Select Home Warranty, one of the leading home warranty providers in the country and specifically in New York, has recently announced it is an official partner of the New York Jets, and that is another major move that shows us that this once niche industry is now mainstream.
Just look at American Home Shield, the largest player in this field, which has spun off from its parent company ServiceMaster to a new company named FrontDoor – simply put, the business is big enough to justify its own stock symbol separated from ServiceMaster’s other operations.
How come home warranties are doing well? Many people, and particularly disgruntled clients, are asking the exact same question. This industry is a constant target for investigative television show over, and over, and over again that some customers are treated completely unfairly and against the policy they are holding.
With that being said, the concept itself can appeal to people of all traits of life. Instead of spending $2,500 in one go when your refrigerator goes bust, you will pay $50 a month until it does, and when it does you’ll only have to pay a $75 deductible and it’s fixed or replaced.
Another thing that home warranties have going for them is time-saving. If you are short on time, it can definitely come in handy to always talk to the same company to dispatch you home repair professionals when you need them.
The question is of course whether in the moment of truth, when an expensive item breaks, you will get the coverage you were paying for all these years. It’s a good question, especially with the smaller providers in this industry. These go out of business from time to time, leaving havoc behind. It is in fact also a good question whether the bigger companies will take care of you.
American Home Shield has a petition in place demonstrating against its allegedly poor business
practices, it has been sued multiple times, and out of thousands of client reviews online the vast majority are highly negative.
Further to bad business practices which appear to be common in this industry, there are also limitations which are imposed by the contract (at least by some companies and/or in certain situations). These include a service fee payment of $50-$100 per call. That is almost as expensive hiring your own handyman and paying him for his services (without enduring the $50
subscription fee to a home warranty). Another common thing among some home warranty companies is that you have to pay for each time a repair person visits, even if the original issue was not resolved to your satisfaction. That means that a bad repair person who does a lousy job can end up coming back to fix and re-fix several times, each incurs a $50-$100 fee!
To summarize, home warranties are growing with each year passing, and have become almost as mainstream as any other sort of insurance, but in spite of their success, it does not seem like business practices are improving, and upon signing up with a home warranty company, you have a tangible risk of not being appropriately taken care of when you need them.