When It Comes to Home Warranty Companies, Not All Are Created Equal

Sparks, NVWhen consumers purchase home warranty insurance, the expectation is that the home warranty companies that offer the warranties are properly licensed and able to conduct business. Unfortunately, some consumers find out too late that their home warranty company is improperly conducting business in their state, sometimes leaving the home owners paying for repairs they thought were covered by their home warranty.

KUTV (9/12/13) reported during its “Get Gephardt” segment about a homeowner who purchased a home warranty from Sensible Home Warranty and then had his furnace die. The homeowner was told by the warranty company to find a repairman, pay the bill and then file for reimbursement. When the homeowner sent in the receipt for the $661 furnace repair, he did not hear back from Sensible Home Warranty. Gephardt, however, learned that the home warranty company was not allowed to conduct business in Utah because they did not have a proper license.

But Utah is not the only state in which Sensible Home Warranty was allegedly operating without a proper license. According to documents filed by the Oklahoma Insurance Commissioner, John Doak, Sensible Home Warranty LLC was operating without a license in that state, as well. The claim (case no. 13-0051-DIS) alleges Sensible Home Warranty did not file its 2012 Service Warranty Annual Financial Statement, which was due on or before May 1, 2012, and failed to file its 2012 Service Warranty License renewal before the due date. As such, the documents state, Sensible Home Warranty was “acting as a service warranty association in Oklahoma without licensure.”

The Commissioner found that Sensible Home Warranty’s failure to file its annual statement and failure to renew its license in Oklahoma, “are business practices that pose an imminent threat to the welfare of the residents of this state.” As such, Sensible was ordered to stop selling and renewing contracts in the State of Oklahoma.

In 2012, the State of Washington sent a “Cease and Desist” letter to Sensible Home Warranty, demanding that the company stop conducting insurance business in Washington because the company was not authorized to conduct insurance business in the state. The letter noted that Sensible Home Warranty had sold approximately 140 home warranty service contracts in the state since 2009.

And in Utah, where the KUTV report originated, the Insurance Department alleged Sensible Home Warranty was operating without a proper license and “failed to pay legitimate claims made on home warranty contracts sold in the State of Utah, or pay them in a timely manner,” (according to documents). The Insurance Department ordered Sensible Home Warranty to cease and desist all insurance or home warranty business in Utah. It also ordered the company to pay all claims related to its home warranty contracts in a timely manner or refund 100 percent of the amount paid by the contract holder if the contract holder should decide to cancel the contract.

Licensing requirements for insurance and home warranty companies vary by state. For its part, KUTV’s report did result in the homeowner receiving his reimbursement, albeit months after he first filed his receipts.