GlossaryThis term is crucial to understand as it often plays a significant role in determining the extent of coverage provided by a home warranty company.
Typically, home warranty companies do not cover pre-existing conditions, which can lead to confusion and disputes when a claim is denied on these grounds. Therefore, homeowners need to comprehensively understand what constitutes a pre-existing condition and how it impacts their home warranty coverage.
A pre-existing condition, in the context of a home warranty, is any malfunction or defect present in a home system or appliance before the home warranty policy begins. It includes any condition that would have been detectable by a visual inspection or a simple mechanical test. If an issue would have been noticeable to a professional service technician, it is generally considered a pre-existing condition.
It's important to note that a pre-existing condition does not necessarily mean the homeowner was aware of the issue. Even if the homeowner was unaware of the problem, it could still be classified as a pre-existing condition if a professional technician could have detected it.
Pre-existing conditions can be categorized into two types: visible and invisible. Visible pre-existing conditions are those that could have been identified through a visual inspection before the start of the home warranty contract. These include issues like a cracked heat exchanger in a furnace or a leaking pipe.
Invisible pre-existing conditions, on the other hand, are those that would not have been detectable through a visual inspection but could have been identified through a simple mechanical test. For instance, a faulty electrical circuit that shows no visible signs of damage but fails when tested would be considered an invisible pre-existing condition.
A home inspection is a crucial step in identifying pre-existing conditions. A professional home inspector can thoroughly examine a home's systems and appliances, identifying any visible or invisible issues. This can provide a clear picture of the condition of the home before the start of the home warranty coverage.
Having a recent home inspection report can also be beneficial when dealing with a home warranty company. If a claim is denied on the grounds of a pre-existing condition, a home inspection report can serve as evidence to challenge the denial.
Pre-existing conditions have a significant impact on home warranty coverage. Most home warranty companies explicitly state in their contracts that they do not cover pre-existing conditions. This means that if a system or appliance fails and it is determined that the issue was pre-existing, the home warranty company will not cover the repair or replacement costs.
This is often a point of contention between homeowners and home warranty companies. Homeowners may feel that they have been misled or that the company is refusing to honor its contract. However, from the company's perspective, covering pre-existing conditions would be akin to providing coverage for a known risk, which is not the purpose of a home warranty.
One of the most common ways that pre-existing conditions impact home warranty coverage is through the denial of claims. When a homeowner files a claim for a system or appliance failure, the home warranty company will typically send out a service technician to diagnose the issue. If the technician determines that the problem was pre-existing, the claim will be denied.
This can be frustrating for homeowners, especially if they were unaware of the issue. However, it's important to remember that the purpose of a home warranty is to provide coverage for unexpected breakdowns, not for issues that were present before the start of the coverage.
In some cases, a home warranty company may agree to cover a system or appliance with a pre-existing condition, but at a higher premium. This is because the company is taking on a higher risk by providing coverage for a system or appliance that is already known to have issues.
While this may seem like a good option, it's important for homeowners to weigh the cost of the increased premium against the potential repair or replacement costs. In some cases, it may be more cost-effective to pay for the repairs out of pocket rather than paying a higher premium for the home warranty coverage.