BTW, AHS doesn’t cover appliances at all. For appliances (or anything covered for that matter) the homeowner must pay the fees on top of the warranty… even if the appliance or system is new. This from the AHS link you posted:
Uh, that isn’t a warranty. And I don’t care what they call it or how much they charge for it.
Again, the seller provides the appropriate policy to cover what systems are present at the subject property. There is a standard service call deductable, $40-$50 dollars for example. Let’s say the AC system fails. You’ll pay the deductable and the policy will replace the condenser for example. If the existing system is outdated and requires upgrades to meet current code requirements, you’ll be responsible for those upgrades. In most cases, you simply pay the deductable and your done.
As you read in the AHS website they paid out over $300 million in customer services and repairs last year. I’m guessing they’re considerably larger and more recognized nationwide than “Mountain”.
BTW, I’m using AHS as an example only. There are several large, well known and respected home protection/warranty companies nationally.
Post the web link for the $17 ones that cover the items without additional service call fees and cover central AC systems without an additional $144 charge on top of the $356 warranty charge please. I’d like to compare.
I’m not sure this is much of a warranty either…
[FONT=MyriadPro-Cond][size=1]The claim payment will be prorated
according to the age and condition of the item. Determination of the amount of the cost
of repair or replacement will be made solely by MWC. Determination of the operating
condition and the nature of any failure or inoperability will be made solely by MWC.
Determination of coverage for any claim will be made solely by MWC.
[FONT=MyriadPro-Cond][size=1]On the day of the
inspection, the item must be visually observable and readily accessible; inspected by the
inspector; not reported in need of correction, repair, or improvement; not reported in need of
monitoring or further evaluation; not reported with any deficiency; not older than ten (10)
years of age; not approaching, near, or at the end of its service life expectancy.
[/size][/FONT][/size][/FONT]
And that’s only for appliances less than 10 years old…
Anyway, there really is no comparison.
Better coverage at 1/20th the price!
Maybe you’re right.
The only differences are that AHS charges service call fees and additional repair and replacement fees, doesn’t cover things like Central A/C at all unless you pay an additional $144, and charges 16 times more for the warranty.
Uh… but I’d say those are pretty big differences.
[FONT=MyriadPro-Cond][size=1]On the day of the
inspection, the item must be visually observable and readily accessible; inspected by the
inspector; not reported in need of correction, repair, or improvement; not reported in need of
monitoring or further evaluation; not reported with any deficiency; not older than ten (10)
years of age; not approaching, near, or at the end of its service life expectancy.
[/size][/FONT]
You’re kidding, right?
What is wrong with that?
Be specific.
It appears pretty much only a newer appliance would be covered. Since that’s not the protection most homeowners are looking for, how exactly is that a positive for anyone? What % of home inspections involve appliances older than 10 years or central air systems older than 15 years? What % of home inspections find appliances without some amount of rust/corrosion or nearing the end of its normal life expectancy.
This program appears to be some sort of con. It does not appeal to me as an ethical inspector representing his clients and certainly not as a home buyer and or owner.
I’m guessing the large majority of NACHI membership will not involve themselves with something as questionable as this limited warranty program.
LOTS!!! That’s the point (unlike AHS which does’t require a home inspection) of us requiring a home inspection performed by an InterNACHI-only member. If the inspector explains that it is nearing the end of its life expectancy or in need of correction, repair, or improvement, why would we warranty it? We’re giving the warranty to cover what the inspector MISSES… not what he catches.
Remember, I helped build MW for inspectors. We have no interest in selling warranties to homeowners. We want to give warranties to InterNACHI-only member’s clients.
–If the inspector finds a potential problem and warns his client about it… his own inspection report saves his a$s.
–If he fails to find a problem and fails to warn his client about it… MW covers it.
And lastly, we built MW so that inspectors (who mostly don’t live in areas where all the sellers buy warranties for all the buyers) can afford to add it into their inspection fee. I really don’t think our inspectors will raise their prices $500 to pay for a similar coverage (at best) warranty. $17 is tough enough.
It’s simple. Nick is stating this policy “MAY” cover your assets in the event you were negligent. If it doesn’t now the lawsuit kicks in and E&O takes over along with the heavty deductible most people are required to carry. I can see it giving a home buyer some piece of mind however if I decide to start pushing them my website will explain in detail what’s covered and what’s not.
The main reason to buy a Mountain Warranty is not to reduce your liability… although it does that anyway.
The main reason is to increase sales.
Think about it… your profit margin on a home inspection should be close to $150. Your risk cost should be less than $5 (a typical E&O policy for an inspector who performs 300 inspections a year sells for $3,000 which is at least twice the actual cost to insure the risk).
In other words, every inspection you perform comes with $150 in profits and $5 in risk costs.
Even if you think the warranty DOESN’T reduce your liability and even if you raise your fees only $17, just enough to cover the warranty… you still earn $145 on every inspection that touting the “free home warranty” brings in.
At $17, the math works.
Which probably explains the “strategy” of giving away what cannot be sold.
In these days of homeowner discontent, mortage fraud and questionable real estate practices coming under federal scrutiny…the last thing most of us want or need is increased propensity for accountability for the actions/inactions of others.
