A warranty that aggravates

I recently stated to provide the mountain warranty to my clients and thought it would be seen as a benefit. Here is an email from my client;

I lost hot water on Saturday afternoon. I also had some leakage on the first floor of the house directly below where the water heater is positioned in the attic. I remembered that you had provided me with a warranty. I called the warranty company and they said a claim could be submitted online. I went to their website but was unable to enter the claim info as that part of their website was not operational. I then called the toll free # again and this time left a message.

I received a return call on Sunday afternoon and the rep said that she had contacted Rick at R6 Construction Services (972-971-6596). She also said that if the water heater needed to be replaced that HWA would not cover it if the failure was due to ‘rust and corrosion’. I got a call from Rick at R6 and he arranged to come out at approx. 5:00pm. He inspected the water heater and informed me that it would need to be replaced as it was leaking on the top of the unit. He then went out to his truck to call HWA for an authorization to replace the unit. He told them that the unit had failed due to ‘normal wear and tear’. The rep that he spoke to asked if the unit had a steel tank. Rick said yes and then the rep indicated that HWA would not be responsible for the replacement as the unit had failed due to ‘rust and corrosion’. At no time did Rick say anything to the rep about ‘rust and corrosion’. As Rick was coming back into the house I got a call from the same rep who informed me that my claim was being denied. I asked him how he could possibly know that the unit had failed due to ‘rust and corrosion’ when no one from his company had examined the unit.

He provided what sounded like a very formulaic answer. Rick (who was extremely professional at all times) expressed surprise that the claim had been denied. He then gave me a quote for the repair and I decided to give him the job. On Monday morning I called HWA and asked to speak to a supervisor. The woman that I spoke to came back on the line and said that no supervisor was available but that I could leave my # on someone’s voice mail. I did receive a call back approx. 2 hours later.

The supervisor (Melissa or Michelle) was not helpful at all. She just reiterated that the claim was correctly denied due to ‘rust and corrosion’. I asked her to give me an example of HWA actually agreeing to pay for a water heater replacement. She said that it ‘happens all the time’ but was unable to provide any specifics. I told her that I was going to file complaints with the Texas Real Estate Commission, the Texas Attorney General’s office and the Better Business Bureau of Dallas-Ft. Worth. She said to go ahead as HWA had ‘done nothing wrong’.

The warranty that you are providing to your customers is not worth the paper that it is printed on. As I mentioned to you it would not even make good toilet paper.

Your story is one chapter in a very long book.

I have never understood how to communicate to a client that my inspection is merely a snapshot of a single moment in time of the condition of his property…and is no guarantee or warranty for continued or future use or condition — and then provide him with a warranty that has more exclusions than inclusions.

I think that these gimmicks are mostly “shame on us” for we are businessmen and we know that what we buy for our client for $15 is not going to go far.

In all fairness to Mountain Warranty…oh, they cannot call themselves a warranty anymore, by law…well, in fairness to Mountain Whatever…there is little difference between them and American Warranty or any of the others.

Thanks for sharing. It is real world situations like this that reinforce my distrust (and disgust) in these warranty policies.

While other inspectors look at them as another way to market their services, I have always steered clear of these. I don’t want to be part of creating an illusion of security for my clients.

Now to be fair, I am not sure why any company would warranty a hot water tank. I am sure they have exclusionary language that makes it rare that a tank would be covered. Face it, tanks are expendable.

But in the end this is the problem with offering a home warranty. At the time of the inspection, you seem like a hero handing them the useless piece of paper. But when a claim needs to be made it becomes clear to the buyer what it is that they really got.

Your client assumes that almost every thing is covered, but the reailty is you don’t get much for $15 worth of coverage and not for very long. Half of the warranty period is gone by the time they have closed and moved into the home.

Lessons learned.

