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TDCI Helps Consumers Avoid Home Warranty Scams

Always Conduct Research on the Company, Warranty Before Purchasing
Tuesday, April 23, 2019 | 10:18am

NASHVILLE – Home warranties, which often cover the repair or replacement of a home’s important appliances and systems, can provide peace of mind to homeowners. But when it comes to purchasing a warranty, the options and coverages can seem overwhelming. To assist consumers, the Tennessee Department of Commerce and Insurance (TDCI) is providing tips to help consumers learn more to help them find the right home warranty for them.

“Home warranties can be a financial asset if an expensive appliance needs repairs, but they can also be confusing for prospective buyers,” said TDCI Commissioner Julie Mix McPeak. “We encourage consumers who are in the market for a home warranty to research the company, read the full statement of coverage, and compare warranties before selecting the one that is right for them.”

To help consumers make informed decisions about their home warranties, TDCI’s Division of Consumer Affairs shares the following tips:

QUESTIONS TO ASK BEFORE YOU BUY

  • How long does the warranty last? Verify when the warranty begins and ends. Also, look for any conditions that may void the service. Remember: Always read the fine print.
  • Who do you contact to get the warranty service? Find out if you contact the seller or the manufacturer to provide the services covered under the warranty.
  • What will the company do if the covered item fails? Some warranties offer to replace the item, while others cover repairs. Make sure you know which service your warranty offers.
  • What parts and repair problems are covered? Check for product or part exclusions in the warranty. Some warranties will cover the item, but require you to pay for labor. Keep an eye out for conditions that may prove to be expensive or inconvenient, like a requirement that you ship a heavy object to a factory for service or that you return an item in the original packaging.
  • Does the warranty cover “consequential damages”?  Many warranties do not cover damages caused by the product, or your time and expense in getting the damage repaired. For example, if your refrigerator breaks and the food spoils, some companies will not pay for the lost food. Ensure you understand these provisions before signing anything.
  • Are there any conditions or limitations on the warranty? Some warranties provide coverage only if you use or maintain the product as directed. For example, a warranty may cover only personal uses as opposed to business uses of a product.  Make sure the warranty will meet your needs.

PREVENTING/MINIMIZING PROBLEMS

  • Remember: If it sounds too good to be true, it probably is. Always approach surprisingly good deals with caution. Scammers will make an offer sound too good to pass up, only to take your money and leave you with nothing.
  • Read before you buy. If you’re purchasing online, look for the full warranty or request a free hard copy. Understand exactly what protection the warranty gives you. If a copy of the warranty is available on the website, print it out and keep it with your records.
  • Research and consider the company’s reputation. Look up reviews to determine the company’s reputation. The Better Business Bureau (BBB) has resources to help consumers evaluate business options. Remember: a warranty is only as good at the company that stands behind it.
  • Understand that home warranties are not insurance policies. Home warranties often provide repair or replacement for appliances and other home systems that fail due to age or wear and tear, but don’t cover your property like a homeowners insurance policy. A homeowners policy will cover any accidental damage to your home and belongings due to theft, storms, fires, and some natural disasters. Be sure to compare your homeowners insurance policy and home warranty contracts to compare what is covered under each.
  • Save the receipt and store it with the warranty. You may need to reference the receipt to give the dates of coverage or prove that you’re the original owner if the warranty is nontransferable.
  • Perform required maintenance and inspections. Some warranties require that you have regular maintenance performed for the warranty to remain valid. Be sure to read these requirements. Does regular maintenance fit your household budget?
  • Use the product to the manufacturer’s instructions. Abusing or misusing a warranty may void the coverage. Be clear on what terms you agree to before signing the contract.

TROUBLESHOOTING WARRANTY SERVICE ISSUES

  • Reread the warranty and instructions before calling the retailer. Don’t expect features or performance that your product wasn’t designed for, or assume warranty coverage that was never promised in writing.  A warranty does not mean that you will automatically get a refund if the product is defective; the company may be entitled to try to fix it first. On the other hand, if you reported a defect to the company during the warranty period and the product wasn’t fixed properly, the company must correct the problem, even if your warranty expires before the product is fixed.
  • Try to resolve the problem with the retailer. If you have a grievance with your warranty company, first try to resolve the problem with the business themselves. When corresponding with the company, send them written notifications via certified mail. Be sure to keep the copies and any other relevant documents.
  • File a complaint. If you can’t resolve the issue with the company directly, contact the TDCI’s Consumer Affairs Division and a file a complaint.

For more tips on being a savvy consumer and avoiding scams, visit tn.gov/consumer.

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