Warranty companies do not make money from “paying out”. The mystery Nick presents as to how they can profit from “giving away” a free warranty even adds to the loss of paying on a claim.
Why…after the inspection is over and I have moved on to other business…do I want to be called back and have to deal with an unhappy client who is upset that “the warranty I gave them” is worthless…in their opinion…because it will not cover the cost of replacing a sewer lateral that I had already disclaimed in my report?
Well if you don’t like Mountain Warranty… you’ll really hate AHS.
My bet is that you don’t ever offer any warranty Jim.
Fact is, offering a warranty increases sales and lowers liability. Business is not much more than simple math.
In the 10(+) years that I’ve been inspecting homes, I have yet to find a real warranty that protects everything in the house carte blanche!
I won’t waste your time on the numerous stories about alleged home warranties. Of the several close calls my business experienced because of situations where the client’s expectations were not met. The times that I received notices from a lawyer concerning lawsuits after the client failed to receive a claim on a pre-existing condition that was reported during the inspection.
I won’t talk about the real estate agents that think home warranty covers everything and a home inspection is not needed. I won’t talk about the irate telephone calls from some of these real estate agents I received when I mentioned the fact that the client should read carefully, the home warranty because everything is not covered the same.
I won’t talk about my personal conflicts with home warranty companies (though they are posted elsewhere on this board).
Why are we trying to compare apples and oranges?
How can we expect a home warranty to cover something beyond its useful life? How can we expect a home warranty company to insure something “sight unseen”? How can we not expect the home warranty to hold some restrictions in exclusions to their coverage and stay in business?
The point is, home warranty companies pay out big bucks in repairs but they don’t cover everything. The most important point is that you must understand what you’re purchasing. My clients say “that’s okay I’m getting a home warranty anyway”, but none of them can tell me what their coverage is when asked! They’re just told by their realtor, “that’s no problem you’re getting a home warranty anyway”.
These warranties are useful to cover explicit problems. They all have their advantages and their restrictions and must be tailored to fit the particular clients needs. A one-year warranty on new appliances and new construction is unnecessary because there are already under warranty. But on the other hand, how can we expect insurance on a 21-year-old refrigerator in a 100-year-old house?
As Nick said, it’s about marketing your services with a warranty.
As Billy said, he is going to put all the information on his website.
Mountain provides a short-term insurance policy on items not covered in other policies. Who does the short-term policy really protect? The home inspector. The guy that had something break as he walked out the door! Has anyone ever received a phone call stating “it worked before you got here”?
When you buy life insurance you have several options. Term life insurance is the cheapest but does not cover everything that other types of policies will cover. This is the same thing. It provides very economical coverage in the event of specific occurrences. If you want more, you need to pay more for the risk factor.
Again, this is about marketing. How many of you put on your website that you guarantee your service?
This is an inexpensive option that adds a warranty to your service.
If they already have a warranty, then the service is unnecessary.
If that warranty is so great, then there’s no reason for a home inspection is there?
Warranty programs that base their paid claims on items that must be inspected first are the only warranties that are not going to come in looking for that speck of rust to deny the claim. They deny claims for a service man’s comment that required maintenance has not been maintained. When your air-conditioner breaks, you had better call in air conditioning company and completely dismantle and clean and paint the unit before their service provider or arrives or they can simply say the unit has not been maintained.
Offering warranties can open up a can of worms for the inspector if not used properly, so they should be used with caution. If you advertise and use a warranty to make yourself “bulletproof” you’ll probably get in trouble. These are the guys that will not fill up the whirlpool tub and turn on the jets because nobody will really know or complain that they didn’t do it and they have a warranty to cover that stuff anyway.
It’s always in the back of my mind when I close up an HVAC system after an inspection, what if someone topped off this unit with refrigerant just prior to the inspection so it’s running properly for the time being? What can I say when the client calls several weeks later after the close of escrow in the unit no longer cools? How can I prove that it was okay at the time of inspection? How can I prove that I’m not responsible for the equipment that fails to operate?
Just as the roof may have water stains on the rafters, but it hasn’t rained in 60 days, it’s 140° in the attic and there is a new roof installed. Is the stain indicative of an active leak or is it from leakage of the previous roof, or did the new roofer screw up the flashing? Maybe a roof jack requires replacement.
Wouldn’t it be nice to just turn this stuff over to a warranty company?
I hate warranties! I never purchase extended warranties unless it makes perfect sense to do so. So I’m not here trying to promote anyone’s product. I’m just trying to promote a perspective.
But for the price, I have considered offering a warranty that requires prior inspection.
Time will tell.
Excellent post David. I hate warranties too. But I like success.
Develop a widget that increases my profits through increased sales without increasing my costs… and I’m all ears.
The way the disclaimer at the bottom reads, is IF an inspector calls out anything than it is not covered. In other words, if a perfectly good roof leaks then they will cover it, if you say there is anything wrong with the roof, they will not cover it. If you call out a furnace should be monitored because it is older but functioning it will not be covered. So if the roof is perfect and the furnace is new but quits or leaks, they will cover it.