The problem is inspectors using gimmicks to out do their competitors instead of good quality inspection and technology (not saying your inspection was not good, but loose the warranty), which in turn makes us all look bad. Just give a quality inspection, follow the Standards of Practice and actually call out concerns and problems instead of trying to cater to the Real Estate Agents and you will be fine and so will your clients. I have people call and occasionally ask if I offer a Warranty. NO! I offer the best possible home inspection, if you want to get someone who gives an inferior inspection and a warranty for you to deal with later! Go Ahead…Warranties are a scam always have been, whether for a home or a car etc… :smiley:

James and Henry,

I have always been concerned about reporting on water heaters especially around the Dallas area as we have acidic water that can eat its way through a water heater in a few years. My concern is with how they handled the customer interaction and did not look at or pay any attention to my report which stated;

Static water pressure reading: 95psi +/-5psi is between 90 and 100psi

If you read their inclusions/exclusions regarding water heaters if states something like this;

Example of a warranty exclusion clause:

Solar and heat recovery units; auxiliary and secondary holding/storage tanks; geothermal or water source systems and components, including wells, pumps, coils, and piping; base pans; color or quality of the water; flues; vent pipes; insulation; any noise without a related mechanical failure; point of service and/or instant hot water dispensers; racks; straps; timers; meters; sediment build-up; conditions of insufficient or excessive water pressure; conditions of water flow restriction due to scale, rust, minerals and other deposits; domestic coil unit separate from a boiler system; boiler mates; secondary tanks; any hot water source that is 10 years of age or older.

If they had read my report rather than send a plumber around they could have denied the claim based on high water pressure. This would have legitimized my report and made the point to my client that inspectors don’t just call something out for the hell of it.

It is very sad to think that no one reads my report until something goes wrong and then when it does Mountain Warranty , does not either…Ben, any thoughts you would like to share?

Home warranties are only good for one thing: grief.

Let the RE’s or the home owner provide them. Not worth your time. All are different, and are very limited. I state in all of my reports/agreement: “If you have been provided with a home owner’s warranty/protection policy, read it carefully… Such policies usually only cover insignificant costs.”

Thanks for sharing your thoughts……………….was my posting my experience a gimmick as well?

Great statement! I’ll put it in my report; thanks for sharing

Mark, I updated my post #6.

I’m sure there are 2 sides to this story…

But, it sure does sound like a poor service for the client on the part of the warranty CO. The contractor indicates need for replacement via “normal wear and tear” in of itself is very vague. If anything, the HW co should have asked “can you be more specific?”

Doesn’t sound like a good service either way.

I am a bit confused. Was this Mountain, or another company? You mention HWA.

I didn’t get that either…maybe Ben knows.

Isn’t this the company Ben has been pushing?

This is the company that Ben owns, if it is mountain. Sounds just like the air filter gimmick. Sooner or later you guys will learn that any third party offers are only going to make you look bad in the long run.

Looks like they’ve gotten away from warranties.
Not exactly sure what they’re doing or why.

I believe that is because the state of Florida outlawed these types of warranties. The company just found a way to go around the law and call it something else so that they can still sell the product in Florida. I hope that no Florida inspectors are using the product.

I have been with HWA for years, it does not sound like them. They have denied a claim before with one of my clients, but they wrote a letter explaining why. The leak was already disclosed in the report. At least I did not have to spend my time explaining that to the buyer, who obviously did not read the report.
I got a claim filed now, after living in the house for two months, the lights flicker than go out in the house but if they turn on the clothes dryer they come back on (I am guessing a loose connection at the main power feed somewhere). It is obviously not my problem, so I am glad I have a warranty company to deal with it.
An inspector needs to explain the warranties when he explains his contract. If you do not understand what a warranty is you should not be offering them.

It was Mountain; which it seems is backed by HWA

In the State of Texas these home warranties fall under:

This can be found on TREC’s WEB page of http://www.trec.state.tx.us/pdf/rela/RSC_Act_Sept_2009.pdf. TREC has a list of licensed warranty companies which can also be found on their WEB page of http://www.trec.state.tx.us/licenses/rsc_licensed.asp. Unless they are running under a different name I see no mention of a “Mountain” warranty company of any type.

From the Occupations Code:

Definitions from the Occupations Code:

If this is not a licensed “Residential Service Company” and you acted as their Agent to provide the warranty to a homeowner then in effect you have potentially violated the State laws regarding Residential Service Companies and can be subject to action by TREC, the Texas Department of Insurance (issuing an unlicensed or unregulated insurance product) or the Texas Attorney General.

At this point it would most likely be in your best interest to speak with an Attorney, or TREC, or call the client and make good for what the warranty refuses to cover.

How can you make that accusation? Please base facts.

Mountain is a competitor that of HWA. From what I understand Ben started the company with Nick backing the company, but I could be wrong. I believe Chris and Cohen is on the board.