Why Home Warranty Claims Get Denied and How to Avoid This

Owning a home is an exciting opportunity, but it also requires a lot of work and dedication. It is likely the biggest investment you will ever make. Aside from making your monthly mortgage payment, you will have consistent maintenance, upkeep, and repair costs to take care of. These are essential if you want to keep your home looking nice, feeling comfortable, and provide the conveniences and security that you and your family members need.

If you are worried about the finances required to make essential repairs and keep your home in good shape, it may make sense to get a home warranty. This benefit can save you a considerable amount of cash. Before you get serious about purchasing one, learn more about what it entails and when you would and wouldn’t be able to take advantage of it.

What a Warranty Looks Like

A home warranty should come with a brand-new home at the time of closing. If you buy an existing property, you can purchase a warranty at prior or even after the closing, or request one to be provided by the sellers. It provides services on repairs and replacements at no additional out-of-pocket cost to you. You would only have to pay a service call fee, which is usually around $100, but you'll need to find out the fee for the warranty you choose or the seller is providing.

The warranty is an agreement that states that you pay an annual or monthly fee in exchange for the servicing of your home appliances or systems. Plans change and offer different coverages. Some plans will cover kitchen appliances, such as your refrigerator, range, built-in microwave, dishwasher, and garbage disposal. Others might break those appliances up and you will have to pay a premium to add a refrigerator and/or the clothes washer and dryer. You want it to take care of other appliances, too, including your water heater, furnace, and air conditioning unit. It should cover your entire HVAC system as well as the plumbing and wiring in your home. Some warranties will include roof damage but read the fine print, as some will only provide repairs - not an entire roof. If the sprinkling system falters, or if you need to replace or repair your sewer line or swimming pool, the warranty might provide financial protection but these are usually premium add-ons.  Read the warranty in full so you know exactly what your warranty offers.

Warranty Costs vs. Costs to Repair and Replace Items

Warranty plans typically range between $500 and $700 a year. You can pay for the plan all at once or in monthly installments. If you think these costs are steep, consider how much you will need to pay to fix an appliance or replace it with a new one. It can set you back anywhere from $100 (and that is usually just to cover the visit) to several hundred or even thousands to make repairs, depending on the item and how complex the issues are. Installing a new HVAC or plumbing system can cost even more. Your expenses when handling these problems yourself could far exceed the costs to pay for a home warranty.

Coverage Limits

You should be aware before buying a home warranty that your plan will have a coverage cap per item. The warranty claim may be denied if the repair and replacement costs exceed this amount. Know what this limit is before you buy the plan. These amounts can vary, so talk to the warranty company about any concerns you may have with this.

Improper Use or Installation

An instance in which the warranty company may deny your claim is if you haven’t used the broken item or system correctly. Over time, the misuse could damage the product, making it ineffective. Your warranty won’t cover this type of damage.

Another possible issue might not be your fault but otherwise may invalidate your claim. If the appliance or system was not put in properly, you won’t have coverage. If you recently had something installed, have a professional inspect it to make sure it was done the right way, according to safety codes and regulations.

Deliberate Damage

This caution is the same as you would find with an insurance claim. If you damage or destroy something on purpose, your claim will not be accepted, and you will have to pay for repairs or replacements yourself. Do not ever try this tactic.

Poor Maintenance and Upkeep

As a homeowner, it is your responsibility to maintain the contents of your house. This includes doing regular inspections, using the right parts and components, and taking care of minor service issues as necessary. If the warranty company deems that you have not done this, it might deny your claim.

A home warranty provides many benefits that can save you money and a lot of headaches during a stressful time. Instead of paying an excessive amount of money, you can pay a modest fee and get the repairs your items need. You should understand, however, that not everything will fall under your warranty’s protection. There may still be instances when you will have to pay for the entire service yourself. Taking care of your items and knowing what your plan entails will help you avoid any issues when you make a claim.