Sunday, August 31, 2014

You be the judge: Are home warranties scams?

In July of this year, I had a problem with my garage. The door wouldn't open with the clicker, and when I tried to open it manually, it felt heavy. I spoke with a maintenance technician over the phone for advice, and he stated that whenever a door felt heavy it was usually because the cables had come loose. With some help from my parents, I was able to pry open the unusually heavy door, and I saw that my side cables had popped off, just like the maintenance technician had predicted.

Soon, I contacted my home warranty company, First American Home Warranty (AKA
First American Home Buyers Protection). I placed a service request, and I listed that my door was stuck and I indicated that it was due to the cables having popped off. (See below.) First American arranged for a garage technician to come to my home.

For those unfamiliar with home warranties, a customer pays a yearly fee to have covered problems with his or her home fixed. However, each time a service call is completed, the company charges a fee. In First American's case, they charge a yearly fee of $384, and their service fees cost $60. I was aware of this pay structure, but I was not aware of their policy of sending out repairmen, knowing that they will not cover the problems but still charging the $60 fee. 

The day that the garage repairman came, he assessed that my hinge needed to be replaced and that the cables needed to be redone. He informed me that First American did not cover these issues, and he had me speak with a First American representative who confirmed this and said I had a right not to use his services. The repairman told me that my repair and part would cost $165 plus I had to pay the First American service charge--total $225. I asked him how much I would have had to pay if I had called him directly for service. He said he would have charged me the same--$165. I would not have had to pay a service fee. I told him that I refused to pay the service fee because I had to pay full price for repairs. He said that if I refused to pay the service fee I would have to speak with First American later. 

When the repairman finished his work, I paid him for his service and for the part. Then I contacted First American, and I told them what happened. They said even if my repairs were not covered by First American that I still owed the $60 because they had sent someone out on a service call.  I asked them why they had fulfilled the request since I had explicitly stated in my service request that I was having problems due to my cables, which were not covered by First American. They refused to answer this question directly. I then asked for the statistic of how often they send out requests knowing they would not fulfill the requests. They also ignored this question. Finally after nearly one month of back and forth nonsense, I paid the $60 and chose to not renew with this company that has received hundreds of negative reviews on blogs such as Pissed Off Consumer and on review sites such as Yelp.

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