Major home appliances are costly to repair and expensive to replace. That's why some homeowners spend hundreds of dollars a year to buy a home warranty, sometimes called a service contract.
Home warranties are supposed to provide peace of mind. But in many cases, people who try to use them when something breaks down experience disappointment and frustration.
Online bulletin boards are filled with complaints:
- "I'm highly disappointed and angry!" – Kathy of Cordova, Tenn.
- "They don't do anything they said. All they want is your money." – Mary of Lancaster, Texas
- "They made me wait a week, only to tell me my broken washer is not covered under my plan!!! So far, this is the second item they claim is not fixable under my plan!!! Save your money, and get your own repairs done!!!" – Rozelia of Oakland, Calif.
Home warranty companies have been the worst-graded category on Angie's List for eight years in a row. Nearly half of the member ratings were unfavorable.
Cheryl Reed, the website's director of communications, told me some of the complaints deal with poor service, but most result from unrealistic expectations about how a service contract works.
"People were disappointed because they just assumed the home warranty covered everything in their house in the way they wanted it covered," she said. "They never really took the time to read the warranty and understand what the process was."
(Read More: Car Repair Costs Could Put Drivers on the Road)
For instance, you may think you need a new water heater, but the warranty company may decide it only needs to be repaired. Under the terms of the contract it's their choice, not yours. Even worse, they may say the repair isn't covered at all.
Angie's List member Steve Donahue, who lives near Houston, complained after his home's air conditioning system broke. The service technician diagnosed a number of problems, but the warranty company denied the claim. They said the humidifier hadn't been properly maintained.
Donahue told me his system didn't have a humidifier. You don't need one in that part of the country. He called the warranty company to complain, but could never speak to anyone in charge.
"I paid a lot of money and I never did get much of a return out of it," he said.