If you’re thinking about buying a home warranty, you may be considering First American Home Warranty, a leader in the industry.
Home warranties like First American’s can feel like a gamble. Will the warranty pay when you need it to? Or will you find out the hard way your warranty doesn’t cover the repair you need?
You may not know unless you comb through a warranty contract line by line looking for exceptions, conditions, and requirements of you, the homeowner. So let’s take a close look at First American Home Warranty.
About First American Home Warranty
First American Home Warranty has been in business for more than 35 years and currently serves about 450,000 clients in 38 states.
That’s a substantial amount of customers and a wide range of coverage. Paired with more than three decades of service, the numbers speak highly for First American’s reputation. It’s one of the leading home warranty companies today.
But you also need to assess the terms of their home warranty policies and the types of claims they actually cover to make an informed decision.
Let’s go through the company’s warranties element by element:
What Does First American Home Warranty Cover?
First American has two plan categories: Basic and Premier. Any prices quoted in this section could change without notice.
First American typically raises its premiums every few years. The company sells annual contracts but allows monthly payments.
The Basic Plan ($28 a month) covers:
- Range/oven or cooktop
- Garbage Disposer
- Trash compactor
- Washer and dryer
The Premier Plan ($44.50 a month) covers everything in the Basic Plan, plus:
- Electrical system
- Plumbing system
- Water heater
- Central heating
- Garage door opener
- Central vacuum system
Additional available upgrades to either plan include:
- Air conditioning service ($9 extra per month)
- Coverage for additional refrigerators ($4 extra per month)
- Pool and pool equipment ($15 extra per month)
- Well and well pump ($9 extra per month)
How Much Will First American Home Warranty Pay?
To understand how much a warranty could pay, you have to consider payout caps and service fees.
When you contact your warranty company for service, the company will typically send out a technician to assess the situation. You’ll pay a service fee for this initial step, and you can think of the fee as a deductible.
With First American Home Warranty, the fee is $75 in most states, but it could be as high as $100. We looked at a contract from Texas, where customers currently would pay $75 per visit from a technician.
Assuming the repair or replacement you need will be covered by the warranty, your next concern will be the warranty’s payout cap. Again, these can vary from state to state.
The contract for Texas is fairly typical for First American, and it caps payouts like this:
- Plumbing: $500 maximum per year for repairs to the pipes in your home.
- Water heater: $1,500 maximum per year, excluding flues and vents and fuel storage areas.
- Kitchen appliances: Limited to $3,500 per covered appliance.
- Heating system: Limited to $1,500 per year.
- Central air conditioning (optional add-on): limited to $1,500 per year.
Other systems in the First American Home Warranty contract do not cap expenses, but they have specific limits on what parts of the system the warranty will repair or replace.
In these cases, the fine print can go on for a while, so the following lists aren’t all-inclusive. If you’d like to fully assess the details of a contract, you’ll need to go through the quote process and ask for a sample contract.
The following examples should give you a better idea what to look for when you’re investigating a contract’s limitations:
- Electrical system: No expense cap, but the plan won’t pay for door bells, alarm systems, intercoms, audio or video recording devices, damages due to power surges or inadequate wiring capacity.
- Garage door openers: No expense cap, but the plan won’t pay for remote controllers, gate motors, hinges and springs, side rails.
- Laundry appliances: No expense cap, but the plan won’t pay for repairs to filter and lint screens, knobs and dials, venting, or damage to clothing.
These limitations are typical for a home warranty, and you’ll want to study the details carefully before signing up. If you think the contract won’t provide services you anticipate needing, don’t sign the contract.
Filing Warranty Claims
You will have to wait 30 days after signing the First American warranty contract before you’re eligible to file a claim.
After the waiting period, you can contact First American’s customer service staff any time of the day or night, either via phone or online to start a claim.
How to File a Claim
Starting the claims process online has the advantage of documenting your claim from the outset in case you need to dispute the company’s decision later.
If the customer service staff is certain your problem won’t be covered, the claims process can end immediately. But in most cases, the company will send out a home repair technician who will charge you the service fee we discussed earlier. The service charge is typically $75.
After you pay the service fee, the warranty’s technician should fix or arrange a replacement at no charge, up to the annual limits of the warranty. At this point, your warranty will either seem like a great idea or a waste of money, depending on the outcome of your claim.
Often, when a warranty does not pay a claim, the homeowner feels cheated, and understandably so. However, warranty companies like First American generally do not breach their own contracts, so knowing the intricacies of your contract can help you dispute an unpaid claim.
Common Reasons for Claims Denials
Here are some common and legitimate reasons a warranty could deny your claim for service:
- System not covered: When you buy a warranty and then renew it a couple of times, it’s easier than you might think to forget what coverage you bought, especially if your real estate agent helped purchase the initial warranty. A Basic Plan from American Home won’t cover your plumbing, for example, so if you filed a claim to fix a frozen pipe, you’d get an automatic denial. I know this is kind of like asking whether your computer’s plugged in when you call tech support. But there’s a reason people ask.
- Bill not paid: Sometimes customers fall behind on their monthly bills and decide to skip a few warranty payments. If that happens and you need to file a claim, you’re giving the warranty company a reason to deny service.
