Home Warranty Companies

[Nonny]

We made an offer on a home and I'm interested in "good and bad" reactions to home warranty companies.

[ChairMan]

In news:j0aAn.156752$ [e-mail], Nonny spewed forth:

Don't

[Oren]

If the seller, buys the warranty for you for a year. Go for it.

[Ed Pawlowski]

A better investment is to shred the money and put it on the compost pile. At least you get fertilizer that way.

This has been hashed out here in the past. The warranty company is a profit making company. They make a profit by taking some of the premium you give them and spending it on themselves, not you. In the past, you've shown to be a smart person. I'm astounded that you even asked the question.

[AZ Nomad]

I've had mixed results.

one company on a previous house, forget the name of the company, covered a failed electrical panel, saved me a bunch of money. Other ("AHS") was on my latest house and I was dumb enough to renew it for too much money, refused to cover a leaking roof saying they don't cover stuff like that.

Usually they're a ripoff unless you have an item that is probably on its last legs like the AC and you're sure they cover it.

[hallerb]

spend the money on a home inspector, they probably dont know what they are doing:( but can run the price down anyway:)

[trader4]

Even in the case of something like the AC, it's highly questionable. Suppose for example you have a 20 year old AC that goes out. What exactly is their obligation? Even assuming they decide to replace it, rather than do say a $300 fix, what do they have to replace it with? Most likely the minimum EER unit that's sold. I'd rather be the one choosing exactly what unit I get is, what the EER is, who installs it, etc. Also, I wonder who if anyone gets the appropriate fed tax credit and any state or utility incentives for it? I doubt it would be the homeowner, because they didn't actually pay for it.

[hibb]

From what I've heard, the same can be said for Mortgage Insurance, too.

[Molly Brown]

After trying to repair an a/c/furnace package unit and failing I found out that it was replaced by a company hired by the home warranty company a few years back. They installed a used unit that had a design flaw. The furnace had a tendency to overheat and shut itself off due to poorly designed air circulation. The owner never noticed it and thought that this was how the unit operated until it finally burned out the high temp. safety and wouldn=92t come on at all. The whole thing fell on my lap when the owner called me and I had to try to explain to her that the unit never operated properly but she was just noticing it now. Just try to explain that to someone.

[keith]

What is your reaction to after-market car warranty companies?

Mortgage insurance is always a bad deal. Life insurance (which is what mortgage insurance is) is cheaper and generally from better companies. That said, my FIL had mortgage insurance and my MIL had to beat it out of them. They knowingly collected premiums for a year after he died, then refused to refund the premiums, along with the claim.

[Steve Barker]

All's i can say is read the agreement very very closely. The only one we were ever offered wasn't much worth the paper it was written on once you dug through all the details.

[GROVER]

A good adage concening home repair insuance companies is that they give with the large type and take with the small. The WSJ advises against taking these policies and also against policies covering purchased electronic devices as well as automobile warantee extensions. Some users may benefit but the companies wouldn't exist if everyone collected more than their premiums.

Joe G

[trader4]

Which brings up a good point. You should be paying for insurance on the items that you can't easily cover yourself. Examples for most people being fire insurance on your home or auto liability insurance. But anyone owning a house should be able to pay for the items covered under these warranty programs. A new dishwasher? $400 Even a new HVAC system could be in the $5k-7k range and in many cases you can finance it if necessary.

[GROVER]

With regard to Trad's post. I once tried to get a home owners insurance policy with just the protections I felt I needed. Protect against a calamity but be a self insurer for some of the lesser expensive items. No dice, the insurance company won't offer the policy as a cafeteria, where you pick and choose your coverage. Beside the mortgage company or bank won't go along with that concept. Joe G

[JimT]

I'm probably going against the tide here but for the 1st year I think it's a good idea to get the seller to pay for it. If they won't do it you "may" want to consider it anyway.

I've only had experience with the former situation and it's worked out well. As I see it, the main problem is the HWC will usually only "fix" something that is warranted. If you have an HVAC system that really needs to be replaced they will usually only fix whatever the problem is.So down the road you're still stuck with an out-of-date HVAC system that's probably going to break down soon anyway.

The thing is, you can negotiate with the HWC. You can opt for a replacement but you have to pay the difference for the new system. I've done that and it actually worked out pretty well for me. There are so many situations you can get into it turns into a balancing game. The HWC wants to win but you do get some security that you will not have to cough-up 100% of the cost.

Of course there is the, "put the money in the bank", and save it for repairs. Which is what I do now. But for the first year you can usually get the seller to pay and that's basically a no-brainer.

[trader4]

While you can't pick and choose, one common way of self-insuring some of it is to pick a high deductible, which many insurance policies will let you do.

[keith]

Yes, picking and choosing each peril insured against, or each item in your home, would be too expensive to manage. ...rather like picking each television channel on your cable. A high deductible (and not selecting riders for jewelry, electronics, etc.) one can cut costs substantially. There are limits, though. Mortgage companies have preferences too, and they're not paying the premiums.

[Dottie]

It's been awhile - like almost 20 years - but the company (AHS) didn't cover air conditioners/furnaces when we bought and sold a house in

1991. We offered a one year policy on our house because real estate was moving slowly and the house we were trying to sell was 30 years old. It made the house more attractive to the buyer and it only cost about $350. Peace of mind insurance ... we moved to Florida and bought this house. The seller also had a policy with AHS....same terms. It covered the cost of a new hot water heater -- think that was all that went wrong. With the housing market as dead as it is now, it may be money well spent to offer it with your house.

[JimT]

It's been awhile - like almost 20 years - but the company (AHS) didn't cover air conditioners/furnaces when we bought and sold a house in

1991. We offered a one year policy on our house because real estate was moving slowly and the house we were trying to sell was 30 years old. It made the house more attractive to the buyer and it only cost about $350. Peace of mind insurance ... we moved to Florida and bought this house. The seller also had a policy with AHS....same terms. It covered the cost of a new hot water heater -- think that was all that went wrong. With the housing market as dead as it is now, it may be money well spent to offer it with your house.

[IGot2P]

If you have to pay for it, Don't!

If the seller is paying for it make a deal with him/her that they lower the home price an amount equal to one half of the insurance premium and you will both be better off.

Don