Home warranty - is it worth the money?

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JackRam
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Home warranty - is it worth the money?

Post by JackRam » Mon May 13, 2019 9:59 pm

I live in a 15 year old home with every appliance and systems original from builder. I recently had a blown out motor in HVAC that cost about $300 to fix though it could have been worse.

Now I am thinking if I should buy a home warranty. Your thoughts?

tim1999
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Re: Home warranty - is it worth the money?

Post by tim1999 » Mon May 13, 2019 10:15 pm

The last house I bought had one included from a national warranty company that was paid for by the seller, which was a common thing to include in a house sale in that particular area.

The biggest benefit for me was that when something went wrong, no matter what it was, I just had to make one call to the warranty company and they scheduled an appropriate contractor to come out. Almost always within 48 hours even if a not very urgent issue, and the appointment window times were pretty flexible. I didn't have to mess around with trying to find a legit contractor interested in a small job, having them come to give a price and hopefully show up, not overcharge me, etc. The warranty farmed most of the work out to small, but incorporated "handyman" type contractors.

Most of my problems in that particular house ended up being related to various plumbing leaks, and one HVAC issue. The problems were always fixed without the warranty company balking at anything.

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baconavocado
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Re: Home warranty - is it worth the money?

Post by baconavocado » Mon May 13, 2019 10:18 pm

No.

You can search this topic on the board to find out why. In summary, home warranties are a rip-off. They don't cover things that commonly break, and when they do cover it, they aren't going to repair it when it breaks (e.g., weekends, evenings, etc.).

These things are about as valuable as extended warranties on appliances, electronics, and everything else. I think they were dreamed up by the real estate industry as another profit generator.

adamthesmythe
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Re: Home warranty - is it worth the money?

Post by adamthesmythe » Mon May 13, 2019 10:24 pm

Buy a warranty if (1) your budget is very tight and you have minimal emergency fund (2) you can be patient and persistent to get things fixed (3) you are sure that the most important items are covered and (4) you are OK with cheap fixes that may need to be redone more than once.

The age of the house or appliance alone is not a good predictor of probable failure. Refrigerators, unlike the items inside, do not come with "sell before" dates. At 15 years you are in the low part of the bathtub curve for many appliances.

I don't gamble in Vegas. But I do believe skipping most extended warranties is a good bet.

Big Dog
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Re: Home warranty - is it worth the money?

Post by Big Dog » Mon May 13, 2019 10:30 pm

instead of a warranty company, much better to establish a relationship with a good plumber and HVAC guy. The Warranty companies hire a lot of inexperienced rookies.....

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HueyLD
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Re: Home warranty - is it worth the money?

Post by HueyLD » Mon May 13, 2019 10:41 pm

I heard many stories about home warranty services. And the general theme is that insurance companies make lots of money by trip charges ($75 per service call) and denial of services by exclusions in the fine print that nobody bothers to read.

Some homeowners were lucky to have one good experience, but many seem to have subpar experience because the contractors always take a few trips @$75 each to attempt to fix a problem and it appears that quality folks don't work for peanuts paid by the insurance companies.

I think the better alternative is to set aside 1% of house value per year as house maintenance reserve.
Last edited by HueyLD on Mon May 13, 2019 11:48 pm, edited 2 times in total.

boglerdude
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Re: Home warranty - is it worth the money?

Post by boglerdude » Mon May 13, 2019 11:12 pm

Warranties do cheap work. Search for repairmen on Nextdoor.com

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FIREchief
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Re: Home warranty - is it worth the money?

Post by FIREchief » Tue May 14, 2019 12:30 am

Way back when I owned a house (i.e. 14 days ago), I only utilized competent contractors. I'm in a medium sized metropolitan area. My HVAC contractor was in business since 1947. My plumbing contractor since 1950. Appliance company since sometime in the 50's. I don't believe that any of these participate in the scam that is home warranties.

Our home buyers requested a home warranty and we negotiated it into the final deal. Best of luck to them..... :beer
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Meaty
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Re: Home warranty - is it worth the money?

