8 Reasons Your Home Warranty Claim May Be Denied
A home warranty is a contract that covers the repair costs or replacement of a home’s appliances and systems when they break down due to regular use. A home warranty can supplement a homeowners insurance policy, which only covers the home’s structure.
Although they are meant to give you peace of mind, warranties can be a source of added stress, especially if you don't know how they work. Consumers who have to deal with denied home warranty claims may find them particularly stressful.
Read on to learn more about some common reasons why even the best home warranty companies may deny a claim and what you can do to prevent it.
Table of contents
- Why home warranty companies may deny a claim
- Steps to file a warranty claim correctly
- How to avoid getting claims denied
- How to dispute a home warranty claim denial
- Home warranty claims FAQ
Why home warranty companies may deny a claim
A home warranty company may deny a claim for many reasons, including lack of maintenance, incorrect installation or unauthorized repairs. Always read your contract closely, as it contains the details and extent of your home warranty coverage. The contract may also contain stipulations that lead to your claim being denied.
While each company sets its own terms and conditions, the most common reasons why providers deny claims are:
1. The appliance or system is not covered by the home warranty
A home warranty is a service contract that helps you pay for the necessary repairs or replacements of appliances and systems in your home. You can have a systems (heating, plumbing, etc.) repair plan, an appliance repair plan or a comprehensive plan that includes both.
However, a home warranty might not cover every appliance or system in your home. It’s important, then, to read the fine print carefully since exclusions vary by company and could surprise you.
Exclusions may include items such as specific parts of a system or appliance. For example, your contract may cover the repair of your garage door but not the remote.
The item could also be excluded from coverage if a pre-existing condition (present before the warranty began) was found to be at least partly at fault for the failure.
Make sure to read our article on what is a home warranty and what it covers to learn more.
2. The appliance was not maintained properly
Appliances and home systems must be given proper maintenance in order to be covered by the home warranty contract. If the company finds that you didn’t take care of the appliance in a way that could have prevented it from breaking down, your claim could be denied.
3. The appliance was installed improperly or has code violations
Your claim could also be denied if the appliance or system was not installed correctly or if the installation violates local building codes. This is true even if the improper installation was performed by a professional.
4. The appliance has unusual wear and tear
Home warranties only cover an appliance or system when it breaks down due to normal wear and tear. The home warranty company could deny your claim if they determine you haven’t been using the item properly.
So if your kids are in the habit of jumping on and off the dishwasher door when it’s open, it’s probably a safe bet your claim will be denied.
5. The damage was caused by animals
Some home warranty companies exclude from coverage any damage caused by animals, including pets and vermin. If the damage to your appliance or system was caused by any kind of animal, your claim may be denied.
6. The damage is secondary to a primary breakdown
Many companies only cover direct damage to your appliances or systems themselves. If you submit a claim for secondary damage — i.e. the dishwasher overflows and ruins the carpet — your claim could be denied. However, your homeowners insurance coverage may help with the cost of repairing the secondary damage.
7. The coverage limit was exceeded
Home warranty companies place annual coverage limits on each covered appliance or system, and annual caps on all payouts. These caps are different for each appliance or system, but on average they range between $500 for smaller items and up to a $50,000 aggregate limit. Even if your appliance would otherwise be covered, if you’ve already exceeded the coverage limit for that covered item, or the annual cap, you may be out of luck.
8. An unauthorized technician performed repairs
Your claim may be denied if you hired an independent contractor to perform repairs on a covered appliance or system. When you have a home warranty, you file a claim and the provider arranges for an approved service provider to evaluate, fix or replace the item. Having someone else do the repairs — or doing them yourself — would make that specific item ineligible for coverage in the future.
Steps to file a warranty claim correctly
You should file a claim when a major home item — such as a washer, fridge or water heater — or system malfunctions. Before booking a service call, you should make sure that your home protection plan covers your specific issue.
1. Understand your coverage
As home warranty plans vary in coverage, you should review your contract documents to learn more about covered repairs and replacements, terms and conditions for filing a claim, and exclusions. You can usually obtain these from your warranty company’s website.
