Home warranties have become increasingly popular among homeowners looking to protect their investments and save money on repairs. But what do contractors think about these plans? We’ll break down the pros and cons from their point of view so you can make the most informed decision for yourself.
Benefits of Home Warranties for Contractors
Home warranties can benefit both you and the contractors in your area.
As a customer, you’ll expect to save money by paying less for your home warranty plan than you would for repairs without coverage. Paying a company directly without a home warranty can be more expensive than what you would pay with a home warranty.
Meanwhile, these are the ways that contractors stand to benefit from accepting home warranty clients:
- Consistent work and customer acquisition: One of a contractor’s biggest expenses is marketing, and in many areas, it can feel like a hit-or-miss game. Partnering with a home warranty company can give a company a steady stream of work and a cost-effective way to grow its customer base.
- Lower overhead costs: Since a contractor could spend less on marketing by taking on home warranty clients, it can often reduce its service fees and spread the savings to you.
- Opportunities for repeat business: A new customer now could be a repeat customer later. As you become more familiar with a contractor’s work, you might choose to use its services again for a non-warranty-related project. That builds business relationships and referral networks that can be powerful for a company’s growth.
Drawbacks of Home Warranties for Contractors
The benefits of working with a home warranty company are strong, but contractors can also face a few challenges if they make the decision. These include the following:
- Lower profit margins: Warranty repairs may net a contractor less money compared to a job it secures directly. Lower marketing costs can help offset the difference, but there still may be some gaps if a contractor doesn’t have a good balance of warranty and non-warranty clients.
- Less control: Contractors working with a home warranty company often have less control over which jobs the provider approves and how much they’re allowed to bill. That can lead to frustration down the line if a repair gets denied or if the approved amount doesn’t cover the full cost. A company might also find itself in a compromising position if a warranty company’s restrictions undermine its own professional judgment and expertise.
- Delays: Sometimes, the claims process for a home warranty can take time. Contractors tend to try their best to stay out of the middle and let the warranty company handle the situation, but inevitably, they can get involved.
- Less priority: Some contractors can prioritize direct customers over warranty claims in peak seasons, since they stand to profit more from this group of clients.
- Customer satisfaction challenges: A service contractor’s primary job with a home warranty claim is to diagnose the problem and write a report of the findings. It’s up to the company administrating the coverage to approve the claim. Sometimes, customers can misattribute responsibility for a denied claim to the contractor, leading to unfair negative reviews.
- Proof of maintenance issues: Sometimes, home warranty companies require proof that a major home system is regularly maintained before it will approve a claim. That’s a major problem for homeowners who just purchased their property, since it’s rare for previous owners to pass down any documentation to them.
Common Home Warranty Claims
Home warranties are meant to cover major appliances and home systems, so there’s a diverse breadth of common claims that homeowners file. Some common claims pertain to refrigerators, dishwashers, and washing machines, and the specific problems can vary depending on specific brands, models, and mechanisms. If you have older appliances that are more likely to break down, you probably stand to benefit from having a home warranty.
HVAC warranty claims tend to be more straightforward than appliance-related ones, and include replacing igniters, control boards, and motors. Those can cost hundreds of dollars to replace, so if you have a home warranty, you can save big bucks as long as you manage your expectations.
That doesn’t mean every home warranty claim is necessarily worth it. If a dirty air filter is causing your HVAC problem, you can replace it yourself for far less money than having a professional do it for you. Other issues, like dirty flame sensors and coils, are maintenance issues the home warranty doesn’t cover. You’d be paying a service fee only to find out you just need a tune-up.
Takeaways for Homeowners with Home Warranties
These are the takeaways that a typical contractor would suggest if you’re looking for a home warranty. Following them can help you make the most of your plan, should you decide to sign on the dotted line.
Read the Reviews
Before you sign a home warranty contract, read reviews on the company you’re considering. Look at the good, the bad, and the ugly so you know what you’re getting into.
Below, you can find our expert reviews of the major players in the home warranty business. Each of these companies offers free, no-obligation quotes.
- Choice Home Warranty review
- American Home Shield review
- Select Home Warranty review
- Amazon Home Warranty review
- First American Home Warranty review
- Liberty Home Guard review
Scrutinize the Fine Print
Once you have a contract in front of you, carefully review the entire document to understand what’s covered. That can help you prevent misunderstandings or disappointments about exclusions and service fees. If you’re not satisfied with something in the contract, then it’s in your best interest not to sign it and look elsewhere.
Understand the Claims Process
Familiarize yourself with the claims process before you have to file a claim. This will help you set realistic expectations and reduce frustration.
If a claim gets denied, don’t blame the service contractor. If the technician knows what they’re doing, there’s a decent chance that they side with you. However, they have no choice but to follow the warranty company’s rules.
Maintain Your Systems and Appliances
Regular maintenance is crucial for any home system or appliance. If you can handle a repair for less money than you’d spend on copays in the claims process, then consider doing it yourself.
Keep records and receipts of what maintenance you do yourself or hire out, just in case your warranty company asks for proof. You should also know the operational details of your appliances and home systems to communicate better with your contractor.
If you just moved into your home, the seller may not pass on maintenance records with you. Discuss this with a warranty company representative before you sign any contracts.
Communicate Clearly with Contractors
You’ll probably, and understandably, be in some sort of panic when you have a warranty-related issue. However, to improve your overall experience, try to communicate clearly and calmly with the technician about the problem. You should also have any relevant history ready to share.
