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Does a home warranty cover pre-existing conditions?
PUBLISHED: DEC , 29 2021 • 6 MINS READ
An important clause in a home warranty contract is that they don’t cover pre-existing conditions. But, recently, many home warranty companies have mentioned that they cover pre-existing conditions on their websites. As the home warranty industry is a competitive space, these companies have figured that covering pre-existing conditions makes them more valuable to a customer.
However, there is a catch to pre-existing conditions covered by a home warranty, as we will see in this post.
What are pre-existing conditions?
Let’s quickly recap what home warranties are. They are service contracts that provide inexpensive repairs and replacements of home systems and appliances breaking down due to normal wear and tear. Customers pay a monthly premium and trade service fees to save thousands of dollars on costly problems like HVAC breakdowns, plumbing line clogs, etc.
Pre-existing conditions refer to malfunctions or defects in the covered item before the beginning of the coverage period, .i.e. conditions causing the item to fail before the start of the coverage term.
Pre-existing conditions may be known or unknown. The definitions are:
Known pre-existing conditions are the defects or mechanical failures that could have been detected by a simple visual inspection or mechanical test. Alternatively, they were documented during a home inspection, but no action was taken.
Unknown pre-existing conditions are the defects or mechanical failures that the homeowner or inspector couldn’t have found via mechanical tests and visual examinations.
When does a home warranty cover pre-existing conditions?
If a home warranty company covers pre-existing defects, it refers to unknown pre-existing conditions only.Home warranty companies have 30-day waiting periods to reduce the chances of claims being filed due to pre-existing conditions. An alternative to the visual/mechanical test criterion used by some companies is that homeowners should show that the home systems and appliances are working correctly for 60 days before coverage begins.
During this time, the company does not cover any breakdowns. The idea is that any already defective items would break down over this period.
Some home warranty companies, like Old Republic Home Warranty, cover pre-existing conditions for the buyer in a real estate transaction. Like Cinch Home Services, some don’t cover mechanical failures due to unknown pre-existing conditions in Seller Warranty but cover it in homeowner plans. Read the contract carefully to know what your chosen companies do.
How are they determined?
The best way to know if there are any pre-existing conditions in your home systems and appliances is to get a home inspection. While home warranty companies say they will cover items regardless of age, make, or model, without a home inspection, unknown pre-existing defects turn out to be a very common loophole. Older homes are particularly prone to this.
A simple visual inspection or mechanical test is carried out to observe any malfunctions and potential problems. A visual inspection is a thorough examination by sight to check if the item is structurally intact and has any missing or damaged parts that can render it inoperable eventually.
A mechanical test turns an item on and off to check its functioning, but carefully enough to note if there are any sounds, smoke, kickstart delays, and other abnormal observations. If the home inspection fails to note some damage, any breakdowns in the future could be eligible for home warranty coverage.
Some sample problems attributed to pre-existing conditions include HVAC breakdowns with missing or rusted parts, cracks in the heat exchanger, old water heater malfunctions, stopgap caulking, or sealing with plumbing leaks. Parts failing due to old age may also count as detected defects.
Top 3 Home Warranty Companies Covering Undetectable Pre-existing Conditions
A few home warranty companies cover pre-existing non-detected conditions. We have shortlisted the following top-rated ones based on their comprehensive coverage plans, affordable pricing, and reviews.
As the oldest home warranty company, AHS has the most experience dealing with home system and appliance problems. They seem to have fewer reviewers reporting denial due to pre-existing defects. American Home Shield offers separate systems and appliances plans and a comprehensive plan, and there are many add-ons. They also have good coverage caps.
Select Home Warranty is another company that doesn’t have as many reviews for denial due to pre-existing conditions. Their contract states that defective or malfunctioning equipment identified by a home inspection at the time of ownership transfer would count as a known pre-existing condition. A very suitable company for people with older homes because Select offers fuss-free plans covering numerous systems and appliances. They also provide free roof coverage on all their plans, making them a less expensive option.
2-10 Home Buyer’s Warranty stands out in the market due to the sheer range of home protection products they offer, from home warranty to structural guarantees. Their contract also states that they will cover problems that visual and mechanical tests couldn’t detect. Their real estate plans are comprehensive and cover many things other companies don’t cover such as hose bibs, disposal fees, refrigerant recovery, etc.
Getting a home inspection to check for pre-existing defects
We always emphasize the importance of a home inspection, even though most companies say that they aren’t mandatory. Every company denies known defects, and most even exclude unknown conditions. The pre-existing condition clause in the home warranty contracts forms the most common grounds of claims denial.
You should get a home inspection unless you show that you have had continuous home warranty coverage for many years. The problem is that a technician’s word diagnosing a pre-existing condition will carry greater weight than yours. Since the home warranty companies don’t check the working condition of your items, they rest the liability of ensuring good working order on you.
