Is A Homeowners Warranty A Sound Purchase?
Peace Of Mind, Renewing A Home Warranty
My wife and I purchased our second home in July of 2010. Included in the sale was a home warranty that covered various home appliances such as the stove, refrigerator, furnace, hot water heater, and air conditioner. This warranty was provided by HER Realty and the policy is written by HMS National. In July of 2011, we were sent a notice that our initial policy was due to expire and that we had the option to renew our warranty. The cost was $450 for a year and we told that we could continue to renew the warranty as long as we owned our home. After discussing it with my wife, we decided that we did not need to renew the policy. A few days later, I was talking to my father who had just spent $6800 replacing his furnace in his home. It was during that conversation I decided that it might be a good idea to renew the warranty. After hanging up the phone, I told my wife about the cost my father paid to replace his furnace and brought up the home warranty again. I explained that I would rather pay the $450 and a $100 deductible for a warranty versus paying $6800 for a new furnace. She agreed and we renewed the policy.
When renewing the policy, I had the option to pay a portion of the cost up front and then be billed later for the remainder. I chose that option because we did not know anything about the company. HMS is the company the policy is issued through, the better business bureau gives them and their sister company AHS a "D" and "F" rating which concerned me. I researched some of the complaints and found most to be about poor service, billing , and payment collection practices. I soon discovered that HMS did not send bills for the remainder of the fee, the balance was automatically withdrawn from my bank account without my permission, contradicting the choice I made when presented with payment options.
HMS did not send an e-mail or a statement indicating that the policy was renewed or any type of documentation regarding the policy and the systems were covered by the warranty. When I contacted them to see if the policy was in effect, I was asked if I checked my banking statements. If I had done that then I would have known that I was charged three months in a row for the cost of the policy and that it was valid. When I explained that I had not received anything from them, I was concerned there was a problem. I then explained that I chose the option on the website to make the inital payment online and then be billed for the remainder of the balance in two installments. I was then told that there is no such option and if I were responsible I would have checked my banking statments and saw that the payments were withdrawn three months in a row. I then told her that I received nothing from HMS regarding payments or the renewal of the policy. She asked if I had the documents from the closing of the home, when I told her yes, she told me that those documents were my warranty papers and they were adequate. The document she spoke of is a letter indicating the policy number and a small cardboard flyer with an email address and a toll free number. There is no information about what the warranty covers. I was in awe at the blatant,"I don't care" attitude of the customer service representative I spoke with.
This past Sunday our furnace stopped working and I called HMS to file a claim to have the furnace repaired. The web site states the we are to call them first and then they will send a technician out to our home within one to five business days. The following day, HMS called to tell me that a service company was going to call me and set up an appointment to look at the furnace. Two hours later, Capital Air called me to set up the appointment for later in the day.
After the technician arrived he spent about a half an hour looking at the furnace and then told me that the blower fan and the mother board was bad. My furnace was installed in 1998, it is a Trane XV-90. A common problem this furnace model is that the mother board shorts out and which causes the variable speed fan to short out as well. The replacement cost for both parts are $867. The technician said he had to call HMS and inform them of the problem and that he could not do anything until he contacted HMS. They would then determine what was the best course of action. Then the technician told me that he had the parts in his shop in Columbus and that he would have to go and get them. He then climbed into his van and left to go and get the parts in case they told him to make the repair today. He also said that I could just pay him for the repairs that day and then HMS would pay me back later.
When he returned he told me that HMS had contacted him and that they were in the process of deciding what to do in regards to my claim. He then told me that HMS was trying to determine if it would be more cost effective to replace the furnace over repairing it. He told me that he had the parts, but could not install them until HMS purchasing department had made a decision on whether to repair or replace the furnace. He then said that it would take one to five business days for the decision to be made. It is a good thing that the weather is unseasonably warm and we have a high efficiency fireplace or we would be without any heat in our home at all.
