Insurance-Backed Home Warranties: Trick or Treat?

Insurance-Backed Home Warranties: Trick or Treat?

If you’re looking for a good horror story this Halloween, the home warranty industry has plenty of them. Denied claims. Hidden fees. Bad service.

Cue the scary music.

Having a home with a major structural defect is terrifying enough. The warranty should be the hero of this story, not the monster. Unfortunately, many companies write their warranties to limit coverage or make it difficult to file a claim. It’s enough to make anyone scream.

Luckily, there are several ways for builders and homeowners to benefit from the right home warranty without getting horror-struck. The key is knowing what’s a trick and how to find the treats.

Quality Insurance

The Trick: Most structural home warranties are backed by a risk retention group. This means that no insurance policy is issued directly to the home builder, and that builder has no direct line to an insurance carrier should the warranty company disappear.

The Treat: Warranties backed by insurance provide additional financial protection. The insurance company takes on the financial burden and issues a policy naming the home builder. The builder becomes the insured and the homeowner the beneficiary.

PWSC partners with the A-rated Zurich, one of the world’s top insurance providers. The insurance-backed warranty offers 10 years of financial protections against specified structural defects.

Duty to Defend

The Trick: When it comes to settling legal disputes between builders and homeowners, many warranty companies run the other away. They assume no legal or financial obligation to defend the builder should they get sued.

The Treat: Some insurance-backed warranties come with the added benefit of providing defense coverage for claims made against the policy. Should a dispute escalate to the courtroom, PWSC’s insured warranty carries a duty to defend against those claims and lawsuits that may ensue.

Clear Expectations

The Trick: Appearances can be deceiving. When coverage is explained in broad terms it seems like the coverage should be broad too. However, warranties that use language like “unsafe”, “unsanitary” and “unlivable” leave room for interpretation and more opportunity for homeowners and builders to disagree on a coverage decision.

The Treat: PWSC’s warranties include specific standards and detailed tolerances for defects that create clear and measurable expectations.  These details not only help homeowners and builders understand exactly what should be covered, they also support homeowners’ confidence in the quality of their home.

No Hidden Fees

The Trick: Low warranty costs often come with extra or unexpected fees. This might include deductibles, claim filing fees, or transfer fees for homeowners. Home builders may encounter annual membership fees or start-up fees, and both parties can find themselves startled by arbitration costs.

The Treat: Warranties that are true treats offer one standard fee to purchase the service. Filing a claim requires no homeowner deductible because that can delay builders and homeowners in resolving the claim.

Should a claim dispute arise, a strong warranty includes mediation and arbitration as part of its protections. With PWSC, the only cost to pursue arbitration is an $80 filing fee.

PWSC’s insured warranty offers one simple, straightforward price. No hidden fees. No guessing games. No surprises.

Great Customer Service

The Trick: A good builder can quickly become the bad guy if they offer a warranty that comes with a subpar customer experience. The hallmarks of poor warranty service include:

  • Complicated processes to file claims
  • Inconvenient communication channels
  • Customer care agents unfamiliar with home construction

What’s the point of offering a home warranty that only upsets the homeowner when they try to use it? Doing so risks a builder’s reputation and future sales.

The Treat: The best warranty companies understand that a warranty is more than a piece of paper. How the team processes the claim, helps resolve the issue, and assists both the builder and homeowner is critical.

Always beware of bad warranties. If you don’t know what to look for, they can creep up on you. We hope this year’s Halloween is full of all treats (no tricks)!


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