NOTE: Proper working condition=On the date of the agreement, the item should be correctly located within the home, properly installed as per the codes and upgrades, fully connected, capable of successfully performing all operations according to the manufacturer’s original design intention. It should not pose any hazard to life or property.
If an existing defect is found, a home inspection report can serve as evidence that you genuinely didn’t know about the issue. The customer support teams are unlikely to disregard it. Going by recent lawsuits, such a report also helps take legal action against the bad faith decisions of the company.
If any item doesn’t pass inspection, you can have it serviced or exclude it from the plan and save the deductible. If you have it fixed, include service records and receipts from work done, but remember that the noted repairs and replacements won’t be covered. Only failures after the coverage become effective will be covered.
As the home ages, it accumulates various kinds of damage that can spread to home systems and conditions. For example, HVAC systems in coastal areas may be prone to rust, while sediments may be common in arid, dusty regions. Parts failing due to old age may also count as detected defects.
You should carry out regular care and maintenance of the home systems and appliances following the manufacturers’ instructions. As per the contracts, you are responsible for maintaining the areas around covered items so that they function as specified by the manufacturer.
Bottom Line
Read the offer document carefully to understand coverage’s limitations and various aspects, and pay attention to the fine print. A home warranty company will not want to pay for issues that occurred before they became a part of your life. Don’t neglect the items for successful claim processing and your mental peace.
A home warranty may not cover everything, but it can save you a lot of money and protect your budget. You also get the convenience of calling skilled service professionals at one phone call without worrying about whether they are equipped to deal with your home.
FREQUENTLY ASKED QUESTIONS (FAQs)
Q.
Who has the best home warranty plan for pre-existing conditions?
A.
Keep in mind that no home warranty company covers known pre-existing conditions. On our website, we have observed that American Home Shield and Select Home Warranty customers report fewer denials due to unknown pre-existing conditions. These two companies lead the pack regarding pricing, service quality, and customization.
Q.
Do home warranties require inspection?
A.
Home warranty companies don’t require home inspections, but it is advisable to get a home inspection, especially for real estate plans. It improves the chances of your claims being approved.
Q.
What are undetectable pre-existing conditions?
A.
Undetectable pre-existing conditions are the same as unknown pre-existing conditions, those defects or mechanical failures that cannot be identified during a home inspection using a simple visual/mechanical test.
Q.
When would it be too late for me to get a home warranty?
A.
It’s never too late to get a home warranty. If you have enough home appliances and systems in proper working order, you can receive repair services, subject to fulfilling other terms.
Q.
Does a home warranty replace old appliances?
A.
If an old appliance is damaged beyond repair and qualifies for coverage, a home warranty company may replace it. Alternatively, they may provide a reimbursement equivalent to the depreciated value of the appliance if they can’t find a replacement. If they replace it, they provide a functionally identical item if they can’t get the exact match.
Q.
When can I start using my home warranty plan?
A.
You can start requesting service and calling repair technicians to visit once the waiting period is over. This period may be 15-30 days based on the contract. The waiting period reduces the chances that a breakdown is of a pre-existing nature.
This list is not exhaustive. You can also cover items like the sump pump, bathtub, pool, septic system, etc.
Q.
Does home insurance cover pre-existing conditions?
A.
Home insurance does not pay for repairs and replacements of home systems and appliances. It covers sudden and unforeseen losses due to fire, theft, etc. Most home insurance policies exclude pre-existing conditions that make a home prone to structural damage.
Q.
Will a home warranty company pay to get a new A/C?
A.
The home warranty company may provide reimbursement to get a new A/C if the breakdown is eligible for coverage. They may not provide a complete reimbursement, but only a depreciated amount subject to the coverage caps.
Q.
When does a company offer repair vs. replacement?
A.
As long as the broken down item can be restored to proper working condition with a repair, the company pays for that option. When the item is beyond repair or cheaper to replace, the company will offer the replacement option.
Q.
How long is a home warranty good for?
A.
A home warranty is valid for a year (more if you have chosen multi-year contracts). You can keep making claims as long as the aggregate coverage limit has not been bypassed.
Q.
What to do if my claim is denied due to pre-existing conditions?
A.
If your claim is denied due to pre-existing conditions, you can get a second opinion and dispute the company’s decision. The companies generally state arbitration as the acceptable method of dispute resolution. You can also leave a complaint on our CRP system, which would be visible to everyone if the company fails to resolve the issue to your satisfaction.
Q.
Does the Old Republic cover pre-existing conditions?
A.
Old Republic Home Protection covers undetectable pre-existing conditions for homes undergoing a resale transaction but not on homeowner plans.
Q.
Can you ask the seller for a home warranty?
A.
Yes, you can ask the home seller for a home warranty. You should do it, especially if you’re unsure how well the home systems have been maintained.
A cost of a home warranty plan ranges from $25-$60 per month. More comprehensive add-on options can take up the price further. The service call fees cost about $100 on average.
Q.
Do extended warranties cover pre-existing conditions?
A.
Most extended warranties don’t cover pre-existing conditions.
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