Аdvertiser Disclosure

Is Home Warranty a Scam?

Updated February 1, 2020

Being a homeowner certainly comes with risks, and dealing with costly repairs and replacements when appliances or systems give out is one of them. This problem is supposedly solved by home warranties. However, not all home warranties are created equal. While many of them are reputable companies that honestly fulfill their obligation, there are some not-so-honest providers who try to keep the money and provide as little service as possible in exchange.

Quick Discovery

Discover Reliable and Recommended CompaniesDiscover the Worst Home Warranties Companies

Scam Home Warranty Companies – Top 5 Worst Companies List

The absolute worst home warranty companies that can be considered utter scams are fly-by-night types of companies that shut down unexpectedly leaving their customers hanging. Unfortunately, it is not an uncommon thing at all. Here are some examples:

Service America Home Warranty

Service America Home Warranty was a respectable Florida-based company that served its customers since 1973. In 2006, it was generating about $30 million in annual revenue and had more than 65,000 clients across the USA. Many clients reported positive experiences with this company.

However, in November 2018, Service America Home Warranty suddenly reported a shutdown. More than 160 employees in Fort Lauderdale and Clearwater were dismissed. Nobody was left to respond to the customers’ phone calls, and the scheduled services were canceled. The company promised to send refunds for the unused portion of the contract term to the customers, but there were numerous complaints that the refund checks were never received.

Endurance Home Warranty

In 2017, Endurance Home Warranty emerged on the market offering services to all states and Washington DC, which was pretty impressive for a new company, and probably should have raised concerns. The plans and prices were quite comparable to the industry leaders’, and the company started rapidly gaining popularity among customers. However, the success story did not last long.

Endurance Home Warranty ceased its operation in April 2019. The company just stopped responding to any means of communication. No contracts were honored, and no refund money was issued.

Allied Home Warranty

Allied Home Warranty was a local company that had been providing services for both homeowners and buyers from Texas since 2004. The company had an excellent A+ rating with the BBB; however, customers rated it very low on such consumer reporting sites as Yelp and ConsumerAffairs.

In August 2018, the company was sold to OneGuard in Texas and ceased its operation soon after that. Luckily, the customers were able to continue coverage with OneGuard.

American Home Guard

A Pennsylvania-based company, American Home Guard, started operating in 2013. In the beginning, the company successfully served American households in 38 states. However, in 2016 the customers began filing complaints on American Home Guard with the BBB. The company did not fulfill its promises, and the customers were not getting what they paid for.

American Home Guard abruptly ceased its operation in October 2018. The consumer reporting sites were flooded with furious complaints saying that the company took the payments and closed their doors without any prior notice. The scammed customers could not reach the company and could not get any refunds.

Secure Home Warranty

Another Pennsylvania-based company, Secure Home Warranty, started accepting customers in 2015. According to the customer reviews on multiple consumer reporting sites, it did not take them long to begin scamming their customers. In 2016, the customers started complaining that they could not get the services they had paid for.

Secure Home Warranty went out of business in November 2017. However, the customers reported that the company continued to charge their credit cards in 2018. At least one lawsuit was filed against Secure Home Warranty, and in April 2019, the Philadelphia Common Pleas Court permanently banned the former owners of the company from doing business in Pennsylvania.

What do All Bad Home Warranty Companies Have in Common?

Upon analyzing data from the companies that suddenly stopped honoring its contracts leaving many disappointed customers, we found some common traits that can be found in all bad home warranty companies:

Aggressive and misleading marketing

Many of the scam home warranties used the same trick. They sent letters to homeowners stating that their home warranty may be or may have already expired, and they need to renew it in the next few days, or their eligibility will be revoked even though they never had a home warranty in the first place. However, many have homeowner’s insurance, which is mandatory in some states.

These marketing campaigns target the elderly population who can be easily frightened and confused. They then give out their credit card number even though they never planned to purchase a home warranty and thought they were renewing their homeowner’s insurance instead.

Unfortunately, this practice is not used exclusively by the worst home warranty companies, as there are constant complaints about the largest home warranty companies in the industry who are overly aggressive in their techniques as well.

Tricky terms and conditions

One of the major differences between the best and worst home warranty companies is how they present their terms and conditions. All good companies have clear terms that are easily accessible, while bad home warranty companies either do not display their terms or use unclear and hard to understand wording that may confuse the customers.

Payment delays

One of the obvious signs of a scam is a payment delay. If it takes too long to receive reimbursement of repair costs, it may be a signal that the company is having financial difficulties and may be closed soon. With the worst-rated home warranty companies, the customers may have problems with canceling the warranty and receiving a refund.

The Most Popular Complaints

We have analyzed 1,525 complaints from 15 review sites to find out what were the major problems the customers mentioned in their home warranty reviews. Here we discuss the most common issues:

Claim denials

Scam home warranty companies look for any reason to deny a claim. They will do anything to blame the customer for the broken home system or an appliance and refuse to fix them. In some cases, these companies may say that this particular type of breakdown is not covered, or this specific part cannot be replaced. In other cases, they cite unexpected terms and conditions. In the most severe cases, they just deny a claim without any further explanation. All the customer is left to do is to complain about the home warranty scam to the BBB and publish negative feedback online.

