The Worst Home Warranty Companies
A great home warranty can add value to your home, protect you from expensive repairs, and provide peace of mind for you and your family. If you're in the process of purchasing a home, selling a home, or if you're a real estate agent, you probably have considered protecting your home with a warranty.
If you are searching for the right home warranty, it's smart to get information on several companies before making a decision. The more information you have, the better your chances are of finding the best deal and service. Every home warranty company promises to provide peace of mind by offering competitive prices and full coverage for your home, but not all companies follow through.
The home warranty market is full of providers that are reputable and offer dependable service, yet some companies will make every effort to deny your claims and not cover your home's most important items. However, it's important to know what separates a good home warranty from a bad home warranty. Learn about how to separate the bad apples from the best home warranty companies so that you can navigate the marketplace with confidence.
What Makes a Bad Home Warranty?
Without a complete knowledge of the home warranty industry, it can be difficult to determine if your problems with your home warranty are par for the course or if your provider is trying to scam you. Here are some clear signs that it may be time to move on from your home warranty provider.
False prices: A great home warranty provider will be clear on its prices immediately. Usually when you receive a free quote, you'll put in some basic information about your home, like your zip code, and you'll receive a price quote in seconds. Some companies will offer a price and advertise it as a sale that is ending soon. This is a misleading tactic designed to influence you to impulsively buy the warranty out of a false sense of urgency.
Claim denials: Every home warranty company that is facing legal action or has already closed its doors has this in common: It will do anything it can to not pay for your repairs. Home warranty companies make money from your monthly payments, and the cost of operating for a company is paying for repairs. This explains why so many bad providers will deny your claims as often as possible. When you are receiving a free quote from a company, try to acquire a sample contract. Within these contracts are limits of service. A good company will have clear language and a straightforward claim approval process. In contrast, a bad company will hide exclusions and limitations throughout the contract, making your coverage unclear. Make sure you have a clear understanding of what items are covered.
Unreliable technicians: Even if your home warranty provider does everything it can to hold up its end of the bargain, you'll need to make sure its network of contractors is dependable. After you file a claim with your home warranty provider, a technician will be dispatched to your home to make repairs. Many companies that have gone out of business or hold mostly negative reviews have a reputation for providing sub-par service. Make sure that your home warranty provider has a healthy network of experienced professionals before you engage in a contract.
Unclear limits: A bad home warranty provider will often have unclear limits of coverage in its contracts. Customers will file a claim for repair on a broken item or system only to be denied service due to fine print buried in their contract. Great home warranty providers have contracts that are simple to understand, ensuring you won't have to cross your fingers and hope your claim will be accepted.
Poor customer service: A common complaint about the lowest-rated home warranty providers is poor customer service. Most consumers know the best way to ensure an efficient customer service experience is by speaking to a real human on the phone. Many larger companies have employed automated customer service hotlines. Complex or urgent problems require human attention and cannot be solved by automated call centers. If your air conditioning unit breaks in the middle of summer or if your refrigerator breaks with a week's worth of groceries inside, you'll need assistance immediately. The best home warranty companies have a robust customer service network to respond to your claim as soon as possible.
Examples of Bad Home Warranty Companies
We identified the following three companies as the worst in the home warranty industry. Thankfully, they're all out of business but provide valuable examples as to what to avoid when shopping for a home warranty.
1. Delta Home Protect
Delta Home Protect was a company founded in Georgia. It quickly grew a customer base, promising comprehensive coverage for its customers. As recently as 2017, the Better Business Bureau (BBB) reported almost 2,000 complaints about repairs not being made and reimbursements not being paid. The individual registered as the company's owner was convicted of stealing hundreds of thousands of dollars almost a decade prior.
Eventually, Delta Home Protect's website was taken down and its social media accounts went dormant. Thousands of customers were left on the hook for expensive repairs.
2. Service America Home Warranty
Service America Home Warranty closed its doors in December 2018. In the 1990s, it was reported that over 200,000 Florida residents had purchased a home warranty contract with Service America. At some point, the company began to cut corners on service. Customers reported long wait times for service, difficulty finding a human representative to speak to on the phone, and repairs left unpaid.
When the company closed for good, it promised to refund its former customers, but many reported that they never received their money back.
3. Pride Home Warranty
Pride Home Warranty was a Delaware-based company that was active as recently as 2018, according to the Better Business Bureau. At some point over the next two years, Pride stopped answering phone calls and did not respond to any service requests.
Customer reviews during Pride's time in business indicate that the provider offered an inexpensive $60 service fee and was somewhat responsive to service requests. It's important to factor in a company's reputation in your home warranty search, as a new and unknown company like Pride could easily leave you high and dry.
Best Home Warranty Companies
Now that you know some tell-tale signs of a bad home warranty company, you'll also need to know what a reliable company looks like. Many companies offer reasonably priced plans, but more importantly, they follow through on their promises and provide service when it is needed.
Our team has analyzed dozens of companies, and we've found these top home warranty providers to offer dependable service. We recommend getting a free quote from several companies before making any final decisions.
Choice Home Warranty
Get a free quote: Call 929-400-6165 or complete this form
Our verdict: Best Basic Plan
Number of plans: 2
Monthly cost: $41.69-$50.00
Service fee: $85
State availability: All but WA and CA
BBB rating: B-
Read more: Choice Home Warranty review
Select Home Warranty
Get a free quote: Call 888-370-3956 or complete this form
Our verdict: Best Discounts
Number of plans: 3
Monthly cost: $41.00-$47.00
Service fee: $75
State availability: All but NV, NY, WA, and WI
BBB rating: B
Read more: Select Home Warranty review
American Home Shield
Get a free quote: Call 844-529-9298 or complete this form
Our verdict: Best Overall
Number of plans: 3
Monthly cost: $40.00–$58.00
Service fee: $75–$125
State availability: All but Alaska
BBB rating: B
Read more: American Home Shield review
Frequently Asked Questions About Home Warranties
How does a home warranty work?
A home warranty acts as an insurance policy for your home's most important items and systems. You pay your home warranty provider a monthly fee and agree on what will be covered by your policy. If one of the items or systems breaks down due to normal wear and tear, your home warranty provider will cover most or all of the repair costs—you will only be responsible for paying a small service fee at the time of repair instead of paying for the entire repair itself.
Home warranties are designed to save you money, since repairing an item like an air conditioning unit or replacing a refrigerator can cost thousands of dollars. These items and systems are essential to your home's proper functioning and your overall quality of life, and a home warranty can ensure that they're covered.
What items are usually covered by a home warranty?
Each provider will have multiple plan options that cover different items, but here are some that you'll often see in home warranty plans:
Garage door opener
If there's an item that is important to you that you don't see on this list, there's a strong chance it's offered as add-on coverage. Each plan is slightly different. American Home Shield's most comprehensive plan, the ShieldPlatinum™ Plan, insures 23 of your home's most important items with especially high coverage caps and added features. Usually, the more expensive your plan, the broader your coverage. We recommend getting quotes from several providers to find a plan that offers exactly what you need.
How much should I pay for my home warranty?
Most home warranty companies offer plans ranging from $25-$70 per month. It's important to look beyond the monthly rate when calculating how much you'll pay for your home warranty. For instance, coverage limits detail how much your company will pay per repair per item and should be factored in. If your provider offers low rates with low limits for coverage, you may end up paying more in the long run.
You should also find out about each company's service call fee. A service call fee acts as a deductible and is paid when repairs are made. Most companies' service call fees fall between $75-$125. If your provider's fee is on the higher end of this range, you may end up paying more if you submit claims often.