Post by Meaty » Tue May 14, 2019 5:26 am

They aren’t worth the paper they are printed on. Getting a claim paid is incredibly difficult
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SimonJester
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Re: Home warranty - is it worth the money?

Post by SimonJester » Tue May 14, 2019 8:23 am

They are by far Worthless... Take the money you are going to spend on that warranty and put it into a savings account...
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

megabad
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Re: Home warranty - is it worth the money?

Post by megabad » Tue May 14, 2019 8:35 am

Sure they are worth it when you are selling a home and it makes an inexperienced buyer feel better and gets the sale done. By definition, for most people they are almost always a money loser though.

scophreak
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Re: Home warranty - is it worth the money?

Post by scophreak » Tue May 14, 2019 8:50 am

I had a 1-year policy included in the purchase of my home (not something that we specifically requested or asked for). We did use it for 2-3 minor claims within that year with no issues whatsoever - garbage disposal replacement, sump pump replacement, and one other that I can't specifically recall. All problems were fixed with a single service call charge and we haven't had any repeat issues with the same components.

That said, I'm not sure that the warranty would have been "worth it" had we purchased separately. I suppose we may have "paid" for the service since it was rolled into the purchase - perhaps there was some additional negotiation room had we declined. Probably ended up as approximately a wash for us, though we may have come out a couple hundred $ in the black.

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queso
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Re: Home warranty - is it worth the money?

Post by queso » Tue May 14, 2019 11:47 am

Had one on my first house - American Home Shield or something I think. Anyway, tried to use it once for a cracked toilet tank. They didn't want to buy and install a new tank that matched the base and pedestal sink since it was cheaper to buy a builder grade toilet and just install that. Ended up buying the tank online and replacing it myself. Never called them again.

ajg189
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Re: Home warranty - is it worth the money?

Post by ajg189 » Tue May 14, 2019 1:11 pm

I may be in the minority here, but I had a home warranty included with the purchase of my home. Last year, after being unable to fix our dishwasher (two service calls over an approx. 2 week period), they cut us a check for a new one including install/disposal costs. My appliances are all 10+ years old, so I extended it knowing that we will have some repairs coming up on the horizon.

thx1138
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Re: Home warranty - is it worth the money?

Post by thx1138 » Tue May 14, 2019 1:18 pm

In general no. Most "warranties" and "insurance" are of course a money loser to the purchaser in the long run. Buy only insurance that covers things you can't realistically cover yourself (e.g. catastrophic health, various forms of liability). A home warranty is more cost effectively handled by an emergency fund.

Where they are useful is where you want to transfer - usually temporarily - the liability for getting things fixed to a third party. The most common case being on a home sale where the seller buys a year warranty for the buyer so they don't have to get into endless fights about the condition of appliances and other systems in the house.

Another case in which we actually paid for a home warranty was when we temporarily rented a property while we were out of town. We wanted the tenants to be able to contact someone other than us if a repair came up and not have to pay anything out of pocket themselves. If we actually ran lots of rental properties presumably we'd use a management firm or develop other long term relationships in an area to handle these things but since it was only for a year the most cost effective way to do it was via a home warranty.

It did fulfill the intended role but we were pretty unimpressed. When an HVAC issue came up instead of dispatching the most reputable and largest firm in the area (which had actually installed it) they sent out someone else who in the end couldn't tackle the particular issue so then they had to send out someone else. Both visits incurred the $75 fee and of course then my tenant had to be on site twice instead of once.

I'd never pay for a home warranty myself on a house that I occupy myself for the long term.

3funder
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Re: Home warranty - is it worth the money?

Post by 3funder » Tue May 14, 2019 1:20 pm

Nope.

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mhadden1
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Re: Home warranty - is it worth the money?

