A Home Warranty or Home Protection Plan can be a great comfort to a buyer when purchasing a new home.  I always try to negotiate one into the contract for my buyers to be paid for by the sellers.  The warranty lasts for one year from the closing date and depending on the plan purchased covers many if not most of the systems and components in a house, condo, or apartment building. It acts as an insurance policy should any large repair need to be done in this first year after a buyer has already spent a good amount of their savings down on a new home.  There are many companies that offer home protection plans or warranties such as Buyer’s Protection Group, HSA, Home Warranty of America, and Old Republic. The first thing that you need to do is determine who your plan is with and which level was purchased or provided. This info will often be in your file from when the contract was written. You may have email confirmation or a copy of the coverage as well. If you can’t find the paperwork contact your agent for the info.  Once you have a copy of the coverage check to make sure that the necessary repair is covered in your plan.  If you determine that the item is covered under the warranty the next step is absolutely critical.

Call the claims department at the home warranty company before calling your own contractor to repair it

All home warranty companies have relationships with local contractors to perform repairs.  If you pay someone you have hired to make the repair they will not reimburse you.  You must run the repair through them and pay the deductible.  The home warranty company will then pay the contractor.

Calling their own contractor in these cases is the number one mistake a new homeowner normally makes in regard to a home warranty.  It basically renders the policy useless and costs the homeowner unnecessary money.  There are some cases where this may be inconvenient because the repair is time sensitive due to heat, cold, water temperature etc. but the call must be made to the warranty company first.  There are some cases where they acknowledge they can’t have one of their contractors there in a timely manner and will allow you to call their own.  You must let them make that determination, however, or they will refuse to handle the claim.

Here is correspondence between a home warranty company and one of my recent clients as an example.  The igniter on their furnace failed 4 days after closing in early December.  They had the repair handled themselves at a cost of $100.  The home warranty company declined to handle the claim because Laclede Gas performed the repair.  Their deductible was $50 and so they cost themselves $50 by handling it this way.  It could have been much worse had the furnace needed to be replaced, potentially costing them over a $1000.  This can be avoided by calling claims first.

From:

Subject: RE:. St. Louis, MO 63123

To: @sbcglobal.net

Date: Monday, December 12, 2011, 2:12 PM

Hello,

I am sorry to hear about the problems that you were experiencing with your furnace. Per your contract, you must first contact XYZ Home Warranty Company for service, as we do not reimburse or pay for repairs made without prior approval.

We apologize for any inconvenience this matter may have cause.

If you have any additional concerns, please do not hesitate to contact us.

Thank you,

Adrienne Wilson

Original Message

We closed on the above mentioned house 12-6-11. On the 10th (4 days later) the igniter on the furnace needed to be replaced. Laclede Gas charged $99, we would like to be reciprocated this amount.

Thank you.