Home Warranty Regulation

As with many industries, particularly those that involve your financial well-being, home warranty companies are subject to various regulations. These guidelines and laws outline sound business practices and protect homeowners who purchase home warranties. 

As a consumer, you have the right to contract with a business that operates in good faith and to file a complaint should your home warranty provider neglect its contractual obligations. Below, we walk through the different regulatory bodies for home warranties and how they protect you.

The home warranty industry is regulated by individual states and national organizations rather than the federal government. Here are the types of regulations that apply to home warranties:

State Government Regulations

Each state implements its own regulations for home warranty providers. Some states, such as Florida and California, have governmental bodies that regulate home warranty companies. Other states, however, don’t have a clear governmental body overseeing home warranties. 

Although home service contracts are not the same as home insurance policies, some states include home warranties under the authority of the state’s department of insurance. If you live in a state that doesn’t have specific home warranty regulations, check your state’s consumer protection agency to see what protections you have under general consumer protection laws.

Industry Self-Regulation

In addition to applicable government regulation, the home services contract industry has also stepped up with self-regulation. The Service Contract Industry Council (SCIC) is a national trade association that advocates in all 50 states for consistent regulation in the service contract industry (including home warranties and service contracts for appliances, consumer electronics, and more). The SCIC’s member list can be found on its website.

The National Home Service Contract Association (NHSCA) is a nonprofit trade organization that sets a code of ethics for members. The NHSCA routinely monitors member companies for compliance, and you can also access a list of member companies on the NHSCA website. In addition to overseeing member companies, the NHSCA hosts an annual conference with industry-related companies to educate them on industry standards and regulations.

Regulatory bodies create statuary codes that center around the homeowner’s best interests. For example, many states require companies to prove financial stability before being licensed to sell service contracts. Doing so ensures providers can pay out all claims it receives from customers. 

Regulatory bodies also include additional requirements, such as clear contract language, to guide fair business practices. Clear contract language highlights covered item components and the right to cancel your policy if unsatisfied. 

When a home warranty provider doesn’t follow applicable statutes, the state’s regulating body can suspend or revoke a provider’s license.

There are several ways to file a complaint if you believe your provider violated its service contract. You should first re-read your contract for relevant terms. Then, attempt to resolve the issue directly with your provider. Take notes on who you spoke with and on what date. This will help if you need to escalate the issue.

If your complaint isn’t fixed, you can complain to a third party. Your state’s attorney general’s website is one option. You can also contact your state’s insurance commissioner or other consumer protection agency. Timothy Meenan, the managing shareholder at Meenan Regulatory and Legislative Attorneys Law Firm, recommends contacting the insurance commissioner of the state where your provider is incorporated.

Additionally, if your provider is an NHSCA member, you can file a complaint with the NHSCA.  The NHSCA can send your complaint directly to your provider’s management to expedite the resolution process.

Home warranty service contracts are an excellent option to cover an unexpected appliance or system breakdown if you lack the savings to pay out of pocket. However, knowing your provider’s coverage details, exclusions, and fees is important. Industry and government regulations are in place to ensure consumer protection. 

The This Old House Reviews Team recommends reviewing several providers’ sample contracts so you can choose the best provider for your home’s needs. We reviewed the best home warranty companies in the nation if you are interested in learning more.

To share feedback or ask a question about this article, send a note to our Reviews Team at reviews@thisoldhousereviews.com.