The Simple Dollar: “Best Home Warranty Company for 2014” plus 1 more
The Simple Dollar: “Best Home Warranty Company for 2014” plus 1 more |
| Best Home Warranty Company for 2014 Posted: 19 Oct 2014 04:00 PM PDT If you're considering a home warranty to help protect you from costly home repairs, there are several companies that want your business. Unlike the big insurance companies that provide home, life, and auto policies, home warranty companies aren't household names. For that reason, you may feel like you're starting from square one in your search. The good news: I've done a lot of the legwork for you. After analyzing several of the top home warranty companies, three stand out as the best: I looked at several factors to narrow down my recommendations. In a moment, I'll detail my criteria on how I selected the best home warranty companies. Later on, I'll discuss the basics of home warranties, what they cover, and whether they're the right choice for you. The 3 Best Home Warranty Companies#1: American Home ShieldThe largest home warranty company in the nation, American Home Shield allows homeowners to select from three plans or customize their coverage by choosing exactly what they want covered. Their build-your-own plan was the only one of its kind in my search. Customers can also raise or lower their service fee, which helps them control the cost of their plan. Of the companies I investigated, American Home Shield also made it easiest to get a quote — I only had to input my email and street address. The company gets solid reviews overall, including an A+ rating from the Better Business Bureau. Upsides:
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#2: TotalProtectIt was also easy to get a quote and compare plans from TotalProtect, which offers three plans and a customizable deductible. Customers can add a wide range of additional items to base plans, but the company doesn't offer an option to create a plan from scratch. Of all the companies I surveyed, TotalProtect made it the easiest to access contracts by clearly linking to them at the bottom of each plan's description. Though it seems like a small detail, it's a level of transparency I appreciated given many customers' confusion over what home warranties actually cover. Upsides:
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#3: Complete Appliance ProtectionIn a rare move among home warranty companies, Complete Appliance Protection doesn't charge any service fees or deductibles for repairs. That means you won't be shelling out more money on top of the price of the plans. It also doesn't exclude items from coverage due to a lack of maintenance, which is common among other home warranty providers. Customers can choose from four coverage levels and add on items as needed. A couple of drawbacks that kept Complete Appliance Protection from a higher spot on my list: The website is rather clunky, and the company provides service in only 35 states. Upsides:
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How I Evaluated Home Warranty CompaniesHome warranty companies can be tricky to evaluate online. Reviews tend to trend suspiciously positive or frighteningly negative. For that reason, while I considered online reviews while making my picks, I gave them less weight than other factors. Here are all the criteria I considered when looking for the best home warranty:
After considering all of these criteria, the three providers I referenced above rose to the top during my search for the best home warranty company: American Home Shield, TotalProtect, and Complete Appliance Protection. Not sure what a home warranty does, or whether it's right for you? I'll tackle the basics below. Home Warranties 101Don't confuse home warranties with home insurance, which protects your home and its contents from natural disasters, fire, and other major calamities. Mortgage lenders usually require you to purchase home insurance. Home warranties help guard against big bills when things including appliances and plumbing unexpectedly fail. They are generally not a lender requirement. Read on to discover the particulars of home warranty coverage, costs, pros, and cons. What does a home warranty cover?Home warranty coverage will vary according to the type of plan you choose and whether your home is a new build or dozens of years old. For new homes, a home warranty from your builder typically covers any big structural defects for as long as a decade. Heating and air-conditioning, drywall, paint, appliances, plumbing, and electrical work may be covered anywhere from six months to two years. For existing homes, warranties typically fall into a few categories:
