Your home is one of the largest purchases you’ll ever make. It’s only natural to want to protect that investment with a solid warranty. However, you’ll need to be careful who you sign with. Here are a few areas to keep an eye out for, and tips to help protect yourself from people trying to fleece you.
While home insurance plans are usually required by law, they tend to be more concerned with catastrophic damage. They don’t cover areas like ordinary wear and tear or appliance replacements. That’s where home warranties come in.
Generally speaking, I’d argue that home warranties are 100% necessary. Your house, after all, is likely the largest purchases you’ll ever make. It’s extremely important that you take whatever measures necessary to protect that investment.
Unfortunately, there are plenty of crooks in the warranty and insurance space who fully understand this. They are more than willing to exploit you if you’re not careful. With that in mind, I’d like to go over a few of the red flags most frequently displayed by scam artists and poorly-managed warrantors.
1. Questionable documentation
Nobody likes reading contracts. They’re boring, they’re dry, and they’re usually long and confusing. But it’s necessary to suffer through them, or better yet, get an attorney to read through them on your behalf.
That’s because underhanded warranty providers are counting on you to sign documents you don’t read.
Good documentation will leave absolutely no questions about what it covers and how. More importantly, it establishes what the warranty doesn’t cover, such as clearly intentional damage. There should be no gray areas and no loopholes.
In short, the responsibilities of both the warranty holder and the company providing that warranty should be set in stone and understood by both parties.
One thing you should pay particularly close attention to is how your contract defines “pre-existing conditions.” Do not sign a contract where this is vague or poorly-defined. Sleazy organizations will use this phrasing to get out of providing you coverage on just about anything you can think of.
2. Feeling pressured to sign
Worthwhile warranty providers don’t feel the need to browbeat prospective clients into submission. They’re comfortable letting customers figure things out for themselves, and do things on their own timeline. They know at the end of the day their reputation will speak for itself.
Walk away immediately should a representative attempt any of the following tactics:
- Refuses to show you documentation unless you pay. Asking to see a contract before you sign it or make any payments isn’t just reasonable, but sensible. If that request is met with a demand for an initial down payment, you likely aren’t talking to a warranty provider. You’re talking to a scammer.
- Limited-time offers. Home warranties are a long-term investment, much like a mortgage. An agent that’s pressuring you to make a split-second decision on one either doesn’t know how to do their job or is trying to fleece you. Either way, they’re not worth your time.
- They contacted you. If you’re receiving any sort of cold contact from a third-party warranty provider, be wary.