10 Questions You Need to Ask Your Home Warranty Company

It's easy to assume that most home warranty companies offer the same quality of services to be competitive in the industry.

However, it comes down to the fine print in your contract and the company's history and reputation of delivering on its commitments.

As you evaluate home warranties and home warranty companies, ask the following 10 questions:

1. What does the home warranty cover?
2. What are the exclusions and limitations?
3. How does coverage compare to competitors?
4. Has the company been sued for unethical business practices?
5. What customer support does the company offer?
6. How does the pricing compare to competitors?
7. What do customer reviews say about the company?
8. How long is the contract?
9. What's the cancellation policy?
10. What's the renewal process?

1. What does the home warranty cover?

The first thing you need to understand is the coverage offered by the home warranty provider. You'll often find similarities in covered appliances and systems across companies, like heating and air conditioning systems, refrigerators, dishwashers, and more.

Most home warranty providers also offer add-on coverage options like pool or spa coverage so clients can customize their plans to meet their needs.

However, you'll want to review the coverage terms to understand what you're getting.

To fully understand the coverage, you'll need to review a sample contract at minimum. Most home warranty companies only cover specific circumstances and certain parts or components.

Some companies will offer additional service alongside their home warranty plans. These additional services can include annual tune-ups for heating and air conditioning systems or some pest control services.

2. What are the exclusions and limitations?

Exclusions and limitations are included in most home warranty contracts. Specifics vary by company, so it's important to review yours before you make a purchase.

Common exclusions include

• Pre-existing conditions
• Poor maintenance
• Certain parts and components

Some companies offer coverage for unknowable pre-existing conditions or allow you to add coverage for pre-existing conditions at an additional cost.

You should also note what the contract says about the company's obligations when it comes to replacing parts or appliances. Most companies focus on matching efficiency, so they won't match size, brand, or color.

Look for information about a waiting period, too. Home warranty companies often have a 30-day waiting period before your coverage starts. Some home warranty companies may waive the waiting period if you can demonstrate consistent, prior coverage.

3. How does coverage compare to competitor offerings?

As you look at companies, consider what kind of coverage you want. Some home warranty companies offer an appliance-only, a systems-only, or a full coverage plan. 

Other home warranty companies offer tiered plans that offer coverage for both home systems and appliances, though the number of included items varies.

Some home warranty companies offer additional services, like pest control with their plans.

Most home warranty plans are customizable, which means you can add coverage for more things to your plan. Pool or spa coverage is a common option.

4. Has the company been sued for unethical business practices?

Some home warranty companies become involved in legal disputes as a result of bad business practice. While you can ask company representatives about current or past lawsuits, you'll have better luck if you do the research yourself.

Consider any lawsuit involving the company carefully. If you see a large number of similar lawsuits, that's a definite red flag.

5. What customer support does the company offer?

The most important aspect of customer support to review is the company's claims process. The cost-savings and ability to file claims is what you're paying for, so you need to know that the home warranty company will be there for you when you need it.

Most home warranty companies have the same essential claims processes:

1. You file a claim online or over the phone.
2. The company responds to your claim within a certain timeframe, typically within one to two business days. There are usually expedited responses for emergency circumstances, as defined by the company.
3. If your claim is accepted, you'll be assigned a contractor from the company's network who will then contact you to schedule an appointment.

Coverage levels and timelines for replacements or larger repairs vary. For more details on these, you'll need to talk to a company representative and read customer reviews to understand more about the claims process, timing, and coverage levels.

6. How does the pricing compare to competitors?

Sometimes, companies provide you more value at a slightly higher price than if you go with the cheapest option. Try not to default to the cheapest option without first comparing the prices with the options of other home warranty plans.

Typical monthly prices vary depending on what home systems and appliances are covered by your plan.

For plans that only cover appliances, prices can range between $230 and $600 annually, though it will vary depending on your home size and coverage specifics.

Plans that cover only systems, generally fall between $240 and $720. Again, these vary depending on your home size and the contract's specific coverage. Some of the cheaper plans may not cover as many things as the more expensive ones do.

If your plan combines coverage for systems and appliances, rates can fall between $375 and $1,500 depending on your plan's specific coverage and the size of your home. Some home warranty companies offer tiered plans that offer coverage for a different number of systems and appliances, so some of these plans are on the cheaper end. More comprehensive plans will be more expensive.

Service fees typically range between $60 and $125 per visit, with most companies charging around $75 per visit. Some companies allow you to choose your service fee, though this typically affects your contract fee. The lower your service fee, the higher your contract fee and vice versa.

Note the differences in the contract fees with each service fee amount. If there are huge differences, you may want to choose another company.

7. What do customer reviews say about the company?

No company is perfect. You need to find out what customers are saying about each company — this should be your number one resource for choosing a company. Try reading as many home warranty reviews as possible.

Think of your search for home warranty coverage as an interview. Make each company sell their service to you. You need to make them work for it. Companies that admit deficiency are more likely to be honest than ones who claim to be the best in every aspect of their business; every company has a flaw. The trick is to find which one suits you best.

8. How long is the contract?

You need to understand the length of the contract you're buying. Most sample contracts last 12 months. Sometimes this 12 months includes a 30-day waiting period, which means you'll have 11 months of coverage.

Some companies address this concern by offering 13-month contracts at the same rate, so you don't have to pay for the waiting period.

You can also find companies that offer contracts as long as five years at lower monthly or annual rates. This contract length is nice if you're getting the service you need. However, if you need to get out of the contract, a longer contract can be trickier to manage.

However long your contract, you need to understand how long you'll be paying a contract fee to ensure that it fits your budget.

9. What's the cancellation policy?

Even though you probably don't plan to cancel a subscription when you buy it, it's smart to understand the process and terms of cancellation.

Most home warranty companies offer a full refund if you cancel within the first 30 days and have not made a claim.

Generally speaking, you'll receive a prorated refund of your contract fees if you cancel after 30 days or have made a claim. Home warranty companies will subtract the costs of services rendered and a cancellation fee from your refund. 

In some cases, this process means that you'll need to pay the home warranty company to cancel. Other home warranty companies just take the lesser of the combined cancellation fee and services rendered or the rest of the contract fee for the term.

10. What's the renewal process?

Along with understanding how cancellation works, note whether or not your home warranty plan automatically renews. Many home warranty companies will automatically renew your contract at their option. You should receive notice of any new terms and rates before the plan renews.

If you don't want to renew, you need to understand the process for opting out. These processes vary by company. You may need to give the company a certain amount of advance notice or provide written notice of your plan not to renew.