CHARLOTTE — A broken appliance or a major home system can get expensive fast. A home warranty may help cover repair costs, but Consumer Reports says these plans may not protect as much as many homeowners expect. Before buying a policy, it’s important to understand what’s covered—and what isn’t.
Imagine your air conditioner breaks down in the middle of summer. You have a home warranty, so you assume the repair is covered. Not necessarily.
Consumer Reports says home warranties can provide peace of mind, but the companies that sell them often include exclusions that can make it easier to deny claims.
These service contracts are designed to help pay for the repair or replacement of covered appliances and home systems, including plumbing, heating, and air conditioning. But the coverage isn’t always as comprehensive as it appears.
Consumer Reports found that claims may be denied because of poor maintenance, improper installation, or preexisting problems. Even when an appliance is covered, specific components may not be. For example, a refrigerator may be covered while the ice maker is excluded, or a water heater may be covered but not the tank itself.
Before purchasing a home warranty, Consumer Reports recommends checking whether you already have protection. Appliances in newly built homes may still be covered by the builder or manufacturer. And if you purchased an appliance with a credit card, your card may provide an extended warranty beyond the manufacturer’s original coverage.
If you’re still considering a home warranty plan, ask detailed questions before signing up. Find out the total cost, including service-call fees, exactly what is and isn’t covered, how much the plan will pay toward repairs, and whether the company will repair or replace a covered item. Even when a replacement is approved, some companies pay only the depreciated value, leaving you responsible for the remaining cost.
Consumer Reports also warns homeowners to be on the lookout for home warranty scams. Some consumers receive official-looking letters claiming their home warranty is about to expire—even if they never purchased one. These mailers may include your mortgage lender’s name to appear legitimate.
If you receive one of these notices, don’t call the phone number listed in the letter. Instead, contact your mortgage lender or warranty provider using a phone number you know is legitimate, and never share personal or financial information with an unsolicited caller.
If you’d rather skip a home warranty altogether, Consumer Reports recommends another approach: self-insuring. Instead of paying annual warranty premiums, consider setting aside that money in a dedicated savings account to help cover future appliance repairs and replacements.
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