Dark Patterns in Home Warranties

As a first-time homeowner, I heard that a home warranty could be a good idea, so I got one. It sounded great, with a similar pitch as insurance: pay a premium, and the warranty will cover up to $15,000! But, then I was shocked by the fine print. Check your policy for these dark pattern before you buy.

• Policy in paper only, difficult to reference, replace, or search.
• Ineffective customer service
• Impractical liability limits

While I’m sure there could be more than what I’m highlighting here, I want to highlight these three dark patterns. First, getting a policy where the only reference is in print. In my case, there was no way to view my policy online or electronically, only via a paper booklet they sent me in the mail. That means no easy way to search, and that makes it very hard to easily find the gotchas unless you read and retain the whole booklet.

I’m not emphasizing this one because this is just shame on me. A careful read likely would’ve prevented this headache in the first place—because I wouldn’t have gotten the warranty.

What Customer Service?

Everything in our house was going pretty well. Then, our water heater needed repairs. “Great, this is what I have a home warranty for!”, I thought. That raises the second dark pattern: almost useless customer service.

• 16 July 2023: Submitted a claim. They tell me a technician will reach out within 72 hours.
• 19 July 2023: Apparently they are having difficulty finding a technician. Keep waiting.
• 25 July 2023: Still nothing. I call my own technician, pay out of my own pocket for a quote.
  • This plumber identifies a plethora of issues, totaling ~$10k if we really want to fix everything.
  • I email the quotes in for assessment, told I should hear back within 72 hours.
• 31 July 2023: Call again. Woops, nobody looked at my email yet. Service agent “sends a reminder”, I’ll hear back “within 48 hours”.
• 31 July 2023: Later that evening, get a call that they approved the repair (woohoo!)…up to the liability limit of $1000 (wait, what?). I should get a check in the mail within the week. More on this later.
• 5 Aug 2023: Still no check, told “it should arrive by the end of the week”.
• 16 Aug 2023: Still no check, told “it should arrive by the end of the week”.
• 21 Aug 2023: Still no check, told to wait “two more days”.
• 22 Aug 2023: Check shows up.

I want to emphasize that each one of these calls required a significant amount of time on hold (ranging from 30 mins at the fastest, to almost 2 hours at the slowest), and the calls needed to be made during office hours (i.e., during the workday). This timeline represents over a month between submitting a claim and getting a resolution (which only happened because I found a service technician myself), well over 10 hours on hold, and consistently bad information. This would’ve been more tolerable if they didn’t set expectations which were subsequently broken consistently.

If I had an actual emergency, I would have had zero confidence they would have been useful in getting my issue resolved.

Limits of Liability

Third, and the real motivation for this post, home warranties frequently have limits of liability. These can effectively render the warranty useless.

In my case, I was paying $189.23 / month, on a 36-month contract, with a max of $15k coverage.

Consider the following limits of liability from my policy.

I’ve transcribed them here, sorted by limit.

Next, consider that your home almost certainly does not have all of these things. Finally, consider that you’re paying ~$190 / month already for a 3-year contract.

For this warranty to be “worth it”, you would need to claim more than (36 * $189.23 =) $6812.28. Now, given these liability limits, you would need many of the primary systems in your home to fail within the contract period. Unfortunately for you, if that were to actually happen, these limits only go so far. Most will not actually cover replacing the component. Additionally, each of these would require a claims process that might take a month (or more), and persistent follow-ups via phone calls with long hold times.

To put this another way, if you do not have most of the things in your house fail catastrophically, you will almost certainly be wasting your money. Let’s say you had 30 good months, then, you had a massive water leak that cost a lot to repair, due to your refrigerator leaking. After waiting on hold for hours upon hours, perhaps waiting for weeks for service, you might get $1500. Not much consolation after having paid (30 * 189.23 =) $5676.90 already.

Conclusion

Please learn from my mistakes. Unless you literally think everything is going to break, you probably don’t want a home warranty.