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Home /  Home Warranty Companies / Are Home Warranty Companies Regulated?
last_updated_date Last updated: August 3rd, 2020

Are Home Warranty Companies Regulated?

PUBLISHED: July 6th, 2020 6 MINS READ

One of the best solutions to protecting the investment in a home is to buy a home warranty plan. Home warranties are service contracts that cover repair or replacement costs of critical appliances and systems. But before buying a home warranty plan, or if you already own one, there are several aspects that should be looked into. One such aspect is, are home warranty companies regulated?

In this comprehensive guide, we will walk you through home warranty regulations. But before that, let’s get a better understanding of home warranties.

What Do Home Warranties Protect?

Home warranty packages protect different types of devices in one’s home. These devices can be classified into systems and appliances. We’ve listed down some of the major systems and appliances that home warranty plans cover:

Systems Appliances
Water heater Refrigerator
Ceiling fans Dishwasher
Doorbells Trash compactor
Garbage disposal Washers
Central Vacuums Dryers
Smoke detectors Garage door opener
Electrical Built-in food center

Note- Home warranty plans cover many more systems and appliances, we have only listed out some of the major devices that are protected. You can check out more on what’s covered and what’s not right here.

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How Can One Use A Home Warranty Package?

To avail of the services of a home warranty provider, the first step is to sign up for a plan that suits your needs. Once this is completed it may take up to 30-days (depending on the company) for the contract to come into action. When your contract period begins and you notice that a device is giving trouble, you must file a home warranty claim. The home warranty company will send a trained technician to repair or replace the device as per its need.

Now that you are better aware of home warranties, let’s understand more about home warranty regulations.

Understanding Home Warranty Regulation

Home warranty regulations are important to make sure the company operates under a standard protocol set out by the authorities. Since the beginning of the home warranty industry in the 1970s several companies have emerged in the market, which makes it all the more necessary for these companies to be regulated.

As a potential customer or someone who already owns a home warranty package, it is important to understand the different sets of rules and regulations pertaining to home warranties.

Home Warranty Regulations: What You Should Know

There are two groups that govern home warranty companies in the country. These bodies are classified into Federal and State organizations. The Federal Government sets out a standard operating protocol for the states to follow respectively. The States have the freedom to regulate companies under their control but must make sure they do not break Federal Law.

You should know that not all warranty companies follow the same regulations. The laws and regulations vary from state to state.

Who Regulates Home Warranty Companies?

We listed out some of the bodies that regulate home warranty companies in the following states:

  1. Texas Real Estate Commission- Texas
  2. Florida Office of Insurance Regulations- Florida
  3. Department of Financial Services – New York
  4. Minnesota Department of Commerce- Minnesota

The National Home Service Contract Association (NHSCA) is also an organization for self-regulation of home warranty companies. The NHSCA is a non-profit organization that presents a code of conduct for home warranty companies to follow. Companies registered with the NHSCA have an easier complaint resolution method since clients can directly raise their issues on the NHSCA website.

What You Should Look For in Your Home Warranty Contract

As a customer or someone who already owns a home warranty plan, it is important that you know some critical aspects pertaining to home warranty regulations. We’ve listed these aspects for you:

Know The Exact Cost of Your Warranty Package

Typically, home warranty premiums cost between $300-$600, this amount can be paid annually or monthly depending on the company. A service call fee is also charged each time a technician comes to repair or replace any of your covered devices. This amount varies between $50-$125 as per company policy.

 Customers and home warranty owners should note that the premiums and service call fee amount may differ from state to state. The amount may vary due to different regulations set out by the governing bodies of each state. Any customer who owns a home warranty package or is planning to purchase one should know the exact cost of the home warranty policy. This ensures that no misunderstandings take place between a customer and the home warranty company.

Check the Limitations of Your Policy

As a customer, you should know that home warranty companies have limitations. They will not cover all your devices but only those mentioned in your policy.

Also, check the limits of coverage a company provides to repair or replace your devices. If the amount exceeds the terms of your contract, you may be needed to pay the difference amount pertaining to repairs or replacements.

Some home warranty companies may not have a large contractor network and the best technicians.

Always opt for a company that has experienced technicians and large contractor networks, as they are important people when it comes to repairing or replacing your devices. Make sure to read the fine print of your home warranty contract to know the important details for critical aspects pertaining to your warranty.

Find Out the Amount Of Time It Takes To Get Your Devices Fixed

Due to the diverse geography and climate across the country, the same home warranty company may take a different time to fix devices in different states. If this duration is not mentioned in your contract, you can ask the company’s customer care team for the average turnaround time. This keeps your mind at peace, and you also know when your critical devices will get repaired.

The Final Word

Always opt for a home warranty policy that you trust. You can read reviews to get a better understanding of what each company offers in each state. This will help you make the right choice and also make sure you get the best in class service.

Note- The information provided in this article may be subject to change as per Federal and State Law. Make sure to always check the regulations of home warranty companies in your state for better clarity. 

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