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How to File a Home Warranty Claim
By Chris Ozarowski MONEY RESEARCH COLLECTIVE
Part of owning a home involves deciding whether to purchase a home warranty. These service contracts, which help homeowners pay for repairs and replacement of appliances and home systems, can save you money if something in your home breaks down or malfunctions.
But merely having a home warranty doesn’t guarantee that your claims will be approved. Understanding the claims process is the best way to make sure your claim is approved and that you’re treated fairly by the warranty company. Read on to learn how to maximize your chances of having your claim approved, why claims can be denied, and what to do if you’re denied coverage, service, or compensation by your home warranty provider.
Filing a home warranty claim: 3 key steps in the claims process
If you currently have a home warranty and one of your appliances or home systems malfunctions, don’t wait! Be sure to file a claim right away. But also be sure to do it right. Making mistakes in the claims process can waste valuable time and cost you money. Here’s what to do:
1. Review your warranty contract
Figuring out whether your home warranty coverage includes a particular home system or appliance should be the first step you take in the claims process. Home warranty companies charge nonrefundable service fees every time you submit a claim, regardless of whether your claim is approved. If you file a claim on a system or appliance that’s not covered, you could wind up paying the service fee in addition to paying the full cost of replacement or repair out-of-pocket.
Even if your home warranty service contract covers a malfunctioning appliance or home system, the policy may specify certain limits in its coverage terms. For example, some components of covered appliances, such as the electronics in a smart fridge, may be excluded from coverage. There may also be limits on how much a home warranty company will pay to fix or replace a particular appliance or home system.
Annual coverage limits
Home warranty companies usually cap the amount they will pay out to a single homeowner in a year. There are two types of annual limits. One is a total annual coverage limit For example, if a warranty company imposes a total annual limit of $15,000, it will pay only $15,000 in repair costs or replacements each year, regardless of how many covered appliances or systems break down. The other type of limit applies on a per-repair or per-situation basis. For example, a warranty provider may state that it won’t be liable for more than $2,000 a year for electrical repairs due to rust or more than $5,000 total for HVAC system repairs.
If repair or replacement costs exceed your service contract’s coverage limits, the company will pay only up to the policy’s limit. After that, you’ll be responsible for the remaining costs. If you’re worried about how much of a repair you can afford, make sure you ask the contractor sent by the home warranty provider for a firm estimate. That way, you’ll know how much you’ll pay out-of-pocket (in addition to what’s paid by the warranty company) before you authorize the repair.
Home warranty terms
“Home warranties” are actually not warranties at all – they’re service contracts. And these contracts spell out what is and isn’t covered by your agreement. The devil, as they say, is in the details.
A home appliance warranty usually covers only one type of appliance per property (i.e., one stove, one refrigerator, one dishwasher, etc.) and won’t cover commercial-grade appliances. Appliance home warranties sometimes cover professional-grade appliances but often impose low coverage limits that may be insufficient to cover replacement. Other home warranties exclude coverage for damage to glass in appliances, such as that used in oven doors.
Home system limits may include specifics such as exclusions for asbestos-insulated ductwork, solar panels, or some components in an electrical system. Other items that are frequently not covered include sinks, toilet lids and seats, solar water heaters, intercoms, and house or attic fans. Home warranty providers also generally won’t cover damage to appliances or systems caused by something other than normal wear and tear.
If you just purchased a home warranty, be aware that some providers mandate a waiting period before coverage becomes effective. For example, some providers state that no malfunctions in the first 30 days after the signing date will be covered. The logic is that such malfunctions are likely to be concealed preexisting conditions. Still, this contract provision essentially requires warranty customers to purchase a month of coverage that they can’t access or benefit from. This can be very frustrating for homeowners who experience appliance or systems breakdowns within 30 days of purchasing the warranty.
2. Call to request service for the covered appliance or system
Once you are sure your home warranty provider will cover the broken appliance or system, you can make a service request through your provider’s preferred contact method. Providers usually have a phone number or web form to fill out for filing a claim. Begin the claim filing process as soon as possible after discovering the malfunction. Some warranty companies’ contracts require you to report problems within certain time limits. Make sure you submit whatever information your provider asks for within that time.
3. Pay the service fees related to the repairs
Home warranty providers charge a fee for every service appointment they schedule. Many providers require you to pay the service fee before they will send out one of their approved contractors. Once the payment has been processed, the provider will send your details to their chosen contractor, who will contact you to schedule an appointment.
