When you are buying a new home, real estate agents often push a home warranty for extra peace of mind, to protect you against unexpected appliance or air conditioner failure.
Often they will even throw it in free for the first year. But many homeowners discover some big catches when they try to use it.
New homebuyer David Lutz discovered one night his dishwasher would start, but would never turn off.
"The dishwasher stopped working shortly after I moved in," he said. "I had a warranty so I wasn't too worried about it."
He had bought a home warranty to cover surprises just like this in his Loveland, Ohio, home.
So he called the warranty company, which after sending a repairman and assessing his machine, made him an offer for a new dishwasher.
"The warranty company initially offered me $200," he said. $200? But his was a $700 Bosch stainless steel dishwasher, not some no-name junk unit.
So he asked about repairing it.
"Since I didn't think $200 was reasonable, we talked about repairing it, and they informed me that I owed two deductibles on the machine because two parts were broken."
The company, he said, wanted two $150 deductibles, a total of $300 to repair the old Bosch. He said that was insane, as the dishwasher was 15 years old.
Fine Print Catches
Lutz discovered that even when a home warranty will cover a repair, you have to read the fine print, because there is almost always a deductible and a service call fee that you have to pay upfront.
The consumer guide Angie's List says warranties are among its most complained about services, and says before you purchase a home warranty:
- Ask who their repair people are: Are they reputable contractors, or some guy in a rusty old pickup truck? Can you choose your own trusted repairman? (Typically the answer to that is no).
- Ask how much a the initial diagnostic service call costs. It can be as low as $25 or as high as $125.
- Find out what the deductible is for a new appliance. A $150 deductible on a new microwave, plus a service call visit, is no savings at all. You can just go to Sears and buy a new one yourself.
- Finally, check their rating at the Better Business Bureau, and read online reviews at Yelp, Google, Angie's List and other sites.
After Lutz complained, and we contacted the company, his warranty eventually offered $400, which he said was better than nothing.
"I would like it working, or at least a comparable one," he said.
He won’t get a new Bosch, but hopefully he'll get something that works.