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TLDR

Does home warranty cover HVAC issues? Well, it is as the saying goes, “you cannot get something for nothing.” That is just the hard reality of the universe in which we live. How can a company warranty your home for tens of thousands of dollars worth of potential work, without even sending someone out to look at it? Does home warranty cover HVAC issues? Yes, on paper, but really no. It is a smoke and mirror charade that leaves you with a false sense of security.

Why people purchase home warranty plans

People buy warranties for their homes with the intentions of sleeping better at night. Unfortunately, they often find themselves awake in a nightmare once repairs or replacements are needed. If you just stop and think about the pieces to the puzzle, how can a company warranty your home for tens of thousands of dollars worth of potential work, without even sending someone out to inspect it? The truth is, they don’t.

What people get

First of all, they know all of the sales angles to play, and the biggest one is fear! “Do you want to be liable for thousands of dollars in repairs? For just $700 per year, you can buy a little peace of mind!” These companies also play all of the typical insurance tricks and games. For one, they intentionally slow down every claim, waiting you out, in hopes that you’ll finally give up and just pay out of pocket for the repairs. “We said that we would fix it but when its 98 degrees in July, it might take us three weeks to fix your air conditioner!” Another good one is hiding any number of legal loopholes in the contract, to give themselves an out and limit their liability.

It isn’t a warranty

The next thing that you need to know is that essentially, you’re not paying for a warranty, you’re paying for that warranty company to maintain a phonebook of contractors, that agree upon services at a low price.

For example, when a residential service company signs on with a home warranty company, they are presented with a contract that lists all of the services and the prices that they pay for each. Let’s start with Service A that has a typical rate of $800. However, in that contract, the residential service company must agree to perform that at $400. From your perspective, you are alluded to believe that the warranty company is paying $400 of that $800 service, leaving you with your warranty price of just the remaining $400.

In reality, they do not pay anything

The bottom line is that the warranty company usually doesn’t pay out any money at all. They just find the worst of the worst contractors that agree to services at absurdly low prices, to give the illusion that they are paying out something when they are not.

The home warranty company also orders all of their parts online to save what money they do spend. Which, in turn, leaves you waiting for one to two weeks while “parts” come in.

“Well, Anthony, what is wrong with that?”

Well, when you force someone into an absolute rock bottom price, the quality of the work is horrible. You also do not fix problems at that price level; you just band-aid them. And it also becomes a perpetual money pit for you with $75 warranty service call fees and minimum deductibles. If you do not believe me, look for the contractor or “doing business with us” section of any home warranty companies webpage. It is here where they talk about all of the great benefits of being one of their contractors.  Lines like, “Homeowners pay you a $75 “deductible” to bring you into their home. Then, once you are in their home, you can upsell your services, find more things to fix and more things to charge for that are not covered under warranty but will be required”.

Why isn’t it called home repair insurance?

You also need to think about it from this perspective as well. Why is it Home Warranty and not Home Repair Insurance? Because, although they are trying to leave you with the impression of pay a monthly fee, just like health insurance, just like homeowners insurance, and we will take care of the big bills when they come. Their real intent is to steer free of the regulation that comes with being called insurance. What if your health insurance plan sent you to a veterinarian for a medical procedure to save money? The term warranty is used instead of insurance so that they can exist in this gray area free from regulation.

Have you ever signed up for a homeowners insurance policy and the company needed to send out an adjuster to inspect the home first? What about health insurance or life insurance plans requiring a visit to the doctor’s office before you can sign up? Well, then, how is it that all of these home warranty companies can cover your home for thousands in repairs without even looking at it beforehand?

Summary

In summary, it is my humble opinion that it is a bunch of smoke and mirrors, that prays solely upon your fear of expensive repairs to your home. When you first sign on with the home warranty, you feel protected. But, when you need them you quickly find out why it is called a home warranty and not home repair insurance.

What you end up with is paying yearly policy fee and $75 each visit, to gain access to their exclusive list of cut-rate contractors, when you can do that yourself by finding the cheapest contractor on Craigslist.

Instead, I recommend putting that yearly premium into a savings account and then just eliminate the “middleman.” To do that, start compiling a list of trusted contractors in your area to put into your phonebook. Ask friends, family, co-workers, who they like for plumbing, electrical, HVAC, etc. It also doesn’t hurt to buy standard replacement parts and have them ready to go just in case.

It also helps to prepare and plan for the future. For example, most HVAC systems have a lifespan of 10 to 15 years. Know the age of your system and plan accordingly by putting a little bit of money away each month. That way, when the time comes, you are prepared for the cost of replacement.

Don’t be another unprepared homeowner, take matters into your own hands and get involved!

If you have any questions, please feel free to contact me – Anthony – at 33 Solutions LLC!