Insurance Claims – Another way to pursue tough claims
Recently, there was an interesting review posted at AHS warranty discussions page about dealing with insurance claims. The legal option suggested by the reviewer might be useful to some homeowners, who have difficulties dealing with home warranty insurance claims.
It is not practical and cost effective to take legal route to pursue your insurance claims and you may want to read How to pursue insurance claims article before you go that path. However, if you are fighting an insurance claim on a big ticket item, and you have exhausted all other options, this is definitely an effective strategy. Author of this post himself was an attorney and he effectively used the legal threat to beat the home warranty company.
Here is the excerpt:
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American Home Shield – how to beat home warranty companies at their own game
I have discovered how aggrieved homeowners can turn the tables on home warranty companies and beat them at their own game. Please share this with everyone you know.
I’m an attorney and after having a problem with my home warranty company, American Home Shield, I decided to investigate whether other homeowners had experienced the same or a similar problem. What I found were web sites devoted to consumer complaints on which numerous homeowners had recounted incidents of fraud, deception, and rip-offs by their home warranty company. I also found a blog written by a former American Home Shield employee and another written by a former plumber for a home warranty company. Both recounted situations that would not pass the “smell test” in a court of law.
I also investigated lawsuits that had been filed against American Home Shield in Georgia, which is where I live. I found about 15 cases. The majority of cases had been filed in small claims court. As I reviewed the cases, I discovered that none of the cases had been litigated. In every instance, the case had been settled to the Plaintiff’s satisfaction although the details of each settlement were not part of the case file. With the knowledge that all cases had been settled to the homeowners’ satisfaction, I realized that American Home Shield would settle with an aggrieved homeowner before allowing a case to go to trial. My conclusion is that the only thing aggrieved homeowners need to do to beat home warranty companies at their own game is to file suit. The last thing American Home Shield wants to do is litigate a homeowner’s claim and the reasons are obvious to me.
The most obvious reason American Home Shield would not want to litigate a claim is that in most instances, the cost to American Home Shield to settle a claim would be less than the cost to litigate. The average amount of a claim in the cases I found was $3,800.00. Two were for less than $1,000.00 and only one was for more than $10,000.00. I’m sure far more than the 15 homeowners who have filed lawsuits in Georgia have had their claims denied. American Home Shield wins when a claim is denied and the homeowner does not sue, which is exactly what American Home Shield is counting on homeowners not doing.
Another reason American Home Shield does not want to litigate is because the company does not want to have to defend its craftily drafted contract or its questionable business practices, which is exactly what it would have to do if a case went to trial. American Home Shield also does not want such information to become public knowledge, which is also likely to happen. Additionally, a judge or a jury would also be hard pressed to return a verdict favorable to a company that engages in questionable business practices.
The final reason American Home Shield does not want to litigate is because a lawsuit actually places American Home Shield in a precarious situation. American Home Shield would have a difficult time defending any claim by a homeowner because the company has no first hand knowledge about the claim; it would need the testimony of the service contractor who, for its own reasons, may be less than eager to testify. The only knowledge American Home Shield has is what the company has been told by the service contractor. And any testimony from American Home Shield about what it was told by the service contractor is hearsay and not admissible in court.
To defend a claim, American Home Shield would need to subpoena the service contractor who actually made the diagnosis to testify about the claim. If the homeowner has done his/her homework, he/she would subpoena witnesses who could dispute the witnesses for American Home Shield. The homeowner should subpoena one or more service companies who had been called either for a second opinion or to make the actual repairs to dispute the testimony of the American Home Shield service contractor. The homeowner might also consider locating one or more other aggrieved homeowners to testify about their problem with American Home Shield. Another good witnesses for the homeowner to subpoena would be a former service contractor for the home warranty company or a former employee of a service contractor.
Since American Home Shield has at least three significant reasons why it does not want to litigate, the best and easiest way an aggrieved homeowner can beat American Home Shield at their own game (and most likely any other home warranty company) is to file suit. The one thing for an aggrieved homeowner to keep in mind is that if he/she does not sue, the home warranty company will win. But if he/she sues, the homeowner will most likely win. And that is how an aggrieved homeowner can beat American Home Shield at their own game.
My advice to aggrieved homeowners is not to stress over a denied claim, the denial of a situation as an emergency, repeated “band-aid repairs,” or a delay in authorization or in the repair of an item. I would also advise a homeowner not to waste time arguing with American Home Shield but to set a reasonable deadline for the appropriate action. Upon expiration of the deadline without receiving satisfaction from American Home Shield, the homeowner should then proceed as if they did not have a home warranty and then sue American Home Shield for reimbursement. The homeowner should also remember to document every action or inaction by both himself/herself and American Home Shield. Although the disadvantage to the homeowner is initially having to pay for the repairs, the advantage is that the homeowner can choose the service contractor and the brands and quality of products. I won’t guarantee all aggrieved homeowners will prevail every time but I have good reason to believe most aggrieved homeowners will prevail the majority of time.
