Home Warranties: Are They Too Good To Be True?

What is a 'Home Warranty?'

A home warranty is like an insurance policy. In fact, in some states the Insurance Commission may even regulate them. I know in Texas, the Real Estate Commission regulates these companies. Basically as a homeowner you pay a company a few hundred dollars a year to cover the major appliances and components of your home. If something should go wrong, you call them up and they send a technician out to size up the situation and tell you if you're covered or not.

Is this too good to be true?

Problems for some consumers usually arise when they have a claim. They may have paid their dues each and every year and believed everything in their home was covered. Then one day in August the A/C goes out and they call the Home Warranty Company who sends a tech out to look at the A/C. "Yep" he says "Your A/C equipment is shot, you're going need a new one." "Good thing I have this warranty" you think. You may soon find out that your warranty will not cover a new A/C because you failed to have it "serviced" each year or because the service tech says the reason it went out was because of a "Pre-existing" condition.

I've seen claims denied for very questionable reasons. Stop and think about it, if they can deny a claim, then that's money in their pocket. Someplace in that fine print I keep telling you to read there is a whole bunch of "we won't warranty it 'if's'." The Technician who comes to your home may be the one who'll decide whether or not the work will be covered by the warranty. In some instances, these third party contractors who are hired by the warranty companies do not make as much on repairs and replacements on a claim as if you just called them up out of the phonebook. It pays to get several opinions before making a decision.

Here are a few reasons I've seen Home Warranty Companies deny claims

· Lack of regular maintenance
· Pre-Existing conditions
· Questionable 'Code' issues
· Components not installed per the manufacturers installation instructions

The best way to protect yourself if you plan on purchasing one of these policies is to call the Company and ask them which service provider they use in your area. Then call that service provider and schedule an inspection with them to come out and look at the systems and components in your home to ensure the Home Warranty Policy will cover it. Get it in writing if they says everything will be covered.

You also want to make sure what the Home Warranty will cover and what it doesn't. I've never seen a policy with blanket coverage so don't assume it will 'cover everything in the home' like some real estate agents tell you. Read the fine print!

What are my options if my warranty company denies my claim?

I'm betting that most states regulate these companies some how. Check with your states Attorney Generals Office. They should have all the information you need. You may even be able to file a complaint with the AG's office of your state if you've had a denial of a claim in which you feel is legitimate.

Good Luck and read the fine print on those contracts!

Donald Lawson is a Professional Real Estate Inspector licensed in Texas (#5824) and Oklahoma (#454). He currently owns and operates V.I.P. Home Inspections, a multi-inspector firm in Houston Texas. You can find out more about home warranty's on his website at http://www.best2inspect.com

A 1750s farmhouse has a beautifully carved sandstone facade and offers sweeping views of the vineyards and the river.

In downtown Manhattan, new condo developments offer owners both single-house-style privacy and luxe-building-style amenities.

Where others saw a ruin, the buyer of a house in Millburn — a former contractor — perceived buried charm.

A gated community on Coney Island surrounded by sandy beaches, Sea Gate has a suburban feel.

The Yankee shortstop is selling an apartment on the 88th floor of Trump World Tower.

Until the financial crisis, foreigners had been a significant force in the real estate market, an area broker said.

A 1907 brownstone in Washington; a 1914 English Tudor in Kansas City, Mo.; and a 1925 bungalow in Sarasot., Fla.

The difference between viewing housing as a luxury good or as a staple is the subject of a debate about the recovery.

The property market in Stockholm has been insulated from the worst of the housing crisis by low interest rates and by a shortage of apartments in the city.

Laka Nona medical city will include a medical school, hospitals, research centers and space for biotech start-up companies.

Soho House is undergoing a $100 million expansion, including a new exclusive club in Miami Beach.

Real estate listings noting a need for TLC acknowledge problems with a property. Just what those are is not always clear.

Some economists and analysts urge a dose of shock therapy that would shift benefits to future homeowners from current ones: Let the housing market crash.

Two longtime loftmates appeared to be going their separate ways, but the hunt for new apartments landed them in the same building in Williamsburg.

In the weak economy, more buyers are being asked to shoulder the so-called flip tax.

West End Avenue and vicinity was once a stronghold of town houses. Three of the now-rare breed bear distinctive traces of the attentions of recent owners.

At River Pointe, a community in Manchester, N.J., solar technology that earns energy credits is a standard feature in each house.

Questions for a principal of the law firm Proskauer Rose and a co-chairman of the firm’s real estate division.

The wealthy and celebrities often buy property under limited liability companies, often with whimsical names.

Once a grand mansion steps from Central Park, it had fallen into disrepair. Now it is for sale for $8.95 million.

One in eight homeowners had household debt exceeding half the monthly income in 2008, a recent report says.

A parking space that comes with the lease; a condo building with no emergency reserve fund; a landlord’s liability in a burglary; dealing with fees on security deposits.

An art collector builds a nontraditional house in an Alpine village where life hasn’t changed that much in decades.

On Lake Waramaug, a converted boathouse has a stone foundation, a wraparound deck and direct access to the water.

A half-dozen buildings on Second Avenue will house ventilation equipment, disperse smoke and allow for evacuation from subway tunnels in emergencies.

A one-bedroom condo in Philadelphia, a three-bedroom bungalow in Tennessee and a two-bedroom house in Wisconsin.

Developers in Midtown are refurbishing older buildings, using tax credits and public financing, as much as they are building from scratch.