After shopping for a home warranty for a few days, you may wonder how warranty providers stay in business.
Based on online reviews, you’d think every customer who’s ever bought a warranty had a terrible experience and feels cheated. Reviewers warn potential customers away as if they’re patrolling some kind of abyss.
Naturally, online reviews can’t represent all customers. Still, the high volume of discontent is alarming.
The Home Service Club, a relatively new warranty provider, stands out as an exception.
About The Home Service Club
The Home Service Club opened in 2008 with the goal of simplifying home warranties and providing a more straightforward approach to coverages and caps. So far, based on customer reviews, the company has succeeded.
You can find less expensive premiums and higher spending caps in other companies’ contracts, but you learn the real cost of a warranty when it doesn’t pay for your repair and you have to find some other way to cover the expense.
With The Home Service Club, you’ll have a more reliable way to know when the warranty will pay and when you’ve exceeded its limits. Read on to see why the Home Service Club is one of our top home warranty providers.
The Home Service Club Coverage
The Home Service Club has two base levels of service, Standard and Comprehensive.
Standard Plan
Essentially, the Standard Plan covers the kitchen and laundry area and the primary systems in your home:
- Refrigerator
- Stove (ovens, ranges, cooktops)
- Dishwasher
- Clothes washer and dryer
- Icemaker (freestanding)
- Built-in microwave
- Trash compactor
- Built-in food prep center (processors, etc.)
- HVAC system units
- Electrical system
- Water heater
- Plumbing
- Garbage disposal
- Garage door opener
- Ceiling fans
- Central vacuum
Comprehensive Plan
The Comprehensive Plan includes items in the Basic Plan, plus the following:
- Plumbing stoppages
- Ductwork
- Pest control
- Gas leaks
- Telephone wiring
- Smoke detectors
- Alarm system wiring
- Attic fans
- Exhaust fans
- Sump pumps
- Doorbells
- Hot / cold water dispensers
- Hot water pump
Additional Services
After you’ve purchased a Basic or Comprehensive warranty from The Home Service Club and waited the required 30 days for the contract to go into effect, you can add on services for an extra annual fee.
Optional coverages include protection for your:
- Sprinkler system
- Freestanding freezer
- Additional refrigerators
- Sub-zero freezers
- Well pump
- Water softener
- Jetted bathtub
- Roof
- Pool and spa
- Sewage ejector pump
- Outside water or power lines (running to an exterior building, for example)
How Much the Home Service Club Costs
Payments
Home repair costs vary in different parts of the country, so The Home Service Club also varies its fee structures in different markets. The following prices could be different depending on your location:
Premiums: The Basic Plan costs around $500 a year in most areas. The Comprehensive Plan will cost closer to $750 a year. You can break these annual fees down into monthly payments. To get a precise quote customized to your property, you’ll have to enter some contact information on the company’s site.
Fees: Like any home warranty, The Home Service Club will charge an initial service fee to send a technician. The fee could be $65, $95, or $125 depending on your contract.
The Home Service Club explicitly states in its sample contract what it will and will not repair, along with the spending caps for a one-year term.
Annual caps
Many of the caps are lower than some other warranties, although it can be hard to know for sure since so many warranty contracts are hard to decipher.
Here’s a sample of The Home Service Club’s annual caps:
- Heating system: $2,500
- Air conditioner: $2,500
- Ductwork: $750
- Water heater: $500
- Electrical system: $500
- Built-in microwave: $500
- Refrigerators: $750
- Garbage disposal: $350
- Clothes dryer: $800
- Icemaker: $400
Additionally, and this is important, the warranty will place a comprehensive cap between $6,000 and $9,000 per year on repairs at your home. If you exceed your annual comprehensive cap, you’re no longer eligible for any service on any system.
- The Basic Plan usually caps annual payouts at $6,000.
- The Comprehensive Plan usually caps annual payouts at $9,000.
The Home Service Club Claims Process
When a covered system in your home needs a repair or replacement (and you’ve waited 30 days after signing the contract) you can contact The Home Service Club to file a claim.
How to File a Claim
The company offers 24-hour coverage, but only online. If you want to phone in a request, you’ll need to call during business hours in the Eastern time zone.
The company also limits coverage on weekends and holidays, even online, so expect to wait longer — up to 48 hours — for a response. Ordinarily, the company does its best to get help to your home within 12 hours.
Who Will Fix My System?
The Home Service Club has a network of about 15,000 contractors and technicians, and the company’s dispatchers will decide which specialist to send to your home. As a customer, you have no control over the process.
This in-network requirement is not unusual for a warranty, and most customers find it preferable to the other alternative: paying for a repair out of pocket from a local contractor and then trying to get reimbursement from the warranty.
What’s Required of Me?
Other than paying the premiums and the service fees — and staying within the annual caps on expenses — you’ll have a couple of other responsibilities:
- Inspections and local codes: If your municipality requires an inspection of a repaired or replaced system, you’ll have to cover any associated costs. The warranty will not pay it. (Many municipalities do not charge for inspections.)
- Regular maintenance: The Home Service Club does not require a pre-inspection of your home’s systems before you sign a contract, but it will not pay to repair systems damaged by a lack of regular maintenance. If you haven’t changed your air conditioner filter in, say, 18 months and this causes a breakdown, your warranty can refuse to cover the expense.
