Skip That Home Warranty: Tips From Charleston Property Management

As a rental property owner, you may be considering purchasing a home warranty on your Charleston homes for rent. However, there are some crucial details you need to know before you do so.

• A home warranty is not an insurance policy.
• Instead, it is a service contract that pays for the repair or replacement of any items covered by the warranty.
• This may include major kitchen appliances and electrical, plumbing, and HVAC systems.

You may be thinking, ‘That sounds great!’ Some property owners proclaim the benefits of such a warranty, claiming peace of mind and considerable savings. But is this true? Why might a Charleston property management company recommend you skip it? 

Not Everything Is Covered

A home warranty does not cover windows, doors, or other key structural features. Really, only an investor's insurance policy will cover losses to your building and belongings due to fire, theft, or other perils.

Repairs or replacements required because of an 'act of God' are not covered by a home warranty. So it’s important to read the fine print. On the other hand, if you already have a home warranty, you may be getting more coverage than you need. The warranty only really pays off when you need to use it.

If you experience any considerable length of time without the need for service, then paying the premiums could be a waste of resources. In addition to gaps in coverage:

• They also have claim caps: For example, you may only get $1,600 to replace a $12,000 HVAC system.
• There may be an additional deductible: This is an amount you must first pay before the home warranty company pays your claim.
• They may charge service fees: Some companies may charge you a service fee, typically $75 or more, each time you need a repair.
• They may not guarantee all of the work performed by their contractors: For instance, if a contractor damages the dryer vent while repairing a gas leak, the warranty company may not pay to fix the damage.
• Their premiums may not be cost-effective: The cost of the repairs may not be expensive, and they may even cost less than what you pay annually for the home warranty.

You Don’t Get to Choose Your Contractors and Vendors

You (or your Charleston property manager) may have established good business relationships with local contractors, providers, and vendors. However, if you purchase a home warranty, you no longer get to decide who you will use.

• Your home warranty company will send their technicians or providers, whether they are reputable or not. This can be seriously risky for investors whose current renters have children in the home.
• Even worse, you may still be paying the cost of the service call. If multiple calls are made, you may foot the bill for each one.
• You have no control over who is sent—or when they are sent. Online reviews reveal that many residents are unhappy with the quality of the work done by these contractors.
• Additionally, reports indicate that contractors may privately seek to upcharge the client—without the knowledge of the warranty provider.

In contrast, a Charleston property management company provides similar services to the home warranty provider, but in a more trustworthy manner.

You Have No Say in Whether They Repair or Replace

You may have definite principles you follow in determining when to fix and when to replace appliances and other systems. If you have purchased a home warranty, you no longer get to decide.

• The provider will decide what to fix or replace if their coverage even includes replacement to begin with—again, you'll want to read that fine print.
• This means that they may continue to repair appliances and systems that are well past their life span—and many of the repairs will simply be a 'patch fix.'

Imagine the frustration of your renter—who repeatedly reports maintenance issues—and even worse, your frustration as a rental property owner who may still have to ultimately purchase new appliances while still paying fees for service visits.

Ultimately, Your Customer Service and Reputation Suffers

One of the primary reasons that renters leave a Charleston rental property is because they are unhappy with how maintenance and repair issues were handled. The way rental property maintenance requests are handled is important—and home warranty providers don’t always do it right.

• The reason is that home warranties were originally designed to benefit a homeowner who lives on their own property.
• They are not always interested in responding to complaints immediately or ensuring repairs are done promptly and efficiently.
• Your customer service suffers when renters who expect that their maintenance requests will be met right away are disappointed.
• For example, you may experience trouble connecting with the warranty provider and getting a contractor to respond to the call. This delay could cost you money or undue stress.
• You may then get so frustrated you find your own contractor and end up paying out of pocket on top of the premiums you already pay.

Renters also get frustrated when vendors don’t respond for several days—especially when the reported fault involves essential systems, like air conditioning, plumbing, or heating. These can also put you at risk as the property owner if you fail to address habitability issues quickly.

Save Yourself the Stress of a Costly 'Home Warranty'

According to the Washington Post, thousands of complaints and negative reviews are received by consumer agencies and groups regarding home warranty companies. Based on these complaints, even after owners spend anywhere between $400-$1,000 for coverage, they discover that their contracts are filled with costly exclusions.

• The Washington Post examined 14 plans from six different companies and found that home warranty providers have many means to reject customer claims or limit the amount of costs they’ll cover.
• If there is a dispute, home warranty contracts often oblige the customer to settle it by arbitration rather than in a court of law, and arbitration may not benefit you as the rental property owner.

Clearly, the recommendation to skip the home warranty is sound. But what other options exist that protect you as the property owner?

A competent Charleston property management company can guide you through a list of services that accomplish the same goals—but with an outcome that favors you as the investor.