I have a basic problem with home warranties on used homes. It’s quite simple:  They don’t cover anything!

I’ll explain …

Let’s say you pay $900 premium for the warranty. They base the premium on the fact that the home has 10 appliances plus a furnace and central AC.  Now let’s fast forward a few months.

Your dishwasher breaks down! You call the warranty company.  They send a repairman who determines the problem was caused by a “preexisting condition” (in other words, the problem began before you owned the home). The result? The CLAIM IS DENIED!

Now … fast forward another 6-months … another appliance breaks down.

Same story:  preexisting condition!

THINK ABOUT THIS BEFORE BUYING ONE OF THESE USELESS POLICIES!

When you buy one of these warranties you never really know what will be covered until it breaks down.  That’s because the only damage covered is sudden new damage that occurs after your closing date! Let me put that another way … any previous wear, any previous owner abuse … any previous damage that may have contributed to a breakdown is NOT covered! So even though you think you are covered for 10 appliances (and pay a premium accordingly) … YOU MAY ONLY BE COVERED ON ONE OR NONE!

In essence, the warranty company is saying:  “Pay us now and we’ll let you know what is covered later.”

THIS IS JUST PLAIN WRONG!

A better way to buy a home warranty is to demand that the warranty company inspect all of the appliances at the time you buy the warranty.  Then, based on condition, either cover it or exclude it. That way, you’re paying for exact coverage instead of “pay-now find-out-later“.