Also, you’ll need to be home, or arrange for someone else who is 18 or older, to be at your home during the repair process.
Canceling the Contract
You can cancel your warranty within the first 30 days at no charge except for an administrative fee up to $45. You can also cancel the contract anytime after the first 30 days, but you will not receive a full refund on premiums paid.
Your refund will be prorated depending on how much time has passed since you entered the contract.
The Home Service Club retains the right to cancel your contract if you don’t pay the premiums, of course. The company can also cancel your contract if you threaten service technicians or customer service reps or if the local laws in your area change in a way that makes service more expensive.
Transferring the contract: If you sell your home, you can arrange uninterrupted coverage for the buyer, but you’ll need to do so in advance. Warranties can be appealing selling points in the real estate market.
Alternatives to the Home Service Club
As you shop for a home warranty, be sure to consider some of the top alternatives to the Home Service Club below.
Who Needs a Home Warranty?
Hundreds of thousands of homeowners opt for home warranties each year because they worry about how they’d afford a major home repair.
When you buy a new car or a new iMac, your warranty can almost guarantee your product will be repaired or replaced during the warranty’s period.
A home warranty can’t offer this kind of guarantee because the company didn’t make the products it agrees to protect. A better term for a home warranty may be “service contract.”
When you pay your premiums, you’re pooling your resources with thousands of other customers to shield yourself against unexpected home repair costs and service bills.
When Not to Buy a Home Warranty
If you don’t need this kind of shield, a warranty won’t make as much sense for you. For example, you may not need a home warranty if:
- You could set aside money: Unexpected repairs could cost thousands of dollars, and you may need the money quickly, especially if your air conditioner needs to be replaced and it’s the middle of July. If you have a healthy emergency fund set up, you won’t need to rely so much on a warranty.
- You could borrow money at low interest: Banks and other lenders, and even some contractors, offer low or no-interest borrowing promotions if you need a large repair and don’t have the cash. This option won’t work unless you have good credit, though. And stay away from this idea if you can’t repay the loan within the promotional interest-free period.
- You could fix a lot of things yourself: If you are a contractor or if you’re experienced at repairing a wide variety of home systems, you may be your own warranty, though it’s still smart to set aside money for parts and new components.
- Your house is brand new: New homes can have problems, too, but you may be less worried about replacing entire systems in a newer home. Also, many new systems in a home may already have their own manufacturer’s warranties.
When to Buy a Home Warranty
The best candidates for a home warranty such as The Home Service Club often include people who:
- Have an older home: You can cross your fingers all day, but a 25-year-old HVAC system or a 15-year-old refrigerator may not last much longer. If you’ve bought an older home with older systems, a warranty could save you thousands of dollars on repairs.
- Have limited financial flexibility: Sure, you’ll pay $500 or so a year in premiums with The Home Service Club, but the warranty could save you up to $6,000 if a lot of stuff went wrong at your home this year.
- Wants a one-call solution: Some people just don’t have the time or energy to find quality contractors for expensive repairs. A warranty such as The Home Service Club’s plans offer convenience because you can call one number for most of your repair needs.
Is The Home Service Club Right for You?
Only you can decide whether The Home Service Club would be worthwhile for your home. I will say this: I like the clarity of The Home Service Club when compared to other companies.
Premiums and fees may be higher than some other companies’ plans, and annual payout caps may also be lower with The Home Service Club in comparison to other contracts.
But with The Home Service Club, you have a pretty clear expectation for what you’re getting in return for those costs.
Too many warranties claim to offer instant service and complete coverage, all of which sounds great. Only later do customers learn about the warranty’s exclusions and limitations.
Studying the Contract Reduces Your Risk
Home warranties pitch the concept of “peace of mind” to customers who worry about excessive home repair costs. This is an abstract concept. You need some concrete facts before signing a contract.
Fortunately, you can see a sample contract from The Home Service Club before you even share your email address or phone number with the company. Read the contract carefully to learn about its limitations.
Before signing, though, read over the actual contract you’ll be agreeing to because it could work a little differently from the sample contract.
A Warranty Isn’t a Long-Term Commitment
Unlike homeowners insurance, which you should always have in force to protect your property from external damage, a home warranty is an option. Most warranties, including The Home Service Club’s plans, work on annual contracts.
Someone who needs a warranty now but may not need it next year or in a few years can simply opt not to renew the contract. Remember, too, that you’re not locking in a premium or fees for more than one year at a time. Next year the company could increase your premiums or raise service fees.
Bottom Line: Consider Your Options and Study the Fine Print
Warranties incite customer anger for one reason: when the peace of mind the warranty promises turns out to be a false sense of security.
Avoid this snare by reading any contract carefully before signing. Whether it’s the Home Service Club’s contract or another warranty company’s plan, it’ll be worth your time and money to understand each limitation of the contract.
Read it line by line. Make an evening of it after dinner. Read it aloud if you need help staying awake.
This way you can find out exactly how the contract builds its promise to shield you from unexpected home repair expenses.
The post The Home Service Club Review: Simpler and Clearer Home Warranties appeared first on Good Financial Cents®.
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