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Bad Faith Insurance Lawsuits Filed against Home Warranty Companies

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San Diego, CAConsumers who are upset about their treatment by home warranty companies have filed home warranty lawsuits, alleging that those companies practice bad faith insurance. Among the companies that have reportedly faced such lawsuits are American Home Shield and Fidelity National Home Warranty.

One such lawsuit was reportedly filed against Fidelity National Home Warranty in 2009, by Dan Kaplan and James Baker. The lawsuit, as reported by Home Warranty Wiz (11/21/11), alleges that Fidelity National Home Warranty sold home warranty plans but wrongfully denied legitimate customer claims on items included in the home warranty plans. Plaintiffs filed the lawsuit on behalf of customers who purchased a Fidelity warranty agreement on or since July 18, 2002.

According to the court documents, Fidelity National Home Warranty "failed to comply with its duty to properly adjust submitted claims under the home warranty plans, resulting in improperly rejected claims and damages to Plaintiffs and the class." The court documents note that Fidelity started business as Alliance Home Warranty in January 1995 and was founded by former employees of American Home Shield.

Plaintiff Dan Kaplan alleges in court documents that he made four claims with Fidelity, three of which were not properly adjusted and were improperly denied. His first claim involved a leaky toilet, which a third-party plumber determined was a construction defect and not covered by the warranty. According to court documents, the plumber refused to put the toilet back in place but still charged Kaplan a $50 service fee. A plumber for the developer was then sent out, who determined that the previous plumber was mistaken in his diagnosis of the leak.

Fidelity then sent out another plumber, who put the toilet back and resealed it. The plumber also charged a $50 service fee. The toilet was reportedly put back improperly, however, so it continued to leak. Following the incidents with the leaky toilet, Baker alleges he had his claims improperly denied two more times.

The plaintiffs allege that Fidelity third-party service providers are trained to deny legitimate claims. Furthermore, they allege that Fidelity refuses to authorize replacement of appliances and increases the number of service calls, which increases the money made from service fees ($50 per visit). Finally, they claim that Fidelity rewards contractors who deny claims by giving them more calls.

In addition to the lawsuit against Fidelity, lawsuits have been filed against other home warranty companies for allegedly improperly denying clients' claims.

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Posted by

Fidelity Home Warranty was recommended by our realtor when purchasing our home and almost immediately after moving in the hvac system stopped cooling. It took days to get a tech out to even look at the system. Meanwhile the temps are getting hotter in Sacramento. He said the coils were dirty and not covered by a warranty. Never connected gauges, didn't even look at the thermostat. Long story short, we haven't yet made a mortgage payment and we are now looking at a $15,000 replacement and not a dime from Fidelity. They will give you the run around while charging fees that are better spent on a quality contractor, and not the lowest bidder using second rate techs who will more than likely 'miss' the real problem and then you will have to pay another service fee only to gamble that tech will know what they are doing, or isn't milking a contract. After getting a lot of bids and talking with many contractors, not one of them would partner with a home warranty company and especially not Fidelity. They really are the definition of bad faith insurance.

Posted by

I called due to the central air quitting.
They sent out solaris who reset the pressure switch and showed me where/how to reset if it blew again.
The initial call, I TOLD them that there was extensive damage due to dog urine to which they said "don't worry, it's covered".
So from 7/1/2015 to 7/8/2015 their coverage suddenly changed and they deny repairs.

Posted by

I purchased a house a few years back and purchased a warranty contract which included my AC unit. Within 2 months the AC unit started to have trouble so I attempted to use the warranty program. The AC technician told me that the unit was shot and there was nothing they could do it fix it long term. They stated they would have the warranty company replace it as it looked like it had been maintained well enough but it was over 30 years old. I was changed a maintenance fee from the AC company and one from Fidelity. The next day fidelity called me and said I was negligent in maintaining the unit properly in the past years. I explain I had just bought the house and that the ac tech told me otherwise. The person on the phone said they lied to me so I wouldn't get upset with him and it was somehow still my responsibility to keep the unit maintained..... again I explained that I had just purchased the house and there was no way for me to maintain all AC units in the Sacramento area just in case I buy it. They said that this was not their problem and that they would not fix anything. I asked for a refund of the insurance I had already paid they refused. I fought this with every level I could reach and at each level I was told this was my fault and I should have kept up the maintenance.

I had to purchase a new unit that cost me just over $7000 bucks. I never ever has used fidelity again and anytime I heard a friend bring them up I made sure they went somewhere else they are an evil company that cares only about money and doesn't operate as a company should and doesn't live up to thier contracts.

Posted by

I believe without question Fidelity as well as other Home Warranty Companies practice bad faith when it comes to third party contracting. I've been a contractor for ten years in CA. Never a problem until a Fidelity Representative processed a app.location with my license for a friend or himself. They used it for an uncertainen amount of work. This is without question the downfall of my company. Once they had fund funneling through fidelity they continued with my partnership license and practice horrible contracting skills. The price rate sheet fidelity has is well below industry standards and in fact would not allow a heating and ac contractor to survive without practicing bad which would be either deniying a claim all together or if major repair or replacement was needed they would in fact charge the home owner for covered items by simply rewording the so it would not sound covered.

Fines should given and laws should change to stop Bad Faith insurance


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