Among the complaints against home warranty companies are that they refuse or deny legitimate claims for dubious reasons. One reason often cited for denying a claim is that the appliance in question has a "pre-existing condition" or that the homeowner failed to properly maintain the appliance. The problem, homeowners say, is that the warranty company did not ever do an initial inspection of the appliance in question, so there should be no ground for a "pre-existing condition" denial.
Homeowners also state that home warranty companies often overrule the technicians they send out to repair appliances. In some cases, for example, a technician might notice an issue with an appliance that is not related to the appliance breaking down, such as a crack in the appliance. Even if the technician says the crack is not the cause of the appliance's failure, the home warranty company might deny a claim arguing that cracks are not covered by the warranty.
Customers say they are frustrated with constantly chasing down home warranty companies to have their appliances repaired, only to be treated poorly by customer service representatives.
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"We have been cheated and treated badly throughout this whole ordeal, not to mention that [the home warranty company] wouldn't even let me cancel without the threat of being billed further," writes Sandra (real name withheld). "In the end (as it appears), we were treated badly and even rudely I would say, by the home warranty representatives and they had not one ounce of care, compassion or remorse."
Customers pay into home warranty policies with the belief that, should a legitimate claim arise, the home warranty company will cover the cost of the repair, not find ways to make a cheap repair or deny the legitimate claim. Lawsuits have been filed against some home warranty companies, alleging they practice bad faith insurance. Some of those lawsuits have been settled.
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