Home warranty is a very useful service contract that protects your home budget in case something in your house stops working all of a sudden. However, that doesn’t mean you will always be 100% protected and covered. In fact, claim denials happen all the time and prospective (and current) homeowners using home warranty should definitely be aware of that in order to avoid unpleasant surprises.
So, what is a claim denial and why does it happen?
When you sign a home warranty contract, you get a list of appliances and home systems covered by your chosen plan. If during the home warranty period (which is usually one year) something happens to an appliance or a system on that list, i.e. if it malfunctions or downright stops working, you are supposed to contact the home warranty provider (their customer support center, to be precise) and they will send a contractor or a technician to inspect the appliance in question and to repair it. The cost of the repair will be covered by the home warranty company and if the appliance cannot be repaired, it will be replaced, again at the expense of the company.
Keep in mind that this is the ideal scenario. In reality, things often go a bit different. For instance, your claim can be denied, in which case you have to take care of the repair yourself and you have to pay for it yourself. Now that we know what claim denial means, let’s take a look at some of the most common reasons for them.
The number one reason for home warranty claim denials in the US is the lack of understanding of the coverage. The customer thinks an appliance is covered by the home warranty plan when in fact it’s not. People sometimes don’t read the contracts carefully and simply assume that an appliance is included in the plan. When they try to make a claim, they get denied because the said appliance wasn’t covered in the first place. Also, people often believe that home warranty covers everything in the house, all the appliances and systems. A coverage plan that includes everything does not exist and no company will ever offer it, period.
Another common reason for claim denials is the improper maintenance of an appliance or a home system. This does not include the usual wear and tear of an appliance – this kind of thing happens normally over time due to prolonged use and does not affect your claim. Improper maintenance means that you have not been using your appliance properly or as it was meant to be used, and have not maintained it according to the manufacturer’s specifications. This is particularly important for major home systems, such as HVAC, as they definitely require proper and regular maintenance.
Improper installation is another common cause of denied claims and one that makes a lot of sense, too. If you haven’t installed an appliance or a system properly, of course, it’s not going to work and, of course, it’s going to be your fault, which is why such cases will always end with a claim denial.
Claim denials also frequently happen due to various code violations. This is something that almost all home warranty providers consider a “no-no” and if an appliance or system violates a code of safety (or any other code), your claim will definitely be denied.
Damages that occur due to perils, such as wind, water, or fire damage, will also disqualify your appliance from a successfully resolved claim. The same goes for any kind of unusual wear and tear, such as marks or scratches that indicate the appliance has been handled or used roughly or carelessly. In other words, if your appliance doesn’t work because someone (or something) cut one of the wires or cords, for example, or smashed it against the floor, your claim will most certainly be denied.
Since home warranty is not the same as home insurance, you are not protected against situations such as theft or any damage resulting from a break in, so don’t even try to make a claim on that one.