Case in point is a home warranty lawsuit filed by the New Jersey Division of Consumer Affairs against CHW Group Inc. (CHW, Choice Home Warranty), an enterprise issuing extended warranty products to consumers for home appliance repairs. According to the Asbury Park Press (7/30/14), CHW was happy to collect premiums for policies, but was not so forthcoming when a claim related to a failure of an important home system was made.
Air conditioners and refrigerators, for example. In a hot climate air conditioning is not only vital to an individual’s health, a home that is consistently hot can lead to the failure of appliances. As for a refrigerator or freezer, consumers are rightly skittish about filling an appliance with expensive food without the capacity to quickly fix or replace a failed unit in order to avoid spoilage, and any subsequent financial loss.
That’s why consumers turn to home warranty companies.
According to the Park Press report, CHW advertises “home warranties” that provide what is described as “comprehensive coverage” for important appliances and home systems, with a view to repair or replace if something goes wrong. According to the state’s case, CHW advertises “peace of mind” for consumers.
However, according to the state’s extended warranty lawsuit, CHW allegedly denied legitimate claims by employing the use of deceptive practices.
The home warranty lawsuit notes that when consumers submitted a claim for a repair or for a loss, CHW allegedly denied claims due to the defendant’s assertion that consumers had not properly and adequately cared for their appliances. In other cases, consumers were offered cash buyouts that were well below the value that consumers invested in replacing a defective appliance covered by the extended warranty.
The bad faith insurance report notes that The Better Business Bureau (BBB) passed 902 complaints - some of which had already been resolved, according to the defendant - to the division. As of this writing, the BBB listing for Choice Home Warranty of Edison, New Jersey, showed, in actual fact, 965 complaints within the last three years, with 399 complaints in the last 12 months. CHW did not carry accreditation with the BBB, and on a scale of A through F, CHW presented with an “F’” rating.
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CHW denies the insurance claim denied allegations.
Consumers will often purchase an extended warranty for their home once the initial warranty issued by a contractor for a new home expires. Similarly, consumers will also purchase extended coverage for important appliances and systems such as furnaces, air conditioners, refrigerators and freezers. When a warranty company reneges on its obligation, home warranty lawsuits usually follow.