What is a home warranty (another update)
So I wanted to share this tidbit of information with you this afternoon that I just gained after a long discussion with my area sales rep after one of my clients had some issues with a hot water heater. It was rather upsetting for both them and for me, and ended up costing them some money that in my opinion should not have been their responsibility and should have been covered. It was clearly not and it is outlined in the plan that it is not but I left my client unprotected because my understanding of how each home warranty works was incorrect.
In two past posts I discussed 1) how important home warranties were, and 2) gave an update on how they had lost some of the important coverage that I loved and how the upgrade was no longer as important to get. This time I'd like to talk about how I have changed my view again on the importance of the upgrades and how some of them actually work, specifically one that I usually get, but decided against for a particular home since it was an almost new home, and I didn't think it would really add anything to this home because of how new it was.
The Upgrade that I specifically want to discuss is the first class upgrade that First American home warranty offers. In the past this upgrade offered coverage on pre existing conditions which was some amazing coverage that made the home warranty and especially the cost of the upgrade worth every penny. Years after that first post they dropped the pre existing conditions coverage and it lost some of it's luster. (which was the reason for my previous update about this topic) It didn't make it not worth the money really, but essentially a lot less useful in its protection. Some coverage that is still offered through this upgrade though is code violations. This I have found is some important coverage to have but only in hindsight.
So this incident that just occurred and how I found out how important this coverage was to have, was a water heater springing a leak. The water heater is something that is actually covered without any type of upgrade, and almost all home warranty companies will cover the cost of a new hot water heater when the existing one springs a leak. This one though was not covered though. The reason was that the appliance was not up to code. The house was not all that old, in fact I believe it was a 6 year old home when this happened. How did the home not have a water heater that was up to code? how did they pass the inspection when the house was built if it was not up to code? Well the fact is, the water heater was up to code all the way up to the year before the incident happened, when the county code enforcement office changed the code for new hot water heaters. This is something they do every year, so if you have a home more than 1 year old, there is a good chance that some of the items, although code compliant the year it was built, are no longer up to code regulations.
And that is where I had my misunderstanding about how this particular upgrade worked was. When I asked for a home warranty from the sellers for my buyers the year before, I didn't ask for this upgrade particularly because of the age of the house and I figured everything would have been up to code when it was built. The upgrade though doesn't refer to the code when the house was built, it refers to the code as of the day the repair is needed, and the code department changes little bits of code every year, and the year before they changed the code for hot water heaters. The old hot water heater was installed up to code, but 6 years later the code had changed and because of that the hot water heater was not covered.
If you can imagine I was not very happy about this. Neither were my clients. It was a very small code update and almost nothing changed, but the fact is that it did and that made this item no longer covered. And that is the reason I wanted to give everyone this little update so I could once again go let everyone know how important these type of home warranty upgrades are, whether they cover pre-existing conditions or not.