Sealing Leaks with More Holes
Warrantech's Extended Warranty Customers Say Their Contracts are Full of Loopholes
Austin, TX - July 23, 2009 - Purchasing an extended warranty or service contract for your prized possessions (your home, your car, and your expensive appliances) in case they are damaged can bring a consumer peace of mind. But that peace of mind can be broken into little pieces if a consumer purchases that contract from the wrong company.
Justin Black of Austin bought a home appliance warranty from Bedford, Texas-based Warrantech Corporation when he decided to put his house on the market. This was supposed to cover any appliance repairs necessary during the sale of his home and offered potential buyers the chance to purchase the warranty as well. During his home inspection, Black found out he needed to replace the heating element on his hot water heater and contacted Warrantech to get it fixed. To his surprise, Black’s claim was denied even after he faxed Warrantech a copy of his home inspection report.
“I did not receive a response,” said Black. “So I contacted Warrantech again multiple times and was told the claim was denied since Warrantech believed it to be a pre-existing condition.”
Black insists this was not the case.
“The hot water heater was fine when my realtor and I did the walk-through prior to listing my house and receiving the warranty.”
But Warrantech wouldn’t budge and stated the denial stood.
Warrantech Corporation provides service contracts and after-market extended warranties on automotive and consumer products in the United States and internationally. According to information supplied by the company to BBB, Warrantech is a third party administrator and contract agent for private label companies and administers their service contracts. These service contracts include, but are not limited to, home, automobiles, recreational vehicles, home appliances, home and entertainment products, computers and office equipment. Claims covered by Warrantech contracts are paid by insurance companies that underwrite the warranty-extension and product-replacement contracts it sells.
BBB has received 454 complaints on Warrantech in the past 36 months and has a BBB rating of F. Factors that contribute to the F rating are the number of serious complaints filed against the company, as well as government action taken against them by the South Carolina Department of Insurance. Click here to view Warrantech’s full BBB report.
BBB offers the following tips when a consumer is on the fence regarding the purchase of an extended warranty or service contract:
Don’t Be Fooled.
Salespeople will often use the terms extended warranty and service contract interchangeably, but there is a distinction. An extended warranty is typically designed to protect consumers against any manufacturing defects beyond the life of the manufacturer’s express warranty. A service contract, however, provides varying degrees of maintenance and upkeep as defined in the contract and is not a warranty as defined by federal law. An extended warranty offers protection if a computer inexplicably goes on the fritz while a service contract may or may not protect a consumer if they spill coffee all over their keyboard.
Read the Fine Print.
As with any contract, make sure to read the fine print of both the manufacturer’s express warranty and the extended policy. Usually a consumer can even take the policy home to read it closely and sleep on the decision. Many extended warranties and service contracts don’t have to be purchased at the point of sale and can be purchased at a later date up to a specified period of time.
Don’t Duplicate Coverage.
Some protection may already be in-place for a specified period of time under what is known as an “implied warranty” depending on state laws. Also, if a consumer pays with a credit card, they may be eligible for an extended warranty through their credit card company that might be sufficient.
Shop Around.
Different retailers will offer different policies, so if buying an extended warranty or service contract is important, visit several retailers and find out which offers the best value.
Consider the Cost of the Product.
When considering an extended warranty or service plan, it’s important to consider the cost ratio of the policy and the product. It may not be worth it for a consumer to pay $50.00 for a policy to cover a $120 DVD player. Consider and calculate what it would cost for average repairs over the specified time period of the contract and compare it to the total cost of the service contract. If the product has a good track record for reliability, then the service contract could end up costing more money.
For a full report on any company, visit www.bbb.org.