The home warranty as an industry has a unique purpose for homeowners. Outside the insurance sector, there is a similar segment of the consumer economy that sells service contracts and full service for replacing or repairing defective products. Think about the big e-purchases you’ve made in the past few years and you’ll likely remember if someone offered you purchase protection under the manufacturer’s warranty. The USA Home warranty industry is similar. This only covers household parts or basic appliances and systems, not a single item such as a TV set.

A Home Warranty protection plan can be a useful service when choosing a good company that keeps its promises. However, like everyone else, the industry does not have satisfied customers or companies that do not act honestly or live up to their obligations to consumers. In this industry, there is often one thing that causes dissatisfaction and that is the rejection of claims. Customers who advertise defective dishwashers or air conditioning components are unable or unwilling to pay for repairs out of pocket. For this reason, most consumers choose the home warranty first. So, if the company refuses to pay for a repair or replacement, there is no doubt that the customer will get upset.

However, in some cases, denials are only a symptom of a larger problem. Not all states require a home warranty company license. Some that require a license are subject to very strict rules, including regulations that require the company to maintain a security guarantee to protect customers from things like bankruptcy or insolvency. Other states can only regulate this type of service in the simplest way as possible.

States such as Washington, Texas, Florida, and California are very active in responding to consumer complaints about Home warranty coverage. These states also have a lot of control over how licensed companies do business with their residents. Although they cannot control the activities of companies, they try their best to protect consumer interests. One way is by requiring companies that sell a home service contract to have a specific license, registration that must be kept up-to-date and in line with state regulations.

If the company is licensed in the consumer’s home country or where the property is held, there is at least some business history and reputation. Unless the state requires corporate oversight or regulatory involvement in the home services industry, customer protection is certainly less. However, the mere lack of regulation does not threaten the company. Matters such as surety, reinsurance, and other legal requirements should be investigated as part of the procurement process. By looking at this important step, a consumer can easily buy a contract from a new company without real financial support and without complying with applicable laws that ensure that consumers do not have securities.