Worst home warranty companies and scams
Avoid companies that show these red flags
Find Home Warranties, Service Plans near you
Home warranties can be a great safety net. You pay a yearly fee, and in return the home warranty company covers the cost of repairing or even replacing home systems or appliances if they break down. It's different from homeowners insurance, which usually covers items damaged by fire or theft.
Not all home warranty companies are created equally, though. A good one has clear terms, fair prices and reliable customer service. It’ll be there when you need it and won't hit you with hidden fees. Pick a not-so-great company and you might find yourself tangled up in red tape, facing denied claims or stuck with shoddy repair work. Even worse, there are scammers that pretend to be legit home warranty companies.
- Scam companies often send emails and letters to homeowners to trick them out of money.
- Bad home warranty companies may be slow to get you repairs — or they may outright deny claims.
- Research is key to finding a good home warranty company.
How to identify a bad home warranty company
With so many home warranty companies out there, it can be hard sifting out the good ones from the bad. There are some things you can do to ensure you don’t get stuck with a bad home warranty company, though. “Check their online reviews and ratings on sites like the Better Business Bureau,” said Josh Amishav, a cybersecurity expert and the CEO of Breachsense. “Always compare multiple quotes, and make sure you understand the various coverage options, prices and contract terms.”
While you’re researching, look out for common red flags:
- Customers complaining about poor customer service
- Reports of the company denying legitimate claims
- Complaints of the company taking too long to send out someone to do repairs
- Reports of the company offering limited coverage and hidden exclusions to coverage
- Customers saying their repair issue hasn’t been resolved months after starting a claim
Signs of home warranty scams
Many home warranty scams start with a letter or email. In the notice, the scam company says that your home warranty is about to expire and you need to take action. These notices are sent out to people who own a home, whether or not they’ve ever had a home warranty plan. You may also stumble upon scam home warranty sites as you search online.
Always read the entire contract before signing. Scam companies try to bury hidden costs and too many exclusions in the fine print
Overall, home warranty scammers have a few things in common:
- Require upfront fees without providing service: Most companies should offer monthly or annually payment, and they should only charge a service fee when you file a claim. Be on the lookout for customers complaining about paying completely upfront and never hearing back from the company.
- Make misleading coverage promises: Carefully read your contract to understand what is and isn’t covered. Scam companies often use vague language to describe coverage or intentionally confusing wording to get out of paying for repairs.
- Have a lot of fine print and hidden fees: Although contracts can be lengthy, it’s important to fully read them. A poor provider will bury information about extra charges and lots of coverage exceptions within the contract.
- Use unreliable contractors and provide low-quality repairs: Check that a company only hires certified, licensed contractors. You may notice customer complaints about repairs not being done properly or at all. A qualified company should put you in touch with a technician within one to two days, and repairs shouldn’t take weeks unless you need a specialty part.
- Make filing a claim difficult: A good company will allow you to file a claim easily online or by phone. You should never feel like you’re jumping through hoops to talk to someone or get an appointment scheduled with a contractor.
- Use high-pressure sales tactics to get you to sign up: You should never feel pressured to sign up for a plan. Aggressive tactics include constant phone calls, renewal letters and emails saying you have to pay immediately or you’ll lose special pricing or coverage.
How to protect yourself from home warranty scams
To protect yourself from scam home warranty companies, keep a few things in mind. If you receive a notice that your home warranty is expiring, don’t reply. If you have a home warranty, go directly to your provider’s website and log in to check if your service is about to expire.
If you don’t have a home warranty but you’re looking for one, be sure to thoroughly research companies before signing up. Read what other customers have experienced. Also, read the contract terms and make sure you understand them before signing up. If a company is legit, its customer service reps will be happy to answer your questions, so don’t hesitate if you’re not sure about coverage, fees and other terms. If the rep doesn’t provide clear answers or dodges questions, don’t sign up.
“Be wary of high-pressure sales tactics, unusually low prices and promises that seem too good to be true,” Amishav said. “Finally, understand the cancellation policy before signing anything and trust your instincts — if something feels off, continue your search.”
What to look for when researching a home warranty company
Good home warranty companies offer you a reasonable fee (usually $36 and $68 a month, or $264 to $1,425 annually) to cover your home services and appliances. Basic plans typically cover:
- Washers and dryers
- Built-in microwaves
- Stoves, ovens, cooktops
- Garbage disposals
- Water heaters
Always compare companies to see what their plans offer and the prices for each. Don’t forget to check customer reviews, and look over the terms and conditions for coverage limitations (like caps on appliance replacement) — also known as aggregate limits.
“For example, if the cost to replace your refrigerator with a similar model is $10,000, but your home warranty replacement limit is $3,000 you may have to choose to write a big check for the difference or replace the unit with a lesser model,” said Kathleen Kuhn, the head of business development for Fixle, an appliance management company.
The last step before signing up is checking the company’s licensing and accreditation. A legitimate company should be able to provide proof, but you can also check with the Better Business Bureau to see if a company is licensed and accredited.
» LEARN: What does a home warranty cover?
What should I do if I suspect a home warranty scam?
If you suspect a home warranty scam, there are several things you can do. First, research the company and check with the Better Business Bureau to see if the company is accredited. You can also Google the name of the company and the word “scam” to see if anyone has reported the company.
Don’t share personal information or banking information with the company until you’re sure it isn’t a scam. You can report home warranty scams to the Federal Trade Commission online.
Are all home warranty offers scams?
What should a legitimate home warranty offer include?
A legitimate company will have clear terms and conditions outlining what is covered and what isn't, along with a list of covered appliances and systems. It will also be upfront with information about claim procedures, service fees and deductibles.
On the website, there should be a clear way to contact the company for information or customer support. You should also be able to find details about cancellation and refund policies.
How can I verify the legitimacy of a home warranty provider?
Research is key. You can start by checking the Better Business Bureau’s website to see the company’s rating, if it’s accredited and reviews from customers. You can also ask for recommendations from friends and trusted colleagues to find a company you can trust.
If you’re in the middle of buying a house, your real estate agent can also recommend some of the most popular companies in the area.
- Article sources
- ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Federal Trade Commission, “Warranties for New Homes.” Accessed Aug. 14, 2023.
- Federal Trade Commission, “So what’s the deal with home warranties?” Accessed Aug. 17, 2023.
- Maryland Office of the Attorney General, “Consumer Alert: Home Warranty Scam Letters Sent to Maryland Homeowners.” Accessed Aug. 17, 2023.
- Oregon Department of Justice, “Don’t Fall for This Home Warranty Scam.” Accessed August 17, 2023.
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