CONSUMER TIPS
From the Service Contract Industry Council

For Purchasing and Using
HOME WARRANTIES
(Service Contracts)

WHERE TO PURCHASE:

  • Home warranties or service contracts are available to homeowners at any time during the course of homeownership and regardless of the age of the home or its appliances and systems.
  • Licensed service contract providers, who administer and service the contracts and back them with an independent third-party insurer, sell home warranties directly to homeowners. 
  • A list of home warranty providers who are members of the Service Contract Industry Council, a non-profit trade association representing the service contract industry and working to institute regulations to establish standards and protect both consumers and providers, is available here.
  • Many realtors around the country also sell home warranties during the home buying and selling process.  Homeowners add a warranty to their home as a sales incentive before it goes on the market.  Homebuyers, meanwhile, may insist on a warranty as part of the sale.
  • Home warranties renew annually and most are transferable from homeowner to homebuyer.

BEFORE PURCHASE:

  • Ask for a copy of the contract and read the provisions carefully to be sure the terms and benefits fit your needs.    
  • Research the provider and/or contract administrator with the local Better Business Bureau and/or state insurance commissioner.  As with any vendor, consumers are urged to research the reliability and soundness of companies with whom they do business.
  • Only buy from a provider or realtor willing to supply a copy of the contract terms and conditions prior to purchase.

ONCE PURCHASED:

  • Most service contracts (extended warranties) come with a free-look period that gives consumers 30 days from time of purchase to review the details of the contract and receive a complete refund upon cancellation.
  • Read the provisions carefully to become familiar with all coverage, exclusions, and terms and conditions.
  • Carefully fulfill all contract obligations, such as proper product handling, maintenance, voltage requirements, etc.
  • Keep contract paperwork, original receipt(s), and all maintenance records in a secure, easy-to-access location.
  • Activate the service contract often and for even small covered repairs to maximize the function and value of home appliances and systems.

Consumer Benefits
Home warranties can help homeowners keep appliances and home systems, such as HVAC, plumbing and electrical, in top-operating condition via access to pre-qualified in-home service technicians, technical support and assistance, and repairs or replacement.

Home warranties help homeowners avoid unexpected large repair bills and are an investment in preserving the value and integrity of the home.

When a home goes on the market, a home warranty can benefit the seller by protecting him/her from unnecessary expenditures in the event of an appliance or system failure.  Offering a home with a warranty is an attractive option for buyers as well and can indicate the property has been well maintained. 

Buyers increasingly are asking the seller to add a home warranty to the property before sale.  This also offers the new owner protection from large repair bills as he/she acquires the home's systems and appliances as is.  Owners new to the location appreciate the access to pre-qualified repair professionals and technical support.

Consumer Protections
Most home warranties remain valid if a provider closes for business.  This is due largely to the SCIC's efforts to regulate the industry on a state-by-state basis with laws mandating licensing and stringent financial responsibility requirements for companies obligated to perform under a service contract. 

About the SCIC
Established in 1989, the Service Contract Industry Council is a national trade association that educates consumers about service contracts and extended warranties, and has developed and promotes model legislation with provisions designed for consumer protection and industry standards.  SCIC members sell approximately 80% of the service contracts sold in the U.S. for consumer goods, home and motor vehicles.

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