Information on Ohio's Consumer Laws from Attorney Daniel Myers, Myers Law, LLC, not legal advice
We’ve seen a sudden increase in consumers with legitimate home warranty claims that are being denied by warranty companies after long delays, or no investigation whatsoever. Worse, sometimes when claims are covered by a utility warranty company, a nightmare ensues.
It would be nice if all warranty companies, or insurance companies, simply did what you paid them to do. But we know that there are unscrupulous and deceptive companies out there. These companies make money by getting people to pay premiums, and they get to keep that money if they don’t pay claims.
In 2015, Choice Home Warranty reached an agreement with the New Jersey Attorney General’s Office to pay almost $780,000 and change its business practices, because the warranty company “allegedly used creative and deceptive means to deny their customers’ claims,” according to the then-Acting Attorney General of New Jersey. These actions and practices are engaged in by other utility warranty and home warranty companies, including warranty companies in the State of Ohio.
This article will help you learn what you need to review, where you need to look, what you need to say, and what you need to do if you want to get your utility warranty or home warranty company to take your repair seriously. There is no guarantee that the warranty company will do what it is supposed to, they often do not, but these steps help you get in a better position to get something done.
The first thing you need to do, before you call the home warranty company, and before you hire someone to make repairs, is to locate your actual warranty agreement. The warranty company should have given you the written agreement when you signed up. You should store the agreement in an easy to find location with other important records. If it is electronic, make sure it’s in an easy to find folder.
You need to read the agreement because it has limitations, coverage definitions, exclusions, and other rules that you need to follow in order to get your repair covered. For example, the Choice Home Warranty plan available online as of March 22, 2018, provides a specific number to dial before they will send out service providers. Some warranties from other companies require notice to the warranty company before you hire a contractor to repair anything. Others have specific steps to take when reporting a claim. If you fail to get prior approval in those situations, or fail to follow the necessary steps, the warranty company may refuse to reimburse you or cover the repair.
Read your warranty to see what specific steps you need to follow to make the claim, what specific systems in your home are covered, and what specific type of issues or parts are covered in those systems. Also, read the exclusions, the things not covered, by your warranty, so that you know how to talk to the service provider about the problem later. You may want to consider getting an opinion from a company you trust even before the warranty service provider shows up (as long as your company doesn’t do any repairs or alter the appliance). Many companies will give you an opinion or estimate for free. Others may charge a service fee for coming out.
You may be surprised by your coverage (or lack of coverage). Some warranty companies put a limit on what they will cover on any given system or appliance. Even though the policy says they will repair or replace something, the cap on that may be $500 or $1000 or $1500, which does not come close to covering many of the expensive systems they claim to include.
After you phone your claim in (or send it in however the warranty company requires), you will want to talk to the service provider they send out. Even better, see if you can get your choice of contractor to come out to give you a free quote and diagnosis. You will want to inform the service provider, or your own contractor, what is covered and not covered by your warranty. Rust and corrosion might not be covered, but breaks or seal leaks could be covered. A Jacuzzi-style or whirlpool style bath tub or hot tub might be covered, but only for failure of its motor, not it’s valves or jets. You have to understand the exact coverage you have so you can ask these service providers to describe the problem accurately to your warranty company.
If your service provider thinks there might be two different possible causes for your problem, ask them what they believe is the most likely reason or cause of the problem, and if that is covered by your warranty agreement, get them to put it in writing and share with the warranty company. You may even want to mention to them what is covered and not covered to get them to use the right language in how they describe something.
Your coverage might exclude problems that existed when you bought the warranty agreement, while covering the same problem if it occurred after you bought the plan. There is a difference between your service provider saying “this was leaking for a long-time” and “this was leaking for a few months, but in our opinion no longer than 3 months,” especially if you bought your warranty agreement more than three months ago. That is why it is important to tell your contractor or service provider the limits of your coverage, so they know how to better communicate the problem, and they don’t say something that could be misinterpreted by your warranty company to deny the claim.
You need to understand your warranty agreement and its coverage first, and then communicate with the service provider about your coverage before they put their decision in writing, and before they communicate back to the warranty company.
