A Word on Home Warranties…

Posted by on Sep 23, 2016 in Insurance, Real Estate | No Comments


First Time Home Buyers are often overwhelmed with the “Do”s and “Do Not”s of home ownership. While most are familiar with the principles behind the need for home insurance, and the added benefits of flood insurance, many have not been exposed to anything beyond that basic knowledge. In efforts to further protect themselves, the homeowners will purchase a home warranty from one of several companies offering them such as American Home Shield and Fidelity Home Warranty.

Home warranties traditionally cover such items as plumbing defects, stoppages, hot water heaters, and even air conditioners. While we understand the need for these offerings, and even recommend them, one must be very well informed as to the true nature of these products, as well as their limitations. For example, home warranties are NOT insurance, and as such, are not subject to the protections of the Texas Insurance Code. They are not therefore governed by the timelines which cover most homeowners’ insurance companies.

Keeping that in the front of your mind, there are some other important details to remember when considering your home warranty purchase. Sometimes the warranty company will charge an extra fee for such items as refrigerators.  Just as important, one needs to realize that the warranty contains a few terms which are sacrosanct by the warranty company. The most important of these is that the homeowner must give the warranty company first notice of the issue and allow them to call one of their preferred vendors to the property.  If you call another contractor thinking you will then have the warranty company pay you, then you will void the coverage for that claim.  Secondly, you must know that there is a limited amount of funds available under your warranty.  Therefore, if you have, for example, a Sub-Zero refrigerator, then chances are you will be unable to purchase a replacement with the warranty proceeds, if a replacement is indicated.  Most of these warranties have a cap of $5,000.00.

Additionally, you should know that the approved contractors are not always the most qualified.  You have a right to a second opinion, but must call the warranty company for them to assign the second opinion company.

Wading into the murky world of home ownership can feel overwhelming at times, but there are a myriad of resources available to shed light on the area.   And just always read the warranty!

The law firm of Thomas M Fountain & Associates, P. C. is an AV Preeminent rated law firm located in The Woodlands, Texas which is in the greater Houston metropolitan area. Thomas M Fountain has 35 years of experience upon which the firm’s clients draw when necessary. The firm prides itself on being proactive rather than reactive. 

For more information see our Website at www.HoustonTrialLaw.com or call (281) 296-6500.