Home warranty refused to repair AT

Ting Lai · 2020-10-10T16:09:06-07:00

My friends and I owned a small multi (12 units) in Tucson, AZ and have had the home warranty that came with the purchase since last year (Nov). One of the units recently had AC issues and the home warranty company sent one of their network companies to assess. They commented: "the compressor breakdown was a result of secondary damages due to the poor maintenance conditions of the evaporator coil and therefore will not be covered by the company service plan" and they quoted a ~$2700 out of pocket repairs, or even a brand new AC. The main coverage definitely included the AC but it was shocking to receive this notice. Is this legal / reasonable? Does anyone have such experience with home warranty company? PS: in my previous posts I also had suboptimal experience with this home warranty company and am finding alternative companies / solutions once the contract is over. I appreciate the advice from many experienced folks here and would highly appreciate your thoughts around: 1) whether you have encountered similar experience and how did you overcome this 2) what are other suggestions / action oriented solutions? Look forward to your feedback!

Debbie C.

Member since 2019 · 118 posts · 74 votes

5y

@Ting Lai

I have not had the Company refuse to pay, however, I have heard about it. When I had a minor A/C repair that was under the Home Warranty, the repairman told me my A/C filter was a little dirty. No big deal, but he warned me that not changing the filters on a regular basis would case problems with the coils, and ultimately the Warranty Company could refuse to cover me.

We inspect our rentals every six months and always check to see if tenants are replacing filters which we provide. We also added to our lease that if they do not, they will be responsible for any costs related to problems this has caused.

I hope you can get this resolved.

Good Luck

2 Reply

Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

5y

@Ting Lai

They're pretty much daring you to hire a lawyer. Denial of services for vague, trumped-up reasons is one of the main ways home warranty companies make money. It's the oldest insurance trick in the book. You've owned the place since last November. Just how much maintenance were you supposed to lavish on it in the intervening year?

Pay a lawyer a few hundred bucks out of your reserves to call them up a few times and write a letter and they'll fall in line fast enough. Don't use a home warranty as a general maintenance contract for your building. It's just never worth it.

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Jason Crittenden

Real Estate Agent · Gilbert, AZ · Member since 2020 · 36 posts · 29 votes

5y

@Ting Lai Which home warranty company?

Nevermind, it doesn’t matter. In my experience, this is par for the course with home warranty companies.

Did you have a realtor help you on this deal? Sounds like you didn’t get to pick the home warranty company and it was a free through in on the deal?

In that case, fight with them but understand, it’s something you got for free, so you’re not out money in that sense (on the garbage warranty)

In the future, IF you plan to get home warranties, us your realtor to order one.

We (I’m one of the top agents in Arizona) have access to home warranty reps for each company. We order what are called “real estate” plans, whereas if you call the company directly, you’re ordering the “consumer” plan.

That’s code for, you have to call Karen at 800-We-Don’t-give-a-rip to fight about coverage.

If you had an agent, and they ordered through their connections, often times if (when) you get denied, they can call their rep and lean on them to make it right and magically, the company reconsiders and approves your repair.

They don’t want to lose a top agents referrals so they take care of their clients.

Is this right? Absolutely not. But it is what it is. Relationships matter.

Hire a great agent, that has great connections, and they can move mountains for you in the future.

Good luck!

2 Reply

Ting Lai

OP

Rental Property Investor · San Francisco, CA · Member since 2018 · 20 posts · 13 votes

5y

Thank you for all great tips and advice! I've got some useful ideas for the next steps.

I am still not sure what's the best approach to appeal - The home warranty company used another company (local HVAC firm) to take care of the AC-related claims. To my understanding, they have refused repairs / coverage (due to a variety of reasons) for my AC, along with other investors' ACs (a total of 5+ units at least) this summer. We plan to, altogether, walk out of this home warranty contract (decide not to renew), leave a bad review of the HVAC firm, and appeal to get a second opinion. Altogether we will have at least 10+ units business discontinuing with this home warranty company, but not sure they will care. Still we think this is the right thing to do.

Interesting idea to get a lawyer involved, @Jim K. I guess you're right that we need to have a legal counsel in our team to deal situations like this.

Thanks all!

2 Reply

Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

5y

@Ting Lai

Before Obamacare, the way the medical insurance companies used to operate was, when major health expenses came up, to deny for pre-existing conditions as a matter of course on the basis of any reason, however farfetched, knowing that only a limited percentage of the people they were shafting would contact a lawyer and an even smaller number would take them to court. Got leukemia? Oh, you had gestational diabetes twenty years ago? Pre-xisting condition, denied! The home warranty companies have obviously studied this in coming up with their own business models.

Home warranties are a great way to sell an old or complicated single-family to a retail homebuyer. But they simply don't work as a maintenance contract for landlords. The warranty companies will do pretty much anything in their largely unregulated industry to save costs and only grudgingly fulfill their contractual obligations. The forums here get inquiries about this all the time: "Dear BP contributors, the home warranty company is shafting me, oh, what should I do?"

When the warranty company drags its feet and makes excuses, this is no way helps the landlord or property manager of an investment property act promptly and effectively, as they should, to solve maintenance problems. More often than not, the LL or PM gets stuck making excuses on the warranty company's behalf, barely realizing that they're just carrying the warranty company's water for them.

The tenant doesn't care that the warranty company is giving you headaches. The tenant just wants the problem solved.

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