For aggrieved homeowners whose claims were denied at sometime in the past, you may still be able to sue for reimbursement. To make that determination, the homeowner needs to research the statute of limitation for suing on a contract in their state. In any event, a homeowner should be safe filing suit for a claim that was denied during the past twelve (12) months.
Within the next six months, instead of reading homeowner’s stories about being scammed and ripped off by their home warranty company, I want to read stories about how homeowners turned the tables and beat their home warranty company at their own game. If anyone has any questions, I can be contacted at LegalCohen@aol.com.
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3 weeks ago my heating system started making loud noises and I called my home warranty company (Nationwide home warranty) to have someone come out and fix the noise. Nationwide home warranty send out a technician who looked and decided to be replaced some parts. The technician called nationwide home warranty and discussing the issue with nationwide home warranty come in and said that they would need maintenance record for the heating system before approving the repairs. I just bought house 5 years ago after that I never done any repair, every month I changed filter my self, now, how do I provide them maintenance record. Now they denied the claim because there is no maintenance record. Now I don’t have enough money to fix my heating system, I’m leaving without heat. This Nationwide home warranty company has terrible service and makes it a practice to make repairs difficult or impossible to discourage payouts. Please stay away from Nationwide home warranty company, find some other which is more reputable. I paid them $488.78 for nothings. This company rep off me.
I recently purchased a house that belonged to the bank as a result of foreclosure. I purchased “2-10 home buyers warranty”, “a product of home buyers resale warranty corporation”. this policy is good for one year and expires 2/26/2010. The house has a pool which was empty and house was vacant when I was shown the house. The pool had graffiti all over inside of pool plus all over the outside of the house wall facing the pool. The pool pumping equipment was only checked on the walkthrough inspectionm to see if motor ran which it did. There was no way to check to see if the pumping actions that this pump performs worked or not because of the pool being empty and utilities were off until just before the walkthrough inspection and the water worked when checked but not on pool since it was empty. We had no authority to fill this huge pool which holds hundreds of gallons of water nor the time when the house inspector did his inspection which would take quite some time (days) to fill to verify the pool pumping operation. This house was built in 1975 and as near as we could tell, the pool was built then also. Upon further inspection a couple of days later a crack was discovered on one of the main PVC fittings which would have to be fixed prior to pool pumping any water. The man sent out by the warranty company was from an electric company and according to the warranty company, his bid to repair the pumping equipment was $1800. He told me he was sure the warranty company would deny the claim. They did and told me the problem was preexisting which they did NOT know because of the empty pool. I feel after paying a $50 copay to the electrician they sent out, plus they denied claim which was legitimate, that I should obtain an opinion from a Attorney on this matter.
Binod,
I am dealing with an issue with Nationwide Home Warranty also. I am early in the experience and awaiting a response, I would be interested in documenting your experience as a I prepare my position on this. Please send me an email message so we can dialogue. jdsavoy@hotmail.com
Additionally, thanks LegalCohen for your advice/suggestions. I started a documentation trail once my experience started to turn “sour.” I may be in touch depending on the response I get.
I Just tried to use my AHS policy for my condensor for my ac unit they refused to take care of it due to lack of mantence.
On the latest occasion, AHS denied the claim. I’ve found that saying the tech made no mention of lack of maintenance during the visit was enough to get them to turn around. That and asking them to specify what maintenance they required.
I also have Nationwide Home Warranty and was recently denied on a claim to fix my heating unit due to “lack of maintenance records.” The technician himself stated that the unit appeared to be well maintained and also relayed that information to Nationwide. Even though the technician also stated that the failure was due to normal wear and tear and not because of any lack of maintenance, I still cannnot get Nationwide to honor the claim. I live in CA and I will be taking them to small claims court. Very dissapointing since this is the first claim I’ve had with them. I feel like it’s been a complete waste of $400.
the home insurance company was Allied Home warranty
Allied Home Warranty sent out Lone Star Repair twice – each time the repair cost for uncovered items was higher than i could go straight to a company and order brand new equipment and have it installed. They wanted 987.00 in uncovered parts for a new 50 gallon hot water heater and 1300.00 in uncovereed parts for a new fournace. Cheaper to buy outright than go through Allied Home Warranty.
I have called twice to Allied Home Waranty – for repairs – each time the sent out a copny called lone star. Each time the cost was 60 trip fee(which i sexpected) But i did not expect the uncovered cost to equal the price of going straight to a vendor without the insurance. The uncovered heating unit price was over 1300.00 dollars and the hot water heater was 895.00. In both cases I went to Lowes for the new hot water heater to save money and to a heating company for a new fournace for 400 less. The home warranty company in both cases where higher than going straigt to a dealer.
Hello,
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