- Contract caps met: American Home has more relaxed payout maximums than most other companies, but on many systems, the company still sets an annual maximum. This makes sense: A company wouldn’t stay in business if it regularly paid out more than you’re paying in premiums.
- Maintenance standards not met: Again, American Home’s standards aren’t as high as many other companies, some of which require proof you’ve performed regular maintenance on your covered systems in order to get coverage. American Home will often require regular maintenance on larger items such as your central heat and air (if you opt into AC coverage). The company typically doesn’t require its own initial home inspection before you sign the contract.
How to Avoid Denied Claims
Getting a claim denial can be infuriating. You feel cheated, and you still have to figure out how to pay for the repair you need. Reading your contract carefully, line by line, will help you know whether the warranty provider is living up to its agreement or whether you should file a claim.
Believe it or not, a denial may not be the worst experience you can have with a warranty company. You could get approved for service only to experience delays in service making you feel stuck in-between.
Or, you could get stuck in another in-between: a repair you’re not happy with that the warranty company insists has been completed.
Who Will First American Send to Help?
First American has its own staff of home repair technicians. If the company’s technicians need more expert help, they can bring in specialists of their choosing. Customers have little control over who comes out to repair your home system.
Although First American serves nearly half a million customers around the country, the company usually sends technicians from your general area.
This reduces waiting times, and it also helps the company adhere to your local codes.
However, the company will not send help specifically to get a system up to code. A warranty exists to replace or repair systems in your home, not to maintain them.
Grading First American Home Warranty
If you’re trying to decide whether to buy a warranty from First American Home Warranty, you’ll quickly discover it’s a tough question to answer.
First American Pros
- Simple contracts: Compared to many other companies, First American’s contracts can be easier to understand.
- Lower premiums: The company is on the lower end of the cost spectrum.
- Complaint resolution: The company has the customer service staff in place to help resolve customer complaints.
- Reasonable caps: On the surface, none of First American’s annual caps on repairs seem prohibitively low.
First American Cons
- Lack of clarity: Though the contracts are easy to understand, they don’t always answer every question you may have. You may need to call for clarification.
- Lack of flexibility: Some warranties allow you to customize your coverage to meet your home’s needs. For example, you could pick 10 systems to cover. First American offers only specific coverage plans.
- Closed service network: First American sends its own specialists and technicians, meaning you have less control over the repair process.
What Customers Say
In many ways, the First American’s customer service rates better than other warranty companies:
- The Better Business Bureau gives the company a B+.
- TrustPilot, which compiles customer reviews, give it 4 out of 5 stars.
These ratings result, in part, from First American’s commitment to dealing with complaints. But, individual customer reviews tell a different tale. Customers express frustration, annoyance, and disgust in review after review.
Of course, customer reviews tend to lean toward the negative. Happy customers are generally less compelled to share their feelings online. Still, this preponderance of frustration can’t be simply ignored.
Truth be told, it’s unfair to single out First American. Just about any home warranty company can inspire these feelings when the warranty doesn’t pay as the customer expected.
Do You Need a Home Warranty?
A warranty works kind of like home insurance, but instead of protecting you against loss of value from disasters such as fires and hurricanes, a warranty can shield you from out-of-control home repair costs.
When to Avoid a Home Warranty
- You have a healthy savings account: When you could afford to repair or replace major appliances or home systems if needed, you could have less need for a warranty.
- You can borrow money easily: When you have great credit and a low debt-to-income ratio, you can usually find no-interest loan offers for big repairs like HVAC systems or electrical wiring repairs.
- You have a brand new home: The protection a warranty can provide makes the most sense with older homes which could require expensive repairs at any point.
- You have other protections in place: Maybe most of your home’s systems already have manufacturer’s warranties or service contracts from the installation company.
- You’re good at fixing things: Some people have the gift of fixing just about anything that breaks, meaning they’d be on the hook only for parts and their own time.
If any one of the above scenarios describes your life, you could possibly get by without buying a warranty.
When to Buy a Home Warranty
On the other hand, if the following conditions describe your home and your financial life, you may want to consider a warranty more seriously:
- Several major systems in your home are old: An HVAC system will typically last 20 to 25 years. Smaller systems such as dishwashers, clothes washers and dryers, garage door openers, and stoves may last a decade or so. If you buy an older home with aging systems, a warranty can seem more appealing.
- Your mortgage payment stretches your budget: If your house payment already takes 35 percent or more of your monthly income, a huge repair bill could spell financial disaster. A warranty may seem like a sensible precaution.
- You don’t have much in savings or solid credit: If you couldn’t spend or borrow your way out of a tight spot, a warranty can provide some extra peace of mind.
Someone with all of these limitations may be the most ideal candidate for a home warranty. But someone with a tight budget also has the most to lose by getting a warranty that doesn’t pay.
Bottom Line: Become an Expert on Your Contract
Here’s the number one rule if you’re shopping for a home warranty: Read and understand every last word of the contract before signing up.
If you don’t understand part of the contract, get in touch with the company’s customer service staff to get answers to your questions.
Becoming an expert on your warranty’s contract will help prevent you from being surprised when the warranty won’t cover a repair you need.
Becoming an expert on the contract can also prevent you from buying a plan that doesn’t meet your home’s specific needs.
Home warranties like First American sell peace of mind. It’s up to you to find out whether the warranty would actually provide it.