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What to know when shopping for a home warranty

What to know when shopping for a home warranty

By Daniel Gutierrez. CREATED Jul 11, 2011

In this tough economy money gets tight when having to shell out big bucks to repair a major appliance. That's why many turn to home warranties. But what do you do when your appliance isn't covered by the warranty company? Contact 13's Tricia Kean looks at what you need to know before signing a service contract.

Gary Craden says "Well they did absolutely nothing." And Maria Fransk says "They never fix my problems when I call them." Homeowners Gary Craden and Maria Franks say they aren't getting what they paid for. Both have home warranty coverage with American Home Shield. Gary called the company back in May when he had a problem with his refrigerator. They sent someone out to look at it. Gary says "Initially he said that the coils were dirty and it caused the refrigerator to break." Paperwork from the repairman states that the coils were 50% dirty. Gary says that's why American Home Shield refused to repair or replace the fridge. Gary says "Nowhere in the contract does it say that I'm suppose to maintain the coils." So Gary requested that American Home Shield send out another repairman. Gary says "The next repairman that came out the next day said the coils looked fine, and the compressor was making noise." Once gain Gary says American Home Shield refused to help fix or replace the refrigerator. Gary says "This contract right here say's they replace it if they can't fix it. And it's in writing right here." So we reached out to American Home Shield. After several phone calls and emails American Home Shield issued a statement detailing why the refrigerator wasn't covered in this instance. American Home Shield says "This claim was denied due to lack of maintenance, as outlined in his contract. The contractors found that the coils had not been properly cleaned or maintained, which caused the compressor to fail.

Gary isn't alone in questioning his warranty. Maria Franks also contacted Action News because she was unhappy with American Home Shield. She had someone come to her home last November to look at her garage. Maria says "The guy said, the problem with your garage is that we have to replace the whole garage door." The problem is, the actual door isn't covered by her plan. According to the American Home Shield serviceman, the issue was a dent. Maria says "That dent has been there since I purchased this place." Maria says she doesn't think the entire door needs replacing. She points to a spring, which is clearly broken in two pieces as the real problem. Maria says "They just want to sale you something and you have to replace it." American Home Shield sent Contact 13 this explaination as to why Maria's claim was denied. "Per the terms of our contract, damage to garage door units are not covered, nor are the door openers if the breakdown occurs as a result of damage to the door unit, as was the contractor advised was the case in this situation." Refering to both Gary and Maria's cases American Home Shield goes on to say "While we regret that our services did not meet their expectations, it appears upon additional review that these denials were in accordance with the terms of their contracts."

So what can you do if you're like Maria and Gary and you can't come to terms with your home warranty company and you feel you're voice isn't being heard? One option is the Nevada Division of Insurance, which oversees the insurance industry including home warranty companies like American Home Shield. Brett Barratt says "If a consumer in Nevada has an issue with a service contract provider, I want to know about it." We spoke with Commissioner Brett Barratt from Carson City via video conference. He says his agency averages 7 complaints a month involving service contracts. But in the last year only 2 complaints involved American Home Shield. Brett says "The majority of complaints we get with regard to American Home Shield and all service contract providers are almost exclusively related to payment of claims."

They've seen a lot more complaints at the Better Business Bureau. They've received 3,169 complaints against the company in the last 3 years and over 1,000 in the last year. But American Home Shield responded in each case, closing the complaint. So the BBB still gives American Home Shield an A+ rating. More than 2,000 of those complaints involved problems with products and or service. Just like Maria and Gary are experiencing. Maria says "I told myself maybe they will replace it, but I realized they don't want to replace anything actually." Gary says "They came out for maybe, both repairmen, the total time 5 minutes out here and didn't' do anything basically, I got no service at all."

So here's the Contact 13 bottom line: Before signing on the dotted line review your home warranty contract to understand what is and isn't covered. But remember you can avoid breakdowns with regular maintenance which will help extend the lifespan of your appliances. And if you feel like you're getting the runaround from your home warranty company, call the Nevada Division of Insurance at (702) 486-4009 or visit them at www.doi.state.nv.us. In the last 16 months, the Division of Insurance helped Nevada consumers recover $1.8 million.

Here's the entire statement from American Home Shield email to Action News:
"While we regret that our services did not meet their expectations, it appears upon additional review that these denials were in accordance with the terms of their contracts.

Gary Craden (refrigerator): This claim was denied due to lack of maintenance, as outlined in his contract. The contractors found that the coils had not been properly cleaned/maintained, which caused the compressor to fail.

Maria Frank (garage door): Per the terms of our contract, damage to garage door units (i.e., door and tracking) are not covered, nor are the door openers (i.e., electric, mounted opening devices)if the breakdown occurs as a result of damage to the door unit, as was the contractor advised was the case in this situation.  We have placed a call to Ms. Frank to discuss the matter with her, as the service call you are referencing occurred in November of last year. Our records indicate that she cancelled her contract, and we have not had any further communication with her about this matter.

While we strive for complete customer satisfaction, unfortunately, there are situations where we fail to meet expectations. This could be due for a number of reasons, from lack of understanding about coverage, to unavoidable parts delays, to a poor service experience. Based on our renewal rates, independent research, feedback from customers, and other sources, this is the exception, not the rule. We strive to build lasting relationships with our customers by providing quality services and exceptional value.

In the past three years, our company has responded to nearly 8.4 million service requests. As the nation's largest home warranty company, we naturally have the largest volume of service requests and therefore greater opportunities for customer feedback. Our complaint to service request ratio, when comparing number of Better Business Bureau (BBB) complaints to number of American Home Shield service work orders from 2008-2010 is less than .0004%, and the current BBB rating for American Home Shield is A+.

Here are a few tips we'd like to provide homeowners with home warranties:

Review your contract to understand what is and isn't covered, before a breakdown occurs.
Unfortunately, plenty of misconceptions exist about what home warranties do and don't cover. Your home warranty covers the repair of specific systems and appliances that break down due to normal wear and tear - it doesn't provide for automatic replacement for any and every item in a home. What's more, customers may elect to have certain items covered based on their unique needs, so it's possible that what's covered by one contract may or may not be covered by another. Our customers have 24/7 access to their contracts through our secure website.

Ask questions at any time.
In the event that a customer experiences a breakdown of a covered system or appliance, we want to ensure that they understand what to expect each step of the way. Our service representatives are happy to answer questions at any time, and a wealth of helpful information is also available online at ahs.com for our customers' convenience.

Regularly maintain your systems and appliances.
Regular maintenance can help extend the lifespan of your equipment by ensuring its kept in good working order; this can also add up to energy savings. However, even the most well-maintained systems will break down - and that's when a home warranty steps in to repair covered items. While a home warranty cannot prevent systems or appliances from breaking down, it can help make covered repairs or replacement easier and less costly.

Use your warranty.
We encourage our customers to actually use their warranties, and they do. Our customers place an average of 2.5 service requests per year, and their experience speaks volumes in terms of renewals. Customers who use their warranty renew at a much higher rate than those who don't, as they see first-hand the valuable protection that a home warranty can provide them and their family."