Monday, February 13, 2006

Home Buying Basics - Part 5: Home buyers' appliance warranty - not as good as it gets

When you buy your home, appliances that came as part of the deal can be covered for breakdowns or malfunctions through an insurance policy. Typically, the seller pays for the first year's premium.

Invariably, once you occupy the property, one or more appliances will show up with a problem although these were working really well when you inspected the home! What do you do in such a case? In many cases, your appliances would be covered with the home warranty company. Although this does exist as a comforting thought for the buyer, it is actually a pain to go through with the companies.

How does this work? You call the applicance warranty company for the complaint. They will register it and assign one of their approved contractors to come take a look which would typically be a week or two later, never immediately. You pay $45 -$50 for that visit and subsequent visits are covered by the company. Look okay so far except in the case of an emergency such as a leaking kitchen sink!

What you would expect though is that on the first visit, the contractor would do something to set right the issue unless it is a big one. That is never the case and if it is, its never done well. This is because there is no accountability on the part of the warranty company and the contractors. There seems to be no one to help you enforce the deal. Now the contractor would merely take a look and form his/her own judgement and send a report to the warranty company. This would take about two days and unless you follow up with the warranty company, no one would bother calling you to update you. Once you follow up, do ensure to get the report read to you and ask for a copy of the report.

About a week or two later, the company would call you back stating whether the appliance can be repaired or replaced. Typically if the cost of repairs is high, they should be offering you the option to cash out for replacement. It is in their interest to not let you know of this option. Instead what would do is to provide you with a cash out option for part of the repair costs, never the replacement cost. Typically, one would be so frustrated with this sort of running around that you simply accept the deal. What you would not realize is that with this sort of settlement, the company would stop coverage for that item even if another part of the appliance breaks down later on unless you show documentary evidence of having repaired the item with a licensed contractor or replaced the item.

So watch out for what you are being given. In most cases, the appliances are so old, that it is worth replacing them with your own money and have peace of mind for many years instead of dealing with unscrupulous home warranty companies.

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