Post by mhadden1 » Tue May 14, 2019 1:43 pm

ajg189 wrote:
Tue May 14, 2019 1:11 pm
I may be in the minority here, but I had a home warranty included with the purchase of my home. Last year, after being unable to fix our dishwasher (two service calls over an approx. 2 week period), they cut us a check for a new one including install/disposal costs. My appliances are all 10+ years old, so I extended it knowing that we will have some repairs coming up on the horizon.
I too had a home warranty that the seller paid for, as a marketing tool, when I bought my house. It paid for some things that broke, so it ended up having value for me. I think these warranties are pretty expensive and not likely to be cost-effective - I can't see myself ever buying one.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

3feetpete
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Re: Home warranty - is it worth the money?

Post by 3feetpete » Tue May 14, 2019 2:30 pm

I had one that came with my current house. The gas furnace failed and they replaced it although I had to wait a few days for it to ship to a local installer. It still cost me a few hundred dollars for stuff that wasn't covered. There was a deductible and haul away charge and an extra for modifying the ductwork. I was not dissatisfied with the experience but I didn't renew because they give me no option to upgrade to a better quitter more efficient unit. They replaced the contractors model with a similar contractors model and that was it. If I wanted to upgrade they would only give me $200 towards a unit for me to get myself.

daheld
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Re: Home warranty - is it worth the money?

Post by daheld » Tue May 14, 2019 3:10 pm

I too didn't protest when the seller of our home included one. We did not ask for one, but I just accepted the 1 year warranty as part of the sale.

I wish I'd just asked for a $450 credit. I'd regale you the tale of trying to submit a claim, but I'm pretty sure there's a character limit on these posts, and I'd probably get banned for profanity.

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FIREchief
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Re: Home warranty - is it worth the money?

Post by FIREchief » Tue May 14, 2019 3:40 pm

daheld wrote:
Tue May 14, 2019 3:10 pm
I wish I'd just asked for a $450 credit. I'd regale you the tale of trying to submit a claim, but I'm pretty sure there's a character limit on these posts, and I'd probably get banned for profanity.
LOL!! :beer I think I paid $515 for the one that my home buyers asked for. It didn't cover pre-existing conditions, and I'm pretty sure it's up to the buyers to "prove" to the warranty company that the <fill in the blank> that just failed wasn't in poor condition when they bought the house. I also read some on line reviews that were pretty scathing. Warranty company only uses a single HVAC contractor (likely the low bidder) in town and there were reports of warranty owners being without AC for several months during the summer. Some just gave up and paid a "real" contractor to get their AC going again.

I'm am little surprised that most Bogleheads in this thread have essentially answered "no" to the OP's question.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

hookemhorns
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Re: Home warranty - is it worth the money?

Post by hookemhorns » Tue May 14, 2019 8:33 pm

They’re a rip off. You’re better off pocketing the premium and hiring quality repair services of your choosing, assuming you even need them.

The catches to home warranties are:

1) They charge a per visit deductible and repairs are often split over multiple trips (ie fixing an ac requires one trip for diagnosis, second for parts and actual repair) leaving you paying most of the cost out of pocket.

2) They choose the repair service, which means you get the cheapest and least experienced service. Again requiring more trips to actually fix the problem.

3) They select the appliance you get if something needs replacement. You will get the cheapest POS they can find.

4) The policy has many exclusions and fine details. For example, if your ac goes out they ask to see your maintenance records, even if you just bought the house. Don’t have them? Sorry, it’s not covered.

On and on. It’s a rip off.

tampaite
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Re: Home warranty - is it worth the money?

Post by tampaite » Wed May 15, 2019 10:11 am

Deleting my messages on this forum
Last edited by tampaite on Mon Jun 03, 2019 7:22 am, edited 1 time in total.

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cheese_breath
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Re: Home warranty - is it worth the money?

Post by cheese_breath » Wed May 15, 2019 10:12 am

You only spent $300, and you're thinking abut buying a home warranty? When you buy a house you should set up a budget which would cover normal maintenance items like this.
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GT99
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Re: Home warranty - is it worth the money?

Post by GT99 » Wed May 15, 2019 10:51 am

Absolutely not. A home warranty is insurance for things breaking in your home. You should only insure for things you can't afford to happen (e.g. house fire, and other type things that aren't covered by home warranty). For things you can afford, the odds are very high that the insurance will cost you more than the occurrence - that's how insurance companies make money. Let's frame it a little differently - would you pay $500 a year to insure against something that there's a 10% likelihood of happening and it will cost you $2500 to fix yourself? I hope not.

