American Home Shield offers protection against unexpected home repairs, but if you don’t read the fine print, you might be surprised when the time comes to request its assistance.
American Home Shield offers three home warranty plans designed to cover your home systems, appliances, or both. Its plans are among the most flexible in the industry, so you can choose exactly what to include and what to leave out. There’s no home inspection, and its waiting period is half what most home warranty companies require.
But despite its reputation as an industry leader, American Home Shield — and generally all home warranty providers — has its detractors. There are many stipulations written into the contracts that limit when the warranties can be used and take certain decisions away from consumers. If you don’t research exactly what you’re getting, you may be in for a surprise when it’s time to call for a repair.
|Price||Varies by location and covered items|
|Best For||People who want a flexible warranty they can customize|
|Not For||People who prefer to select their own technicians and appliances|
|Covered Systems||Air conditioning (including ductwork)
Instant hot/cold water dispensers
Built-in microwave ovens
Free-standing ice makers
Garage door openers
Built-in food processors
|Service Call Fee||$75, $100, or $125|
|Contract Length||1 year|
|In Business Since||1971|
|Better Business Bureau Rating||B|
|Standout Features||Flexible plans tailored to your needs
15-day waiting period
No home inspection required
Network of 11,000 independent contractors and 45,000 service technicians
24/7 service requests
Industry leader, American Home Shield, professes to protect its customers from large and unexpected home repair costs. Its plans cover your home’s major systems and appliances, or both. If any of them break down, AHS will send a technician to repair or replace the item, and all you’ll have to pay out of pocket is a small service call fee.
Is it True?
Sort of. American Home Shield, like most home warranty companies, finds itself with a lot of unhappy customers, simply because people didn’t realize what they were buying. It’s true it will repair or replace broken systems and appliances, but there are several stipulations in the fine print that limit the warranty’s usefulness, including:
- “AHS has the sole right to determine, according to the terms of this contract, whether a covered item will be repaired or replaced.”
- “AHS is responsible for installing replacement equipment and part of similar features, capacity and efficiency, but not for matching dimensions, brand or color.”
- “Instances beyond AHS’s control may prevent AHS from providing a repair or replacement of a covered item. In these instances, AHS will provide you cash in lieu of the repair or replacement services. The amount will be based on what a consumer without this contract would pay after negotiating the best price for such services in your area.”
- “AHS will determine what services constitute an emergency and will make reasonable efforts to expedite emergency service.”
There are also limitations on what components of each system or appliance are covered. For example, your plumbing system is covered, but not bathtubs, sinks, or showers. These restrictions inevitably lead to frustration when customers realize certain repairs aren’t covered, or that they don’t get a say in which appliance is chosen to replace their broken one.
This doesn’t mean the warranty is useless, though. A broken refrigerator could cost several hundred dollars to fix, and a faulty heating system usually runs you a couple thousand at a minimum. By comparison, paying $30 to $50 a month for a warranty to cover those events might be a good deal. The key is to look into exactly what you are and are not getting before making any decisions.
Our Deep Dive
- Flexible plans built around you: American Home Shield offers three basic plans — a Systems plan, an Appliance Plan and a Combo plan that covers both. There’s also a Build-Your-Own option, so you can choose exactly what you want covered. If you get your quote over the phone, the representative will work with you to customize your policy. For example, my home doesn’t have air conditioning, so the rep removed that from my coverage to get me a lower rate.
- Choice of service call fees: Choose between $75, $100, or $125 service call fees. Going with a higher amount will lower your monthly premium and in some cases, significantly. Selecting the $100 service call fee saved me $9 per month compared to the $75 fee.
- Short waiting period: Most home warranty companies have a 30-day waiting period before your policy goes into effect. With American Home Shield, you only have to wait 15 days.
- No home inspection required: Some home warranty companies require an inspector to come and verify that your appliances and systems are in working order before they will approve your warranty. American Home Shield doesn’t require this, so you can get a quote and purchase your policy all at once.
- Getting a quote takes some time: The online quote tool wasn’t working when I tried it, so I had to call in. I was on hold for nearly 10 minutes before I could speak to a representative. Though when I did, she was very helpful and walked me through the different plans and some of the warranty’s restrictions.
- 24/7 service requests: You can call American Home Shield with a service request at any time of the day or night. But because AHS is footing the bill, they will usually only pay for repairs during normal business hours, which could be a problem if your A/C breaks down on a Friday evening. AHS will cover emergency services, but it’s up to the company to determine what situations constitute an emergency.
- Network of qualified technicians: American Home Shield maintains a network of over 11,000 independent contractors and 45,000 service technicians around the country, so you can be sure your repairs are handled by a qualified professional.
American Home Shield’s prices vary depending on where you live, which systems and appliances are covered, and which service call fee you choose. The size of your home may also be a factor. Anything over 5,000 square feet will cost extra, but that is typical of all home warranty companies. I was quoted $43 per month with a $100 service call fee, but the price you get may be completely different.
