Home warranties can reassure nervous buyers and help a real estate practitioner seal the deal, but if ultimately the buyer feels cheated by the insurer, the policy could be more trouble than it is worth.The key to consumer satisfaction is picking a reputable insurer and reading the fine print."Any industry that deals with the public is going to have complaints," says Art Chartrand, a lawyer for the trade organization, National Home Service Contract Association. "It's important for people to understand these are limited benefit contracts."Home owners who are about to purchase a home warranty contract should consider these issues, says Georgia Insurance commissioner John Oxendine.
Get an opinion from the state insurance commission. While most state insurance commissions don’t police these kinds of policies, they are usually aware of companies that have a poor reputation.
Read the contract carefully before signing. If the company won’t give the customer a contract in advance, don’t buy.
Pre-existing conditions. If the system or appliance wasn’t working when the policy was purchased, the insurer won’t cover it.
Is there proof that required maintenance was done? Most insurers have clauses in their contracts that require specific routine maintenance for the systems or appliances to be covered.
Who will do the work? Find out how many approved contractors there are and where they are located.
Ask about service fees. Fees to determine the extent of the problem and whether it is covered can be high and buyers should know that in advance.
Source: The Atlanta Journal-Constitution, Alison Young (01/11/09)
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