Imagine having an 8-month pregnant wife who was sent home for bed rest at the start of a summer heat wave in late May. That’s when Art’s air conditioner went out.
According to a review given to the Better Business Bureau, Art called Choice Home Warranty to have them fix his air conditioner. Their service rep took the call at 11:30 a.m. and didn’t return a follow-on call at 6 p.m. When Art called them then, he learned the call center was closed.
“My house is 90 degrees and I have to leave in order to take my wife somewhere that is air conditioned,” he wrote in a company review on the Better Business Bureau web site several days after he tried to contact the home warranty firm.
Choice Home Warranty is one of several home appliance insurance firms where more than 80-percent of the respondents in the Better Business Bureau have posted negative things to say about getting timely service or having a claim rejected because of the fine print in their coverages.
Home sellers or their agents typically provide home warranties to avoid lawsuits if something breaks in the first year on an existing home. Not to be confused with a builder’s warranty, this service contract covers basic items like a ceiling fan, a furnace or water heater. In Art’s case, he had been a new home owner for only two weeks.
In his BBB review, Art said it took a week to get hold of the claims department who found a technician to repair his air conditioner. To help his wife in the final stages of her pregnancy, he had to move her to a hotel to keep her comfortable.
The response to Art’s problem typifies the response I have seen in 25 years or more from these home warranty firms. It doesn’t matter that there’s a heat wave or that a stove is broken. They’ll take their time and use repair services technicians who have gotten low reviews on a multiple of rating sites. In other cases, their technicians will state that something like the air conditioner didn’t have required maintenance or it wasn’t installed properly. With these factors, they’ll deny the claims.
One of my clients was given the “maintenance” reason as to why his home warranty firm couldn’t fix his rental property’s air conditioning unit. After waiting for two days to have a technician come to his house, he paid the technician the $75 deductible who told him that because of lack of maintenance on his unit, it would cost $4000 to replace a six-year-old system. After he had gotten this reply from his home warranty rep, I sent out one of my repair techs who said there was a small part needed. The entire repair project costs my customer under $200.
When my mother purchased a home, her water heater went out after a month. After she tried to call them several times, they sent out a repairman who replaced the water heater with a new one. When I visited her, I noticed the water heater was not up to city code due to a possible fire and explosion hazard. I called them back to properly repair the device.
Still another of my property owners called his home warranty firm to repair a leaky faucet. After charging the required $75 for the service call, the plumber said he couldn’t fix it because of a pre-existing condition. When I sent one of my vendors to fix the problem, he charged the owner $65 and repaired the problem.
As a property manager, I tell my home owners that they need to understand home warranty insurances are “good will” pacts given them when they purchase a home. These policies are filled with “loopholes” or what I would term as “yeah buts clauses” to avoid what the policy holder believes is coverage for major items. It’s been my experience that the warranty companies bid these jobs out to the lowest bidder who then tries to upsell people on unneeded repairs.
As a property manager, I would advise landlords to create a self-insurance fund that will pay for needed repairs. Property management firms like me know the most reliable repair specialists in their market. These are the people that will quickly respond to a problem and fix it. Like the one client with an AC problem, it’s typically a simple part and a couple of hours labor.
Instead of relying on home warranties, I would take the $450 to $500 or more that they spend on this service. They should take that money and start a maintenance repair fund to offset routine claims.
Leasing contracts require landlords to quickly resolve any maintenance issues that arise. Property management teams like ours depend on a team of service professionals who can quickly and professionally address any repair issue.
With a self-insurance program in place, the home owner and his property management team can take care of tenants. By addressing the home service issues, the landlord keeps a happy and contented tenant. Those who don’t can face possible legal issues due to home warranty claim issues for situations like Art and his very pregnant wife on bedrest.
(I am a Property Manager based in San Antonio. If you have questions about this or any other property management topics, please feel free to message me.)