First, check if your plan covers the specific appliance or system that needs repair. A basic plan might only cover major systems, such as your heating and air conditioning (HVAC), plumbing and electrical systems. Other plan options may include common appliances, such as water heaters, dishwashers, fridges and ovens. Higher tier plans may even extend coverage to equipment such as garage door openers, built-in microwaves and doorbells.
Next, review any particular conditions that the company requires for a claim. Make sure your claim has good odds of being approved by ascertaining whether or not the appliance or system in need of repair meets contract conditions and has not exceeded coverage limits.
2. Consider service fees and coverage limits
In addition to home warranty plan premiums, you must pay a fee for each service call. Moreover, your plan may only provide coverage up to a certain cost, so you can end up with high out-of-pocket costs for repairs that exceed the plan's limits.
Service call fee
The service call fee pays for the time and labor of the professional who will be evaluating and conducting repairs on your broken down home system or appliance. Your home warranty plan contract will state the service call fee, which could range from $35 to $150. If you only need a small repair, consider whether you could fix it for less than the cost of the service call fee.
Coverage limits
Your home warranty contract specifies coverage limits for different systems and appliances. In some cases, the limit may be very low compared to the cost of the item's repair or replacement. The contract may also state an aggregate coverage limit for all claims combined.
If the repair you need costs more than the appliance, system-specific limit or total annual limit, you’ll need to pay for the remainder out of pocket. Having this information before filing your claim can help you arrange to cover the cost with cash or through financing.
3. Request a service visit
Once you’ve confirmed that your plan covers the item, contact your service provider and make a service request. You can usually log in to your customer portal to find an online service visit request form. Otherwise, obtain the company’s phone number on its website or on the plan documents so you can call and speak to a representative.
When requesting a service visit, expect to provide information about the appliance or system that needs service as well as the circumstances surrounding the issue. Make sure you know the brand name, unit age and serial and model numbers. You’ll also need to describe when and how the issue started as well as whether you’ve previously requested service for the issue.
4. Pay the service call fee
Before finalizing the service visit request, the home warranty company will have you pay the service call fee stated in your contract. If you call, the representative may take your card number over the phone. Otherwise, you can pay online for a request you make through the customer portal.
After you pay the fee and submit the service call request, the provider will arrange for a service contractor to evaluate the damage and write an inspection report. If the home warranty company approves your claim, the contractor will then repair the item or begin to process the replacement.
How to avoid getting claims denied
As we explained above, there are legitimate reasons why claims get denied, but there are also steps you can take to avoid this disappointment and hassle. Understanding your contract, giving your appliances routine maintenance and a practice of good record keeping go a long way.
Read the fine print
Study your home warranty contract carefully before you sign, and make sure you understand the terms fully before you buy. Learning as much as you can about your contract and coverage is the most important step you can take to avoid a claim denial.
Keep maintenance records
Frequent maintenance will keep your appliance and systems purring for years, but when it comes to claims, meticulous record-keeping will be your best friend. These records will show that you’ve followed the manufacturers’ instructions to the T.
Record-keeping is a common provision in some contracts, but you should do this even if it’s not required by your provider. With these notes you’ll be better prepared to prove the appliance or system didn’t malfunction because of improper care, but from a defect or regular use.
Take steps to mitigate damage when possible
Pay attention to any glitches, system errors or even funny sounds, as these may precede larger problems. Don’t limit yourself to just routine maintenance on each appliance or system. If you notice anything out of the ordinary, do whatever you can as soon as possible to prevent further damage.
How to dispute a home warranty claim denial
If your claim is denied by the home warranty company, there are steps you can take to appeal the decision.
- Review the terms and conditions of your home warranty contract. Double check the coverage. If you don’t already have one, ask for a PDF of the contract to find keywords and relevant sections quickly.
- Contact your home warranty company. Let them know you want to appeal and ask them to provide you with the documents you need to begin the claims process. Also, log dates, times, representatives and any information obtained during your customer service calls.
