumer Reports reveals what you need to know before buying a plan and warns about fake home warranty letters that could put your personal information and money at risk.
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It’s the middle of summer in your new home when the air conditioner suddenly breaks. The repair could be expensive but you bought a home warranty.
So you’re covered, right?
Not necessarily.
“Having a home warranty can provide you with some peace of mind,” said Chuck Bell, with Consumer Reports. “But you should realize that the providers of these plans build in wiggle room, that makes it easier for them to deny a claim.”
These service contracts may help pay to repair or replace covered appliances and home systems, including plumbing, heating, and air conditioning. But the protection isn’t always as clear-cut as it sounds.
“Some homeowners may discover that the plan leaves out what they need when they file the claim,” Bell said.
Consumer Reports examined home warranty plans and found that a claim may be denied because of poor maintenance, improper installation, or a preexisting problem.
And even when something is covered, every part may not be. A policy may cover a refrigerator but not the ice maker, or a water heater but not the tank itself.
Before buying a plan, first check whether you already have protection.
“Appliances in a newly built home may still be covered by the manufacturer or builder,” Bell explained. “And even if your appliances aren’t new, they may still be under warranty if you purchased them with a credit card, because some cards will extend the original warranty.”
If you’re still considering a home warranty plan, ask about the total cost, including service fees. Find out what’s covered, what’s excluded, how much the policy will pay, and whether an item will be repaired or replaced.
Even if a replacement is approved, the company may pay only its depreciated value, leaving you to cover the difference.
And, watch out for home warranty scams!
Consumer Reports warns about scam letters claiming your home warranty is expiring, even if you never had a plan. The letter may look official and even list your mortgage company.
Don’t call the number provided. Contact your lender or warranty company using a number you know is real. And never share personal or financial information