Connecticut Attorney General William Tong says Connecticut homeowners should keep an eye out for potentially misleading ads from home warranty companies trying to trick people into buying expensive warranties they don’t need or don’t need. they do not want.
A home warranty is a type of service contract, also called an extended warranty, that promises to pay out money in the event a homeowner needs to repair or replace components in their home, according to a press release from Tong.
Although some home warranty companies offer legitimate services, consumers should be careful. Home warranties can cost hundreds of dollars a year, but don’t provide the coverage homeowners expect. It can cover items that are already under warranty and impose high deductibles and service fees, according to the statement.
According to Tong, some warranty companies appear to be trying to entice homeowners to sign up by sending letters that appear to be from the homeowner’s mortgage lender.
These letters may contain information such as the name of the real mortgage lender, the amount of the loan, and include phrases such as “Final notice”, “Last attempt to notify you” or “Immediate response requested”, to create a false sense of emergency and have the owners act quickly, according to the press release.
The letters may even mention “finance charges” or warn that the landlord may be “financially responsible” without warranty.
This language is used to scare off homeowners, however, a home warranty is never required and a mortgage company will never send a threatening letter to buy one, Tong said.
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“If you get an email from an unidentified sender encouraging you to sign up for a warranty or some other service, that’s a red flag,” Tong said.
Tong said consumers considering a home warranty should consider the following:
• Don’t confuse a home warranty with home insurance, which mortgage lenders typically require. Home insurance covers material damage or civil liability in the event of an accident; a home warranty usually only provides for repairs or replacement of certain items in your home, such as appliances.
• Determine if you need a warranty. Is there already a manufacturer’s warranty on expensive items such as appliances? Does the credit card you used to purchase a device offer a warranty? If you are building a new home, is the builder’s warranty still in effect?
• Decide if it is cost effective to purchase warranty. What is the cap on what the company will pay when you need it? Do the premiums, deductibles and service charges exceed what it would cost you to repair or replace the items yourself?
• Read the fine print. Are there exclusions that make the warranty less useful, such as for damage caused by wear and tear, manufacturing defects or natural disasters? Does the warranty cover replacement of damaged items or only repairs? Do you have the option of choosing the contractor who will carry out the repair?
• Research consumer reviews of the warranty company. The Better Business Bureau (BBB) is a good place to look. Have others reported difficulties with customer service or asked the warranty company to pay out claims?
Tong also urged consumers never to give out personal information to companies they don’t recognize.
Connecticut homeowners who believe they have been harmed by a home warranty company’s advertising are encouraged to contact the Attorney General’s Office at 860-808-5318.