This question is extremely common. Home warranty companies earn over $2.6 billion annually. They do not earn this money by paying claims. They earn it by denying claims. As outlined below, there are basically two ways to dispute home warranty claim denials.
Since so many people file home warranty claims which are denied, we will post a series of blogs over the next few weeks which walk people through the claim dispute process. Generally, you do not need a lawyer to file these claims for you. That’s good news, because most attorneys handle this kind of work on an hourly basis. However, you do need to be prepared.
Technical Error
Strict time deadlines apply in these situations. Depending on the state and the policy’s provisions, home warranty companies usually have thirty days to acknowledge claims and sixty days to either pay or deny them.If the company misses either of these deadlines, even by a day or two, most judges will not show leniency.
Again depending on the state and on policy terms, most denials must give the basis for the decision. A rubber-stamp “denial” is usually insufficient.
Not every typo or technical error is a game-changer. Non-fatal errors include things like name misspellings, errant account numbers, and other information not germane to the denial.
Dispute the Results
Legally, home warranty companies must investigate claims and then either pay or deny them. Generally, these investigations must be prompt, transparent, and thorough. The most common violations are investigations which are too fast or investigations which are too slow.
Transparent investigations include things like inspector’s reports, telephone call transcripts, and email strings. If the company refuses to provide these things, that failure could mean the company has something to hide.
These claims are very subjective and the evidence is usually circumstantial. The good news is that the burden of proof is only a preponderance of the evidence (more likely than not). That’s much lower than the burden of proof in criminal court, which is beyond a reasonable doubt. So, in civil court, if you have a sound theory as to what happened and some evidence to support your theory, you might have a valid claim.
Counting the Cost
This step is probably the most important one. And, even if you do not pay a lawyer, there is a significant cost involved. If you act as your own lawyer, you must do all the legwork and planning yourself. So, if you do not want to spend every weekend over the next month building your claim when a positive result is far from guaranteed, it’s probably best not to fight the denial.
Bear in mind that the home warranty company is counting the cost as well. A few companies have in-house lawyers. But many companies must hire attorneys to defend themselves, even in small claims court. In many states, it’s illegal for corporations to defend themselves in court.
Furthermore, if the company wins the suit, the homeowner will almost certainly cancel the policy. That means hundreds or thousands of dollars in lost premiums. And, as mentioned above, collecting premiums is the name of the game, if you are a home warranty company.
One final note. Typically, homeowners have two years after a denial to file claims in civil court. So, before you gear up, sleep on it. But, if you have a valid claim, do not hesitate to take the next step. If the home warranty company unfairly denied your claim, the company has probably unfairly denied other claims. That has to stop somewhere, and you could be the one to stop it.
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