Most home warranty providers have a list of approved, licensed contractors they send out to do repairs. While many people prefer to use their own contractors, this might not be an option. Though some home warranties allow customers to choose their own contractors, the warranty company must approve that contractor before any work begins, or it may not pay for the repairs.
When the contractor arrives, they will assess the defect in the home system or appliance. If required, they will submit their findings to the home warranty company, which determines whether to approve the claim. Once the contractor gets the green light from the warranty company, they will begin repairs. Any repair costs above the initial service fee and below your provider’s coverage limits are covered by the company.
The contractor may have to order parts and return later to install them. Fortunately, no additional payments are necessary if a contractor needs several appointments to complete the repairs. If a repair isn’t feasible or a component is no longer manufactured, your home warranty policy provider may give you a cash payment equivalent to the cost of repair or replacement. Some providers calculate this cash settlement based on how much it would cost to pay for the repair, not the cost of a new system or unit. In this scenario, your cash payment might well be less than the cost of a replacement appliance or system.
Common reasons warranty claims are denied
A denied claim can be frustrating. After all, you could spend a decent amount of money on a service call and several hours of your time for nothing. That’s why it’s important to know why home warranty companies deny claims and how to avoid that situation.
1. Improper installation
If your home warranty company determines the appliance or home system was installed improperly, they will likely deny your claim. This applies even if a professional contractor did the installation. Therefore, be sure you know exactly what your provider considers improper installation.
2. Secondary damage
Secondary damage results from the initial (primary) breakdown or failure. For example, a home warranty may cover the cost of repairing a burst pipe, but not damage to floors or carpets caused by the flooding that results. In some cases, secondary damage can be much more costly than primary damage, so it’s essential to know the limits of your particular policy.
3. Lack of routine maintenance
Home warranty policies cover problems that occur as a result of normal wear and tear on systems and appliances that are routinely and appropriately cared for. If you haven’t properly maintained the coverd items, or if you’ve used them far in excess of what would be expected, your warranty provider may deny your claims.
4. Unusual wear and tear
If the appliance or home system breaks because you used it in a way it wasn’t designed for, your home warranty provider may deny your claim based on evidence of unusual wear and tear. Examples of noncovered damage include an oven door that breaks when a toddler stands on it or a washing machine that leaks because caustic cleaning agents were used in it.
How much time do claims take to process?
Your home warranty company likely has clauses in its service contract detailing how long you have to report a problem and how long it has to respond. For example, one warranty company specifies that you must file a claim within three days of discovering a problem. According to its terms, a service technician will be contacted within two business days to assess and repair or replace your faulty appliance or home system component. However, this company disclaims liability for damages caused by delays in the claim and repair process.
To find out how long it should take your warranty provider to process a claim, look at your service contract or contact your provider directly.
How to deal with a warranty claim denial
If your home warranty company denies your claim, you’ll probably have to pay out-of-pocket for the repair or replacement. However, you may be able to appeal a warranty claim denial and be reimbursed if the appeal is approved. The first step is to contact your home warranty company and ask what documents it requires for an appeal. When you contact the company, note the times and dates of your conversations with company representatives – and be sure to get their names.
You may need to have your appliance or home system assessed at your expense by a licensed third party. For example, if your claim for a malfunctioning air conditioning system was denied due to lack of maintenance, you can contact a local air conditioning technician and ask them to note the cause of damage in writing. Your home warranty company may also require specific mediation procedures as part of the appeal process. Provide your warranty company with any requested documentation.
If your appeal is denied and you still believe your provider made an incorrect decision, you can contact your state attorney general’s office. Attorney generals’ offices often take action against companies that engage in fraudulent activity and deceptive business practices. In the past, attorney general offices have successfully sued home warranty providers for wrongfully denying claims and for false or misleading advertising.
Unfortunately, nearly all home warranty companies require their customers to give up their right to sue for breach of contract, negligence, breach of warranty, and unfair and deceptive practices. Rather, they require customers to arbitrate their claims before an arbitrator chosen by the company itself – and they forbid successful claimants from recovering attorneys’ fees and costs. These mandatory arbitration clauses often give consumers little or no recourse when their home warranty company improperly refuses to pay a claim.
A trusted warranty provider can make replacing appliances and home systems easy
While less-reputable home warranty providers may be cheaper, they may also be more likely to deny claims without cause or engage in other unscrupulous business practices. For this reason, it’s important to pick a trusted provider and a home warranty plan that’s tailored to your home and situation. To compare the plans of the top five U.S. home warranty providers, check out this list of the best home warranty companies of 2022.
