Home Warranty Insurance-Is it the bee’s knees?

blog-9-20-15Is pulling a youngster out of the dryer a repair covered by your home warranty??  What good is that home warranty insurance policy you just got with your new home, or bought as your ‘repair anything’ policy?  Is it fool’s gold, or better than sliced bread?

Most people learn about home warranties when they buy a house.  Either the seller provides one as a benefit of the sale, or the buyers buy one as a hedge against unknown problems.  Most of the cost between $300 and $500.  When you are making a huge purchase, like a house, the relative cost of these policies can give you peace of mind for the first year of your ownership.  I would guess that this is the majority of policies sold, and your realtor usually has their favorite purveyor of these policies.

Some of the home warranty customers we have run across. buy a policy as their chosen method of dealing with any household repairs that come up:  plumbing, electrical, appliances, furnaces,  AC, and any major mechanical system.

Peoples Choice has done appliance repairs for some home warranty companies since 1997.   I am in a position to give you my, oh so humble opinion, about the worthiness of these policies, based on our experience.

First, let me tell you how these policies generally work.  I will refer specifically to appliance repairs, but no matter what trade you need, the system pretty much works the same way.  Let’s say your dishwasher stops draining.  It is VERY important that you don’t call a repair company (even if it’s Peoples Choice).  You must call (or go online) to the insurance company.  If you call a repair company first, you will likely not get any repair covered, so don’t screw up this first crucial step. The insurance company will want any specifics you have such your policy number,  the brand of the appliance, when it failed, and what seems to be wrong with it.  They will then look into their list of approved appliance repair companies and assign you one.  Now, the exact algorithm or method of picking is not totally clear, but none-the-less, your repair will be assigned to someone they have approved.  The insurance company will then send a “dispatch” or “work order” to that repair company, and the repair company (sometimes Peoples Choice) will contact you for an appointment.  A co-pay or deductible will be paid to the repair company.  The deductible amounts vary from insurance policy  to insurance policy, but they generally seem to run between about  $45 annd $65.  The good thing is that throughout the course of the repair, this is the only amount you will have to pay.  It doesn’t matter how many trips, how much diagnosis, or even if you have a second company assigned for follow up, in my experience, this is all you will pay, until the problem is resolved.

I will caution you that if you’re buying a house and there is an appliance problem that does not get fixed during escrow, you will likely not get the appliance covered, as it is a pre-existing condition.  The only exception is that some policies will cover the seller during the listing period, as long as they sign up at the time of listing the house for sale.  Your realtor can fill you in on this option, if available.

Next, I’ll give you a couple of possible scenarios with your broken dishwasher:

1)  Let’s say your pesky dishwasher happens to be a Harvest Gold relic from past decades, and a part that is necessary to repair it, is no longer available.  First, the insurance company will see if they can locate the part or a substitute somewhere, or if it can be rebuilt.  If not, you may have hit the jackpot, and the insurance company will replace your dishwasher or other appliance,  with a new comparable model.

I will take a moment here to inform you of some fairly recent developments.   There are many more options available for you home warranty policy than in the past.  Some will NOT replace your unrepairable dishwasher; they will pay you what it would have cost to repair the dishwasher (if the parts were available).  Some policies do not cover specific appliances or systems, or you can eliminate items from the policy.  If you are the one choosing the policy, make sure you are aware of what and what is NOT covered.  In a two refrigerator kitchen, some policies will  only  cover one of them.

2)  Your dishwasher can be repaired, which totally pisses you off because you were hoping it was trashed beyond help, so you would get a new one.  Fret not.  One thing that customers are rarely aware of is the fact that (in all transactions I have experienced) you the customer can “cash out” of any repair.  I would always recommend that you ask the repair company to let you know the cost of repair before they order any parts.  This way, you can weigh your decision to repair it or “cash out” and use the repair money towards buying a new dishwasher (or whatever appliance).  I am pretty sure the insurance company is very happy to do this, since you will now have a brand new appliance, that is highly unlikely to cost them any additional money.  Win Win.

When you buy a house, I think these policies are a really good safety blanket.  During your first year, you will get to know your appliances and systems.  If you have any that may be in imminent danger of failure, you may decide to renew.  As I mentioned, some customers use these policies as their total repair plan for the systems in their home, limiting their repair expense to whatever the co-pay or deductible is.  I would caution you to compare the cost of the policy and possible deductibles closely.  It may be comfortable for you to use them this way, but I doubt whether they are economically the best way to handle repairs.  I prefer to put aside the cost of the policy and deductibles, and pay for any repairs if and when I need them, out of my own pocket.  Plus, I get to choose who does the repair.  The other thing to consider is the repair company that will be doing the work.  You do not get to choose the repair company, the insurance company chooses them.  Some are great, and some are less than great, so it is a bit of a crapshoot.

If you have any questions on this topic, please feel free to email me through our website www.SaveMyAppliance.com

Rich Johnson

September 20, 2015