Choose the $125 service call fee if you can afford it. Yes, you’ll have higher out-of-pocket costs when you need a repair, but for most people that’s only going to happen once or twice a year, at most. The difference it’ll make in your monthly premiums is more than enough to cover the extra $25 or $50 you’ll pay for service calls.
Purchase only the coverage you need. If you don’t have air conditioning, don’t get stuck paying for a warranty on it. Likewise, your plan may cover smoke detectors and doorbells, but the cost to repair those things yourself likely isn’t worth the service call fee. Also, read the sample contract to make sure the things you want covered are actually covered, and if not, ask to have it included in your plan.
One last thing worth noting: American Home Shield may give you cash in lieu of a repair or replacement, but that cash may not cover the full cost of a service technician visit or a new appliance. In that case, you may still end up paying some money out of pocket to cover the difference. It’s not a common occurrence, but it is a possibility you should be aware of.
Cheaper (or Free!) Alternatives
As with any product that requires a quote, it’s always a good idea to shop around to see if you can get a cheaper price elsewhere. I got quotes from a few other home warranty providers and found a plan for $40 per month with Choice Home Warranty, and an even cheaper plan with The Home Service Club, which was just $34.95 per month. However, the covered appliances and systems varied from one company to another, so you have to look at more than just price. Decide what your must-haves are and see what home warranty provider offers you the best price for those services.
If you’d rather avoid home warranties entirely, you can plan for unexpected breakdowns by setting aside some money on your own. If you can afford to put $100 away every month, for example, you’ll have $1,200 saved up by the year’s end to put toward home repairs and new appliances. That should be enough to take care of most issues. And if it turns out you don’t need to use that money for home repairs, you can spend it on something else.
Conversely, if you choose to invest in a home warranty, you’re rolling the dice a bit — it might turn out to be a great investment, or it might just cost you money. According to a survey by Decision Analyst, a broken refrigerator could cost you anywhere between $223 to $1,500 to repair. The policy I was quoted from AHS would cost me $516 annually, plus the $100 for each service call. If I was looking at a $1,500 repair, the warranty would be money well spent. If the repair was only a few hundred dollars, though, I’d have been better off saving on my own.
Take some time to do the math and determine whether a home warranty makes sense for you. Consider the age and value of your appliances and how much money you could conservatively put away in an emergency fund each month. Then get a quote from AHS and find out how much that will cost you. If you’re confident you can maintain a sufficient emergency fund, though, it’s probably best to avoid a home warranty. That way, you’ll retain your ability to choose your own appliances and service technicians.
The home warranty industry has a lot of unhappy customers. With customers not understanding what is covered and companies trying to avoid paying for legitimate repairs, you’re not likely to find many glowing reviews for any home warranty provider. But if you’re interested in checking out some other options, start with these:
- The Home Service Club: The Home Service Club offers three home warranty plans in 48 states. The Systems and Appliance plans are comparable to those offered by American Home Shield, but HSC’s Comprehensive plan goes beyond what AHS offers to include plumbing stoppage coverage, gas leaks, pest control, and more. It also offers three service call fees to choose from: $65, $95, and $125.
- America’s 1st Choice Home Club: America’s 1st Choice Home Club offers three plans. The Bronze plan covers only heating, air conditioning, and water heaters, but it’s a solid option if you are looking for a basic warranty to cover only those most expensive repairs. The Silver plan covers major appliances and the Gold plan covers appliances and all major systems in the home, including electrical and plumbing. You must call for a quote.
- First American Home Buyers Protection: Offering coverage in 38 states, First American Home Buyers Protection lacks the flexibility of some of the other home warranty companies. There are only two plans available and certain systems, like air conditioning, which are usually standard with most home warranty companies, cost extra for First American customers.
- Choice Home Warranty: Choice Home Warranty’s Basic and Total plans aren’t much different from one another. Both cover major systems and appliances, though the Basic Plan is missing air conditioning, refrigerators, washers, and dryers. You can get a quote and purchase your warranty online in a matter of minutes.
What Others Are Saying
- The Chicago Tribune warns of the difficulties that can arise when working with a home warranty, highlighting one customer’s difficulties in getting AHS to fix his broken air conditioner. Of his experiences, the man said: “They’re very polite on the phone. You really got the idea that they were going to help you out. But it was just horrific that you could go nine weeks without air conditioning.”
- Angie’s List says home warranty companies are consistently one of the worst-graded categories on their website. One American Home Shield customer said of his experience: “I did the math, and I figure you’re paying all this money for the warranty and then you pay $50 to $75 for every service call – it really doesn’t add up…Plus, the people they sent to do the work were late and unprofessional. I got real put off.”
It’s up to you to decide whether an American Home Shield warranty is a worthwhile investment. Do the math, read the fine print, and ask yourself if the potential savings are worth some of the freedoms you give up when you sign up for a home warranty.