American Home Shield and the Home Warranty Business - Should I or Shouldn't I?

Real Estate Services with William S. Cherry & No Co., Wealth Coach

For a number of years -- at least 10 -- I have encouraged my selling clients to throw in a free home warranty from one of the warranty companies like American Home Shield.  It seemed to be both a good marketing strategy for the seller and as a help against the possibilities of disclosure disagreements and lawsuits after closing.

It didn't take long doing this that I sold myself that an American Home Shield warranty on our personal home might be just the thing to do, so I bought and the company started drafting my bank account every month for the premium...about $45, I think.

A long time went by before I needed service.  I called because the back flow valve for our sprinkler system was frozen.  I reported the problem to AHS, and they scheduled a "plumber" who came out and 1) told me that the valve wasn't covered, 2) that he was really not a plumber but a plumber's helper, and 3) that he had learned what he knew about plumbing as a prisoner at the Huntsville prison.  He had only recently been released.

"Well, can you fix it while you're here?"

"No, $55 please."

I drove over to the nearby Lowes, bought the part and put it in myself.  Total cost of the part $6.00.  Total time required to put it in, less than thirty minutes.

The next time I called AHS, the a/c had stopped cooling.  The appointment was set by AHS.  The service technician never showed up.  Calls to AHS and the a/c didn't help.  No apologies then or were forthcoming. I was tired of being hot, so I randomly called a company from the Yellow Pages, they showed up within the hour and fixed it. 

"$105, please"

The next time I called AHS, one of our commodes had been frequently stopping up and the valve at the house for the main water supply line was leaking, too.  I bought a new commode and brought it home for the guy to install because I was sure it was stopping up because of calcification inside the fixture.  I took the day off to be at home for the repairs. 

The plumber came and told me that the water supply valve wasn't covered because it was on the outside of the house.  He said the commode wasn't regulated right and that there was no need to install the new one.

"Well, can you fix the valve while you're here and install the new commode anyway?"

"No, $55 please."  I had to write off the day, too.

The commode immediately began stopping up after he "adjusted it" just as it had before.  I pulled the old one, installed the new one myself.  Cost of the fixture $225.00.  Total time less than forty-five minutes.

The air conditioning began leaking freon.  This time AHS sent an a/c company to do the repair.  The fellow was friendly, knew his stuff, and got it fixed immediately.  He fixed it, and he had come on time.  Wow!

"$55, please."

The hose that goes to the sprayer at the kitchen sink began leaking.  "Hey, American Home Shield, the kitchen sink sprayer hose is leaking and needs replacing." 

"How about tomorrow before 10 AM?"

"Great!  I'll be waiting."

The plumber came, looked at the problem then asked me to bring in my warranty.  "See right here? Replacing washers and stuff like that isn't covered? By the way, I'm a single father trying to raise a young daughter by mself," he added.

"Can you fix it while you're here?" I asked.

"No, $55 please."

Perhaps if this is the business formula followed by all of the home warranty companies, it's time for them to make a change or maybe it's time for real estate agents to discontinue pushing their warranties -- I mean, it's not like we make anything from making the sales for them, and I have to believe that my experiences replicate those of others; worst of all the experiences of those to whom we recommended the services.

Whatever the case, the warranty companies need to be responsible for telling you up front that the service you've requested is likely to not be covered by their warranty.  And further, their contracts with the service companies need to specifically require them to make any and all repairs at local market rates whether or not the AHS warranty covers the repair.

As it is, the primary reason for being a AHS service contractor is the $55 annuity for telling the homeowner, "$55 please," and not delivering any service whatsoever in the process.




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Comments 43 New Comment

Anonymous #39

By the way, the warranties ARE regulated in most states. Some are under the guidelines of the Bureau of Insurance.

April 12, 2009 06:01 PM
William S. Cherry & No Co., Wealth Coach
William S. Cherry & No Co., Wealth Coach

Tonya, the perfect insurance client is one who takes out a policy early in life, pays his premiums month after month until just prior to the occurrence that will require the company to pay his claim. Then he lets the policy lapse. 

And that, by the way, is why life insurance companies are trying to figure out how to get around the sale of viaticals .

Not being able to predict or prevent having to pay a claim, they actuarially guess how they can make more money from premiums and earnings on reserves investments than they have to pay out in claims.

A favorite business plan of many casualty companies is to resist paying claims, knowing that they will lose those clients, but heavily marketing so they can replace them with new clients.  The idea is that you collect lots of premiums and pay our very few claims.  I feel the evidence proves this is AHS's plan.

AHS makes it quite clear that it considers itself a WARRANTY company and not an INSURANCE company.  Therefore they don't feel they have to play under the same rules as insurance companies. 

Regulators apparently feel that way as well. 

(I would like to see a specific list of the state insurance commissioners who 1) regulate AHS and 2) which of those commissioners defines AHS as a warranty company and which defines them as a casualty insurance company.)

Consequently, AHS's business plan is obviously to try its best to weasel out of paying as many claims as it can, regardless of how many clients they lose, because they can depend on Realtors to replace the losses with new clients, and we even do it without charging AHS a commission for selling for them.

(Oy vey, such a deal, Realtors should have.)

No, AHS, in my opinion, is not an honorable company, and Realtors should not recommend AHS's product to clients.  Perhaps there are others as well.




214 503-8563

April 12, 2009 08:16 PM
Anonymous #41

I don't really know why this AHS company is still in business.  I had warranty with them for 3 years paying $42/month.  Had a plumbing leak below the kitchen sink.  My mother was at home when Star Plumbing who is the approved vendor of AHS looked at the leak, my mother noticed that they were not thorough inspecting the leak and they jotted down notes at once and call their main office saying it is not covered.  Paid $60 as my deductible. In their invoice/repair order form,  they just indicated that it is not covered.  So,  I have to call AHS why it was not covered.  They advised that the reason why it leaked was it is faulty workmanship.  I agree that anything that has faulty workmanship is not covered.  However,  my house is only 4 years old and I find it hard to believe that this was the reason.  I called an independent plumber to have a look and he advised that it was just a little loose and it just need tightening.  Paid the plumber $32.00 (this is his hourly rate).  AHS did not do anything but just literatly stared at the leak.  Mind you,  the leak is not that bad and only drops of water comes out.

I believe  there is a conivance between AHS and their vendor.  If I just kept my $42 for 3 years for future repairs,  then I could have save $1512.00,  which is more than enough to cover for  leaks and water back up problems. 

January 08, 2011 09:21 AM
Anonymous #42


I am from Dallas TX.  Do you know if there is a class action against this company in Dallas?  Let me know.  thanks

January 08, 2011 09:26 AM
Anonymous #43
Bill Cherry

Maria, there was one filed in California by a law firm there.  It includes everyone in the US who has a complaint.  Suggest you google it and ask the lawyer if he'll add you to his list.  I'm already on it, but I regret I have misplaced the information.

January 08, 2011 11:47 AM


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