To be blunt, if you can't afford the kind of repairs a home warranty covers, you can't afford to own a home.

On top of that, the Home Warranty company has little incentive to send high quality repair people. They are always going to send the cheapest. My first home purchase came with a home warranty, and I didn't know better. I ended up with years of HVAC issues because the company they sent was completely incompetent. Long story, but when I finally paid to bring in a company of my choosing (which I should have done long before I did) they were flabbergasted at the things the prior company had done.

Finally, they give themselves all kinds of outs on having to pay for a repair - if you didn't follow every manufacturer prescribed maintenance step exactly, they don't have to pay. And most people do not.

gtd98765
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Re: Home warranty - is it worth the money?

Post by gtd98765 » Wed Sep 04, 2019 11:49 am

A good article by a consumer magazine that did extensive research into home warranty companies:
Home warranty companies run lots of ads promising to save you thousands of dollars when something goes wrong with your refrigerator, furnace, plumbing, and other appliances and systems. But don’t count on the peace of mind these plans promise. These warranties are terrible deals and simply aren’t worth their price tags or hassle.

Warranty companies are the subject of thousands of complaints to consumer agencies. Even after paying $400 to $1,000 for the coverage, consumers will find home warranty contracts typically are filled with fine-print exclusions that easily can stick them with much of the costs for product repairs or replacements. The vast majority of homeowners who buy these plans will pay far more in premiums and service fees and for uncovered repairs than if they skipped buying warranties. Plus you don’t get to decide who does the work. We find that the best repair services overwhelmingly disdain these plans and won’t work with home warranty companies.
https://www.checkbook.org/washington-ar ... arranties/

Afty
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Re: Home warranty - is it worth the money?

Post by Afty » Wed Sep 04, 2019 11:58 am

I will echo everyone else's advice to avoid home warranties. We received one (First American) with our house. We had an issue with our water heater, called the warranty company out and they refused to repair it. We were out the $75 copay for nothing. They also use low quality contractors and, if you can convince them to fix something, will use the cheapest option they can. We actually got negative value out of our warranty as we paid them $75 to tell us they wouldn't fix our problem.

bradpevans
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Re: Home warranty - is it worth the money?

Post by bradpevans » Wed Sep 04, 2019 12:06 pm

ajg189 wrote:
Tue May 14, 2019 1:11 pm
I may be in the minority here, but I had a home warranty included with the purchase of my home. Last year, after being unable to fix our dishwasher (two service calls over an approx. 2 week period), they cut us a check for a new one including install/disposal costs. My appliances are all 10+ years old, so I extended it knowing that we will have some repairs coming up on the horizon.
I've had American Home Shield (house is 1941). Some would say they are the best of the worst, and claims seem more difficult over the years.

But, two garage door openers, water softener, well pump, AC fan blade, squirrel down the chimney were all covered over the years.

I did have one where the contractor claimed my "attempts to fix" made it worse and therefore they covered nothing.

There is high turnover of contractors, probably because they got caught in the middle between the homeowner (who they deal with in person) and the warranty company who pays them.

So, a mixed bag in *my* case

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TexasPE
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Re: Home warranty - is it worth the money?

Post by TexasPE » Wed Sep 04, 2019 12:26 pm

Check with your Homeowner's policy for coverage. Mine https://www.sagesure.com/ in Texas has a $47/ year rider "HC195321 11 14 - Equipment Breakdown Enhancement" that covers all equipment ($500 deductible) for mechanical (not electrical) breakdown. My 10-year HVAC parts and labor warranty expired last year, so this may help with future issues (no claims so far).

BTW, the 10 year HVAC manufacturers parts and labor warranty saved me thousands: replaced three inside coils in each system - 6 total (persistent manufacturing defect), an air mover motor and a compressor at zero cost to me.
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adamthesmythe
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Re: Home warranty - is it worth the money?