Over the phone, your home warranty company may tell you “we don’t have anyone to help with that, just find someone and we will reimburse you later.” This statement may not only be unenforceable, but even if you could hold them to it, you’ll have a heck of a time trying to prove that they told you this after they deny it later. If you aren’t recording your phone calls (remember some states require both parties to a call to know they are being recorded), then you need something in writing to verify that they are authorizing you to do this. An email, text message, or letter would help you confirm what your home warranty company told you to do later.
You’ll be surprised how few warranty companies are willing to put anything in writing (a red flag, by the way), and even when they do, the letter or email will usually have more loopholes and disclaimers than their simple statement on the phone. If they say “get a contractor to repair it and we will cover the repair or reimburse you for it,” and that’s it, then you are in a decent place and could consider doing that.
However, if they put in writing that you can “get a contractor, and if we later determine the repair to be a covered issue under your agreement, we will deal with it as written in the warranty agreement,” that is not as helpful, and it doesn’t actually obligate them to pay you or reimburse you for anything. It’s a non-answer answer, like a politician might give at a debate.
If it’s an emergency, you may not have a real choice about whether you are going to fix the problem on your own dime. But if it can wait, demand something in writing from your warranty company before you obligate yourself to pay for the repair.
No matter how thorough and convincing your contractor’s opinion is, prepare yourself for your home warranty company to delay a decision on claim coverage. If you don’t get an answer back from them, pester them an annoy them until they get back to you, at least once a week. Contact them in writing, with emails, texts, online chat systems on their website, or with letters, too. At some point they have to stop delaying and respond. If they don’t respond, the delay is basically a “no.”
You cannot allow them to delay for long. In Ohio, many (but not all) of the legal claims you have against a bad warranty company expire if you wait more than two years from the date the violation occurred, even if you didn’t discover the problem until later. The warranty company might have violated the law when they sold you the warranty, and if you go back and forth with them for a year, over a claim you made in month 12 of coverage, you may have lost the ability to bring many of your claims. You may still have a claim related to their failure to pay for the repair or cover the system, but you lose a lot of the leverage you have. You need to talk to an experienced consumer rights attorney before it is too late to bring your claim in court or arbitration.
Sometimes companies will drag out this process because your warranty agreement requires you to bring a lawsuit or file for arbitration within a certain number of days, months, or years after the problem arises, or after you initially made your claim. If they drag it out long enough, you might be out of time contractually to file your claim, too, regardless of any legal statute of limitation.
An attorney can guide you through a rough claims process, as well, and can be a go-between for you and your home warranty company / service provider / contractor.
If you and your contractor or service provider are confident on the repair needed, and it appears to be covered by the warranty, don’t accept the warranty company’s delay or denial of your claim. Demand that if they are refusing to cover it, they send you something in writing stating so, and giving the reason the claim is being denied. If you have not yet done so, get your contractor or service provider to put in writing the reason for the repair, or have them write down the problem you experienced and the parts involved, as well as what the cost will be.
Even if your warranty company won’t change its mind, this document will be critical later. You will need an expert at court to say what the problem is, what caused it, and whether it is the type of issue that the warranty agreement says should be covered. This document might get you part of the way to that expert report, and any good attorney will want you to get that sort of a document before they are willing to bring a case on your behalf.
That said, sometimes the warranty company is right, and sometimes the repair, replacement, system, or appliance is not covered. In these cases, you can still get a second opinion from an attorney. Consider not renewing the home warranty after it expires.
While many contractors who work with warranty companies are great, experienced, and legitimate, some are not. Some people believe that many warranty companies hire the least expensive contractors to make repairs. It is also said that “you get what you pay for.” There are stories about home warranty or utility warranty companies hiring unlicensed, unregistered contractors, or using contractors that never pulled required permits for the work. There are lawsuits out there alleging that warranty companies failed to properly oversee the work or only authorize cheap fixes.
No one is going to look after you or your interest but you (and your lawyer). If the repair or replacement is extensive, or involves replacement of plumbing, electrical work, HVAC work (like a new furnace, etc.), make sure the contractor pulls a permit, make sure they are registered or licensed. At the end of the work, call the City or County to make sure the building department did an inspection. Trust but verify. If you are still concerned, get another company to come out to inspect the work that was done, and they can confirm or deny that it was done properly.
Taking these steps won’t prevent every problem, and won’t guarantee results or success, but it will make sure you are using your best efforts to get the warranty company to do what it is supposed to do. Always remember that most warranty companies are looking for reasons to not cover your claim. If you realize that, and take steps with that in mind, you are better off.