Q: We just bought a property with a home warranty. The seller’s agent touted that the “top-of-the-line” one-year home warranty also covered appliances and air conditioning. After purchase, our buyer’s agent said we could hire inspectors, but thought it was unnecessary since we received and read seller inspections. Our homebuyer walk-through consisted of looking for damages or cracked windows. We did not run appliances or check for hot water. This morning, my in-laws discovered the guest bathroom shower does not have hot water. Today, the home warranty people rejected the claim over the telephone. They claim it is a pre-existing condition because it never worked for us during our ownership. Is this how a “top-of-the-line” home warranty is supposed to work?
A: The home warranty firms are understandably on guard against being hoodwinked. There are unscrupulous agents and consumers who predetermine that the home warranty firms will correct known or unknown deficiencies not corrected before, during, or after a sale is ratified or closed. Often, these are the same people who failed to conduct thorough home seller or homebuyer inspections and often shun the optional homebuyer walk-throughs. Conversely, Errors & Omissions (E&O) insurance firms cover agents against lawsuits. The annual E&O applications consider the percentage of sales a licensee employs home inspections and home warranties when pricing policies. Industry insiders know a home warranty is an invaluable tool. The takeaway is that all components covered by a home warranty need to be in working order after the homebuyer takes possession.
You were likely denied coverage by the telephone service center after a deliberate set of questions: “When did you first notice the item was not working?” and “Did this item work for you before?” The Department of Insurance regulates home warranty companies, even though it is more of a service contract than an insurance policy. The complaint tab on their website — http://www.insurance.ca.gov/ — is on the top left side under the commissioner’s picture. Consumers and their agents who slow down to fully utilize inspections and homebuyer walk-throughs save time, money, and hassle. They also avoid waiting 10 days, once a complaint is filed, for a compliance officer to render an opinion letter per Section 2695.7 Standard for Prompt, Fair and Equitable Settlements.
Have a question? Know someone who is thinking of moving? Full-service Realtor Pat Kapowich, SiliconValleyBroker.com, provides turnkey services, including relocation, staging, market analysis and strategic planning. Call 408-245-7700 or email Pat@SiliconValleyBroker.com. Broker License 00979413