Communication problems

Customers who reported scam home warranty companies mentioned how hard it was, or even impossible, to reach the company by any means of communication. And even if they managed to get a response, the customer support was useless or pretended that it could not understand the issue. Some customers complained that at the worst home warranty companies, the support was rude and disrespectful.

Unexpected costs

Before you sign a contract with a home warranty company, it is important not only to know which items will be covered but also what the coverage limits are. Low coverage limits mean that it is very likely that you will have to pay out of pocket for your next repair. Problematic companies often do not mention coverage limits in their contracts, and customers who forget to ask about these limits before they sign a contract may face unpleasant surprises when they file a claim.

Repair delays

One of the main purposes of buying a home warranty is to avoid any delays in repairs of covered home systems and appliances. Usually, the good home warranty companies dispatch a contractor within a day or two. However, bad home warranty companies do not often comply with industry standards. First, the customers face problems with the approval of needed repair or replacement. Second, when the repair is finally approved, the contractors show up much later than expected and act irresponsibly. With the worst companies, customer support is hard to reach, or a contractor’s visit is hard to arrange.

Unprofessional contractors

Another difference between the best and worst home warranty companies is how they hire their contractors. The majority of home warranty companies do not allow their customers to choose a trusted contractor; however, the good companies select their contractors carefully and set high expectations for their services. With sham companies, the contractors might not be as qualified to solve the problems quickly and effectively. In the worst cases reported by customers, the contractors were rude and unfriendly.

Tips on Avoiding Home Warranty Scams

  • Avoid scam companies appearing on our worst home warranty company list.
  • Avoid companies trying to oversell you their product aggressively or inaccurately.
  • Make sure the company is properly registered in the USA and has been in operation for a while.
  • Make sure the company has online credentials and user reviews online.
  • Make sure it’s a veteran company operating for a long period of time.
  • Make sure the company you’re inspecting has thousands of active subscribers at any time.
  • Make sure the terms and conditions aren’t confusing or impossible to understand.
  • Check the costs and deductible fees to see if they are reasonable in comparison to the average cost of a home warranty.

You can essentially do it all through our home warranty service provider reviews, or have a quick look at the list below.

Best Home Warranty Companies

#1
Editorial Rating
98.50
  • $150 off + 2 months free
  • $0 transfer fee
  • Good selection of plans
  • High contractor professionalism
  • Quick replacement payments

Free

Coverage for 2 Months + $50 off

#2
Editorial Rating
95.10
  • Best Value for Money 2019
  • Large and established
  • Plans from $25/m
  • B+ BBB rating
  • 500,000 customers

Promo coming soon

#3
Editorial Rating
91.80
  • 24/7 service calls
  • Market veteran
  • Excellent BBB rating A+
  • Accredited by BBB
  • Low optional coverage costs

Free

Coverage for 1 Month + $75 off

#4
Editorial Rating
87.60
  • Multiple optional coverage items
  • 24/7 service calls
  • Clear terms and conditions
  • Limited plan selection
  • New on the market

Free

Coverage for 1 Month + $50 off

#5
Editorial Rating
87.00
  • 24/7 service calls
  • Market veteran
  • Large and established firm
  • Limited plan selection
  • Poor communication reported

Free

Coverage for 1 Month + $50 off

ReviewHomeWarranties.com Can Help You

Seeking home warranty coverage isn’t a bad idea, despite the scam artists out there who give the industry a bad name. The key is protecting yourself against home warranty scams and working with reputable companies to ensure you get the coverage you want and need as a homeowner. ReviewHomeWarranties.com can help you through this process with detailed reviews of various home warranty companies based on their reliability and how clear their terms and conditions are. With us, you’ll know which home warranty companies are the worst and which have proven to be worth using.

ReviewHomeWarranties.com provides valuable information for homeowners, home buyers, home sellers, and anyone else who may be considering acquiring a home warranty. Their reviews are also honest, and they highlight the best ten companies and organize their reviews based on company, pan pricing, and what state you live in.

Reviews are incredibly detailed. For example, the top home warranty company rated, Select Home Warranty, looks at the coverage, policies, variety of plans, total cost, customer reviews, and credibility.

However, ReviewHomeWarranties.com genuinely wants you to make the best decision for your personal coverage needs. Their reviews also highlight the negatives of each company. For example, American Home Shield’s review highlights both their inexpensive plans, but also their aggressive marketing strategies, low coverage cap, and the fact that claims get denied regularly. They even offer suggestions for other home warranty companies to consider with better coverage or practices.

See Home Warranty Scam Infographics

So, are all home warranties a scam? Which are the worst home warranty companies to avoid?

While home warranty scam artists do exist and they can be difficult to spot, not all home warranty companies are out to trap their customers. ReviewHomeWarranties.com can help you pick the most reputable home warranty insurance with the best policy options. You can protect yourself by exploring this site, but also by going the extra mile to vet the company you’re thinking of working with, and by carefully reviewing your policy, so you understand the full scope of what’s covered and what’s not.

Recommended for you: What does a home warranty really cover: a comprehensive guide.

Not interested in understanding the ins and outs of home warranties? Want a home warranty today by a credible company?

Show me reliable home warranty companies NOW