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American Home Shield

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Bad faith insurance lawsuits have been filed against American Home Shield and its subsidiary companies, alleging the companies improperly denied customer claims. Some American Home Shield lawsuits have been settled, including one that alleged the company paid illegal kickbacks to realtors. American Home Shield policyholders who feel their claims were improperly denied may be eligible to be part of an American Home Shield settlement or to file a lawsuit against the company.


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American Home Shield

In June 2011, a lawsuit was filed against American Home Shield by customers who alleged contractors were paid a bonus for improperly denying claims. The lawsuit, which seeks class action status, was filed by Bridgette and William Gaudet, and alleges American Home Shield denied claims regarding appliances on the grounds of "lack of maintenance," or "pre-existing condition" despite not carrying out an inspection of the appliances when the policy was issued.

American Home Shield Settlement

In 2010, American Home Shield settled a class action lawsuit filed on behalf of US citizens who purchased or were issued a Home Service Contract by American Home Shield or its affiliates between July 24, 2001 and October 19, 2009. According to the "Notice of Class Action and Settlement," (in the lawsuit Faught v. American Home Shield Corporation), the lawsuit alleged American Home Shield "engaged in a pattern and practice of failing to fulfill its contractual obligations to its customers." This allegedly included failing to provide repair and replacement services even when customers were entitled to those services, and improperly denying claims during the first year of home service contracts.

American Home Shield denied any liability or wrongdoing in the lawsuit. As part of the settlement, American Home Shield agreed to set up a review desk to consider submissions from class members who had their claim denied during the class period.

Bad Faith Insurance

Bad faith insurance occurs when an insurance company improperly denies policyholder claims or delays processing those claims. Some bad faith insurance practices include failing to pay out a claim in a timely manner, requiring policyholders to fill out paperwork repeatedly, failing to conduct a proper investigation into a claim or using unreasonable excuses for not paying out a claim.

American Home Shield Kickback Lawsuit Settlement

In the summer of 2011, American Home Shield Corporation reportedly settled a class-action lawsuit that alleged the company paid fees to realty brokers and agents for promotion of the company's home warranty policies. According to reports, the lawsuit included people who purchased warranty coverage from American Home Shield Corp between May 2008 and March 2011, potentially as many as 500,000 consumers.

The lawsuit alleged that American Home Shield paid kickbacks to realty brokerage agencies and agents in violation of the Real Estate Settlement Procedures Act, which prohibits any payment for referrals of settlement services. American Home Shield denied any wrongdoing. According to some reports, home warranty policies typically cost between $400 and $500 dollars. Realty brokers and agents generally receive fees of between $60 and $90.

Similar lawsuits against other home warranty companies are reportedly pending. Home warranty companies and realty associations say the warranties are not settlement services and are therefore not in violation of the Real Estate Settlement Procedures Act.

American Home Shield Home Warranty Legal Help

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Last updated on Jan-11-12


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