Guest Author - Kathy Clark

Home warranty insurance is distinctly separate from homeowners insurance. Home warranty insurance covers items that the homeowners insurance doesn’t. Items covered through a warranty policy include items such as refrigerators, heating and cooling units, hot water heaters, plumbing and even the garbage disposal.

If you’ve purchased a seasoned home, the buyer will usually purchase the policy. If you’re purchasing a new home, the builder supplies you with the policy. Generally, on seasoned homes, the policy covers the first year. On new homes, the policy varies.

When the initial policy approaches expiration, the homeowner is given the option to renew the policy at their expense. The costs vary according to the insuring company. The decision to renew is strictly a personal one. Take into consideration the age of appliances including the large items that came with the home.

One important item to remember before renewing is to research the insurance company and read the fine print on the contract. There may be exclusions that in essence would not make the policy as valuable as it appears.

The way in which these policies work is that if a problem arises with a covered item, you place a call to the insurance company who in turn sends out one of their contract repair companies. After the initial investigation of the problem, the repair company reports back to the insurance company who then decides what action is to be taken. As you can see, this could amount to several days before your problem is resolved. There is a nominal charge for this service, usually in the area of $50.

Since all insurance claims are reported to C.L.U.E., keep in mind that any claim you file with an insurance company is recorded and maintained, affecting your credit or the ability to be insured at a future date. Unfortunately, I’m not aware of whether or not home warranty claims are recorded with C.L.U.E.

I contacted Choicepoint asking whether home warranty claims are reported, and this is the response I received: “Thank you for your interest in our C.L.U.E. product. The Comprehensive Loss Underwriting Exchange (C.L.U.E.®) databases consist of five-year histories of personal lines claims provided by participating insurance companies. C.L.U.E. reports reflect personal lines automobile or homeowner claims that individuals have filed with these companies within the past five years.” As you can see, this did not directly answer whether home warranty claims are monitored.

As with any other type of insurance, it’s important to know the impact of filing a claim or even calling to inquire about coverage. All in all, home warranties may be worth the money for some, and not for others. Investigate the company and its contractors first, then decide whether to sign up or just tuck cash away for those inevitable repairs.