Post by adamthesmythe » Wed Sep 04, 2019 12:50 pm

> is it worth the money?

Sometimes (rarely?) yes; usually not. How could it be otherwise?

Buy it (1) for the next owner, to sell your house more easily (2) if you really have no emergency fund or (3) if you know something about your systems. Not that they are old (and 15 years isn't old), but that they are really really likely to fail soon.

chrisjul
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Re: Home warranty - is it worth the money?

Post by chrisjul » Wed Sep 04, 2019 1:59 pm

I will be the contrarian here. I've moved many times and had several home warranties.

The consensus is correct in that the company will fight you, pay you less than the cost of repair, etc.

BUT, you will most likely recover the cost of the contract if your appliances are old and near death. If you have a high tolerance for frustration and don't mind fighting with the company over every claim, you can actually come out ahead.

I just bought a contract a year ago, because I was informed that my central ac unit is on the way out.

The contract cost me $300 a year for 6 years. I netted $1,228 the first year for dishwasher, range and dryer problems. Each was a fight, but I'm ok with that.

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Bogle7
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Home warranty is NOT worth the money

Post by Bogle7 » Wed Sep 04, 2019 2:34 pm


j0nnyg1984
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Re: Home warranty - is it worth the money?

Post by j0nnyg1984 » Wed Sep 04, 2019 3:56 pm

Extended warranties of ANY kind wouldn’t be sold if they were “worth it.” They are a huge money maker for the seller. The buyer feels like they are winning when they utilize the warranty / insurance, but it’s a false feeling.

My brother has been paying for AAA for years - he’s used it twice, once when it wasn’t necessary. Him and his wife also pay for ridiculous “pet insurance” and were shocked that their $2200 emergency surgery claim was denied. I was just 🤦🏻‍♂️

John Doe 123
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Re: Home warranty - is it worth the money?

Post by John Doe 123 » Wed Sep 04, 2019 4:12 pm

Our last house came with a home warranty that was paid for by the seller. We tried to make a claim within the first month and one of the company's customer service reps pointed to the fine print and told me that it was not covered.

I took a closer look at the fine print, and found that I was able to cancel the warranty within the first 30 days for a full refund.

So that's what I did, and they sent me a $450 check in the mail which I contributed to the necessary repairs on the house.

stoptothink
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Re: Home warranty - is it worth the money?

Post by stoptothink » Wed Sep 04, 2019 4:25 pm

John Doe 123 wrote:
Wed Sep 04, 2019 4:12 pm
Our last house came with a home warranty that was paid for by the seller. We tried to make a claim within the first month and one of the company's customer service reps pointed to the fine print and told me that it was not covered.

I took a closer look at the fine print, and found that I was able to cancel the warranty within the first 30 days for a full refund.

So that's what I did, and they sent me a $450 check in the mail which I contributed to the necessary repairs on the house.
Same deal, wish I would have done that. We had 2 separate claims denied in the first 6 months of home ownership that we were certain would be covered. Never actually used it.

Serie1926
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Re: Home warranty - is it worth the money?

Post by Serie1926 » Wed Sep 04, 2019 4:51 pm

Continues to pay for itself year-after-year.

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Nate79
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Re: Home warranty - is it worth the money?

Post by Nate79 » Thu Sep 05, 2019 6:10 am

We received a home warranty on our newly purchased home and have made 2 claims and both were accepted without question.

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Sandtrap
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Re: Home warranty - is it worth the money?

Post by Sandtrap » Thu Sep 05, 2019 8:20 am

No.
Something like extended warranties on a new car.

But, everyone's different. I know a fellow who has a warranty/extended warranty on everything from his water heater to lawn mower to washing machine to . . . . . . (to him, it's worth it).

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zlandar
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Re: Home warranty - is it worth the money?

Post by zlandar » Thu Sep 05, 2019 8:54 am

How does a home warranty company stay in business if anyone can sign up for the warranty, get all their end-of-life appliances/HVAC/water heater replaced, and cancel?

Pretty obvious the service/replacement you will receive will be either mediocre or non-existent.

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