- Request a copy of the inspection report. The service technician that evaluated the item, if the company sent one, must write a report diagnosing the issue. Knowing the information on this report, and by extension the reason behind the denial, will help you focus on the crux of the issue in your appeal.
- Get a third-party assessment. As the first assessment could have missed an important detail, having a second, impartial opinion may help your case. You’ll have to pay for this assessment yourself, so make sure that what you have to gain is more than the cost of the evaluation itself.
- Follow the appeals process. Sometimes the home warranty provider may request additional documents or records. It’s also best practice to follow up with the company if you don’t receive a response within 30 days.
- File a complaint with the Better Business Bureau. If the provider is unresponsive or you feel the denial is unjustified, filing a complaint with the BBB might prompt them to respond. Companies like to stay in good standing with the BBB and other review sites to uphold their reputation.
If your appeal fails and you feel you’ve been defrauded, consider calling in the authorities. First, contact your state’s consumer protection office and file a complaint. The agency that usually investigates fraud is the attorney general’s office, but to make sure you’re contacting the correct office, find your state’s consumer protection office.
If all else fails, you can also take the legal route. Some states have small claims courts where you can sue for up to around $10,000 depending on the state. If you believe the home warranty company owes you more than what your small claims court awards, you’ll have to file a lawsuit in State court. In this case, we advise you to consult with your attorney before filing to ensure this is the correct course of action for your particular case.
Home warranty claims FAQ
Are home warranties legit?
What is an extended warranty?
What does a home warranty cover when buying a house?
There are many extra costs associated with buying a home, such as homeowners insurance, taxes, moving and furnishing, among others. During this process, a home warranty protects you from unexpected costs of repairing home appliances or systems if these break down due to wear and tear.
While you may prefer to forego this protection given the rising cost of homeownership, we advise you to add home warranty to the "must get" list, as not getting it is considered one of several home buying mistakes people usually make.
When can you make a claim with home warranty?
Why would a home warranty company deny a new plan?
Here, the reasons can overlap with home warranty claim denials. An example is when you get a claim or plan denied because an item has not been maintained properly or the damage to the item was caused by animals.
One unique reason that can lead a company to deny a plan is when a buyer chooses a home inspection waiver when purchasing a home, which can prevent them from finding out that an appliance or system has pre-existing conditions. A company can deny coverage or a new plan if it determines that an appliance or system needed repair before the buyer purchased the policy.
Will I be charged a service fee even if my claim is denied?
Since the service fee covers the cost of the technician coming to inspect the issue, it usually applies regardless of the outcome of your home warranty claim. If the company does ultimately deny your claim, it likely won't refund the service fee.
You can consult your home warranty contract to see specific terms for your plan's service fee and any situations where refunds could apply. Try looking for a section that discusses required payments or the claims submission process.
What happens if a home warranty is not honored?
In the event that your service provider doesn't honor the contract, you can and should contact your local or state government office (usually the attorney general's office) to file a complaint for breach of contract.
Another avenue you can explore is filing a lawsuit in a small claims court or in regular court. However, if you're thinking of doing the latter, we suggest you consult your attorney first to determine if this is the best course of action.
Summary of Money's 8 Reasons Home Warranty Companies Deny Claims
Home warranties help homeowners pay for necessary repairs and replacements of covered appliances or home systems. The added peace of mind and cost savings can make a home warranty worth it.
Home warranty customers are often confused about why their home warranty claim was denied. There are many legitimate reasons why this happens.
Among the most common reasons your claim could be denied are that the item isn’t covered by the service plan, the item wasn’t installed or maintained correctly, it displays unusual wear and tear or the damage was caused by animals like vermin.
The claim could also be denied if the damage is secondary, meaning it was caused by another item breaking down, or if you exceed the plan’s coverage limit for a specific item.
To avoid unexpected claim denials, be aware of what your home warranty plan covers and excludes, keep detailed maintenance records and mitigate the damage when you can.