According to a white paper by Cross Country Home Services, a home warranty company, 62 percent of respondents to a survey said that a repair bill of less than $2,000 would push them over their personal financial cliff (report found online at cchs.com). In other words, a repair to an air conditioner, furnace system or even major appliance would be financially devastating to almost two-thirds of respondents.
Furthermore, three-fourths of respondents said finding a reliable repairperson was a challenge, while approximately half worried about being the victim of a scam perpetrated by the repairperson. For many homeowners, the stress of finding a repairperson combined with the financial burden of paying for repairs makes home ownership stressful.
So it is no wonder that many consumers turn to products such as home warranties to ease that strain. Home warranties are designed to cover appliance repairs or replacements and repairs to housing systems, such as the electrical or heating system. Rather than finding a repairperson, the homeowner simply calls the home warranty company to arrange for repairs, and rather than paying for the full cost of repairs, the homeowner is responsible for the deductible.
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Home warranty companies such as Fidelity National Home Warranty Company, American Home Shield and First American Home Buyers Protection have faced lawsuits alleging they practiced bad faith insurance in denying legitimate claims.