What to do when your home warranty is not honored

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Home warranties protect against unforeseen expenses when regular use contributes to a system or appliance breakdown, but the claims process may sometimes be more complex than you hope. If your home warranty isn’t honored, you have options to remedy the issue and seek resolutions, especially when you suspect deceptive marketing or bad-faith business practices.

Why was my home warranty claim denied?

Home warranty policies step in when major home systems and appliances break down due to normal wear and tear. Not all home repairs fall under this umbrella, so it’s essential to understand the reasons your claim can be denied.

Appliance or system isn’t covered

We spoke to Shqiponja Likaj, a Philadelphia-based realtor whose family has been involved in buying and selling homes for years. She primes all her clients on home warranties before suggesting they purchase one. She typically gives them a list of what’s covered, including major appliances and systems like plumbing, heating, cooling and electrical.

“They do not traditionally cover structural items in a home, however, such as walls, windows, doors, foundations, roofs and septic systems,” she added. Some companies offer additional coverage options for roofs and septic systems, so it can be helpful to shop around until you find a plan that covers the appliances and systems most important to your needs as a homeowner.

Lack of maintenance

Liberty Home Guard clearly outlines in its service agreement that insufficient maintenance resulting in rust, corrosion and other breakdowns isn’t covered. We recommend following all of your manufacturers’ maintenance instructions to the letter to avoid claims denials.

Improper installation

Improper installation, including over or undersized systems, modifications and damage caused by home renovations, can lead to denied claims, according to Select Home Warranty’s service agreement.

Unauthorized repairs

Unauthorized repairs are similar to improper installations. If you, a previous homeowner or an unauthorized contractor attempted to repair the covered appliance or system before the company approves the claim, it may be denied.

Claim exceeds coverage cap

Reputable home warranty companies will have a definitive coverage limit in your service agreement. Some companies will have a coverage cap for each covered item, while others have a limit for the policy term.

For example, Select Home Warranty limits HVAC coverage to $3,000 per policy term, but Cinch Home Warranty limits its entire policy to $10,000 for all claims.

What to do if your home warranty is not honored

Once you’ve confirmed that your claim is a covered issue, you may need to push back if your service provider denies it.

Review the denial

You’ll receive a letter detailing the company’s reasons when your claim is denied. Read through the letter thoroughly. Ask a family member, friend or lawyer to read the denial for additional perspective.

You’ll want to check these reasons against any promotional pamphlets and service agreements you’ve received from the company.

If you notice any inconsistencies, you’ll need to present a case by documenting evidence.

Collect additional evidence

You can collect additional evidence by taking photos of the system or appliance in its current state, tracking down recent photos of the same system in an earlier state and compiling proof through maintenance records. You can also submit photocopies of your service agreement, language on the company’s site and your manufacturers’ warranty to help your case.

Richard Alderman, professor of law emeritus at the University of Houston Law Center and author of more than 20 books on consumer protection, recommends everyone document their home issues from the moment the issue arises.

He added, “Document all your contacts with the company or builder and take lots of photos. If you had any contractors look at the situation, be sure to get a comprehensive written report. If you discuss your problem with the company, completely document when you called, who you spoke with and what you discussed.”

File an appeal

Before pursuing outside action, we recommend you exhaust all internal home warranty claims systems. You can file an appeal using your additional evidence and request the company revisit it. The appeal process will typically be included in your denial.

Alderman recommends that homeowners cross-reference the appeals process with their original contract. Often, the contract will outline the claims process there, too.

If the company dodges your concerns, you can escalate your claim to higher management. Keep records of all your communications with the company in case you need to take legal action.

Email makes it easy to maintain records, but it may be easier to get customer service representatives on the phone. In this case, ask them to follow up with an email outlining your conversation. You can also write dated notes of your understanding of these conversations for additional evidence.

What to do if your home warranty appeal is denied

If you’ve exhausted all internal home warranty claims processes and your claim is still denied, you may have a case for external pressure through government and legal actions.

File a complaint

There are multiple avenues to file a complaint against a company, and you can use all of them if you’re struggling to reach a resolution. First, we’d recommend leaving a poor review on social media and other high-traffic review sites. Sometimes, that’s all it takes to get a company’s attention.

If that doesn’t work, contact your local consumer protection office and file a complaint with the Better Business Bureau (BBB). You can also file a complaint with the Federal Trade Commission (FTC) if you suspect you’re the victim of a scam. This avenue won’t provide immediate results but can prompt an investigation if the FTC receives multiple complaints.

Consider legal action

If you have a lot of money on the line or you want to take a strong stand against your home warranty provider, pursuing additional legal action through small/large claims court or a class action lawsuit can be worthwhile.

Look for a lawyer or law firm specializing in consumer protection or contract disputes. Ask for referrals from friends and family or consult professional databases, such as your state’s bar association.

Lawsuits aren’t the only legal option, though. You may achieve similar and less contentious results through mediation or arbitration. The American Arbitration Association and your state’s Office of General Counsel will have guides and templates for these options.

Mediation allows the home warranty company and homeowner to arrive at a mutual decision, which means “it’s up to the homeowner and the company to reach an agreement,” according to Alderman, but that’s not always possible.

In situations where an agreement proves difficult, the next step is arbitration. Alderman explained the process, “Unlike mediation, an arbitrator makes a binding decision regarding your dispute. There is no right to a jury trial, and there generally is no appeal from the arbitrator’s decision. Arbitration can also be expensive, but some contracts require the builder or company to pay the costs.”

How do I avoid denied claims?

You can avoid denied claims by familiarizing yourself with your home warranty’s terms and conditions, maintaining meticulous records and over-communicating with your home warranty provider when you first notice an issue.

Understand your warranty

Understanding your home warranty from the onset is the best way to avoid denied claims. Likaj has a close relationship with America’s Preferred Home Warranty, and she always connects her clients with a representative to walk them through their plan terms before they purchase a policy.

Don’t be afraid to ask questions, read customer reviews and dissect the policy terms. Make notes of exclusions, limitations and coverage caps to avoid surprises down the line.

Keep maintenance records

If you’ve recently purchased your home, your inspection report is good to hold on to. You’ll also want to keep a binder or computer file of documents and receipts for any repairs, replacements or modifications to covered items.

Only use approved technicians

Many service agreements have a clause stating that policyholders must inform the home warranty provider of a malfunction within a specific time frame and only use contractors in its network. Emergencies may allow you to choose your own contractor, but you’ll want to read your policy terms to confirm the process.

In all other situations, we recommend filing a claim as soon as you notice the issue and not taking additional action until you hear back. To minimize further issues, discontinue use and unplug the appliance or system until your assigned technician can be dispatched.

Bottom line

Home warranty service agreements offer homeowners peace of mind that they’re protected from excessive out-of-pocket costs when their essential home systems and appliances break down. However, they don’t cover all situations, and the language can be tricky if you’re not well-versed in service agreements.

If your claim is denied:

• Take a step back by rereading your policy agreement and comparing it with the company’s denial letter.

• Collect evidence and file an appeal with your provider if you notice inconsistencies.

• If the company still doesn’t push your claim through, you can file a complaint with upper management, post reviews to social media and reach out to consumer protection agencies.

• In some situations, legal action, including lawsuits, arbitration and mediation, is another option for achieving the desired result.

Frequently asked questions (FAQs)

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