The following day, I contacted HMS to see what was going on with the claim, I was told that a decision had yet to be made, it may be a few more days. When I asked why they were thinking about replacing the entire furnace, I was told it is part of the process. When I said it would be cheaper to just replace the mother board, the woman suddenly said that she will only tell my wife what is going on when she called. I was shocked, all I could say was "wow", "you just shut me down". Nina, the name of the rep i spoke with, then told me that I needed to read the booklet and hung up the phone. When my wife came home, I asked her to call HMS and have them better clarify the questions I did not get answered. The customer service representative she spoke to was much more knowledgeable and polite, all of our answers were answered or promised to be answered by the purchasing department when they called.
The next morning, a gentleman called to explain what decision was made. My first option was to have the fan and motherboard replaced by Capital Air. My second option was to hire someone on my own to replace the furnace, once the work was done I would have to send in the receipt for the work. I would then be reimbursed $437 for the cost to replace the furnace. I thought I misunderstood him and asked him to repeat the reimbursement amount again. After being told $437 a second time, I opted to have the furnace repaired rather than having it replaced. Replacing the furnace would cost me a minimum of $3200. The gentleman then told me that it would take 24 to 48 business hours to process the work order and have Capital Air perform the service. Again I thought I misunderstood him and asked what the time line would be. He again stated it would be 24 to 48 business hours. After asking if I had any other questions he hung up.
My waiting period for the repairs to be made are now another three to six business days. HMS took two days to process the claim and may take up to six days to make the repair. So we are looking at a possible 8 days without a functioning furnace in our home. The technician offered to install the parts on Monday, but I would have to pay him the full balance less the $100 deductible. The cost would be $65 for him having to do a parts run because they were not in his van when he arrived, then the cost of the initial run which was $117 and the cost of the parts and labor for the repair are an additional $867. Bringing the total to $1149 if I wanted the repair done on Monday. My reimbursement would be $437, making my out of pocket cost $612. This still cheaper than replacing the furnace but more than I want to spend for a repair that is clearly covered under my warranty policy.
The catch with a home warranty service is the time game. If I am not willing to wait for the repairs to be done or I want another service company to perform the work, I pay for the repairs up front and then collect only a portion of the cost back from HMS. Since there is not a dire need for the repairs to be done right now due to the warmer weather, I do not need to rush the repairs. If it were colder and snowing outside, I would chosen to have the the work done as quickly as possible, making it possible for HMS to not have to pay for the total cost to repair my furnace, less my $100 deductible. While I think it was a good investment to purchase the warranty, I am now aware of the tactics that HMS will employ should I have to file another claim with them.
If you are a HMS warranty holder, usually supplied by HER Realty company with a purchase of a home, you will have to wait for the claim to be filed. Then there will be an additional wait for a service company to be told what they are authorized to repair or replace, followed by an additional wait to have the HMS purchasing department to either authorize a service company to purchase parts or replacement products or wait for the purchasing department to purchase and ship parts to the service provider. Once all of this is done by the purchasing department,then a repair is made. If a repair is an emergency, it would be better to file the claim and then hire a service company to make a repair or replacement as soon as you get off the phone with HMS. HMS will not be able to process and authorize a repair in a timely manner in an emergency situation. You will have to pay out of pocket up front and be reimbursed for a portion of your out of pocket cost.
There is also the risk that the repairs or replacement of home systems done will not be entirely covered by HMS. They may disagree with the work that was done, they may only opt to pay for a repair service instead of a replacement. They may exclude components of a system as well. In my case the electronic air filtration system attached to my furnace also malfunctioned when the furnace mother board malfunctioned. The air filtration system is not covered under my warranty even though it is part of the heating and cooling system.
While I am concerned about the swamp water movement of this company, I still feel that this warranty was a good investment. As it stands I am still saving money, I am just a bit inconvenienced. Tonight it is supposed to be 34 degrees and there are clouds in the sky that could produce snow. At the time of this post, it has been two days or 16 business hours since I was told the repairs were approved and Capital Air would be completing the work on the furnace. We shall see what I think of my investment if I am still waiting by the weekend or the repairs are not done properly.