My husband and I built a new home that we moved into a year and a half ago, and we benefited greatly from our home warranty. After living in the home for almost a year, we presented our builder with a list of issues to rectify before our warranty was up. It included numerous drywall fixes, interior and exterior paint touch-ups, the repair of a wobbly toilet, and a costly valve replacement on our downstairs air-conditioning unit. The air-conditioning repair alone would have been several hundred dollars without the home warranty. An important point to keep in mind, especially for older homes, is that home warranties are intended to cover unexpected fixes. Many plans won't cover routine service or problems that are the direct result of incomplete or improper maintenance. How much does a home warranty cost?The price of a home warranty depends on what type of property you need covered — for instance, whether you live in a condo or a single-family home — and whether you stick with a basic plan or buy an upgraded version. Basic plans typically range from $350 to $500 a year, according to Angie's List; souped-up plans can cost as much as $800. On top of the cost of the plan, you will also have to pay a service fee or deductible of roughly $50 to $125 each time you need something fixed. If you're buying a newly built home, the cost of your home warranty may be rolled into the purchase price of your home. That was the case when I moved into my new home, and it turned out to be a nice perk. You may also find that if you're buying an existing home, the seller or real-estate agent may throw in a home warranty plan to sweeten the deal. How do I get something fixed under my home warranty?The home warranty company will arrange repairs on your behalf after you pay any necessary service fees or deductibles. With rare exceptions, you do not get to choose a company to do the work — the home warranty company already has preferred vendors. You should also understand that a home warranty company is obligated only to make sure covered items are in working order. They don't have to replace your aging relic of a furnace, even if it's long past its prime. Same with that funky avocado stove from the early '80s — don't expect your home warranty company to swap it out for a brand-new stainless-steel model. Do I Need a Home Warranty?For most homebuyers, home warranties are about peace of mind. For some, that's reason enough to fork over a few hundred bucks. But like any financial product, home warranties have significant pros and cons. Read on to decide whether a home warranty is the right decision for you. Home warranty prosA home warranty can be a big help if you don't have a ton of cash left in savings — a particularly common scenario for homebuyers who just plunked down thousands for a down payment, closing costs, and other incidentals. With home warranty, one big, unforeseen problem may only cost you a small service fee to fix as opposed to shelling out hundreds. A reputable home warranty company can also eliminate the frustration you may feel as you attempt to make repairs yourself or find someone else to do them. So, if you're the type of person who likes to make one call and leave the rest up to the experts, a home warranty can ease some stress. Home warranty consThe biggest con of home warranties may be the most obvious: There's a good chance you won't need to request any repairs from your home warranty company, which means you're out at least a few hundred dollars. If you do need something fixed, you will still be paying a service fee or deductible on top of the initial price of your plan. You may not like the repair company your home warranty company sends to do the work, and you'll have little control over the speed with which the repairs are done. There's also a chance your repair won't be covered, which is a common complaint among home-warranty customers. Of course, you can help guard against this scenario by reading your policy contract extremely carefully. In my case, it's unlikely I would have purchased a home warranty had our builder not included one in our home's purchase price. Though we did end up using the warranty for a costly fix, the chance of major breakdowns is low in a newer home. And as always, you can set aside money in your emergency fund (where it will earn interest, too) to cover unanticipated fixes. Final ThoughtsRemember the golden rule of home warranties: Read the contract before signing up. And maintain a clear understanding of the pros and cons. Your home warranty policy is meant to keep you from paying big for unexpected fixes, but there are many limits. If you have realistic expectations about what your home warranty can do for you, you may find that the peace of mind is worth the price. The post Best Home Warranty Company for 2014 appeared first on The Simple Dollar. |
| Insurance Ads: Trick or Treat? Posted: 19 Oct 2014 05:00 AM PDT  Insurance isn’t a product you can see or touch, so insurers sell memorable characters — such as Allstate’s ‘Mayhem.’ Remember that ad…? Of course you do, because even when you think advertising isn’t having an effect on you, it is. The fact that you remember the Taco Bell Chihuahua or the Old Spice guy is proof that television ads, at the very least, take up some space in your memory. Making a brand or product memorable by associating it with a character such as The Most Interesting Man in the World is only one of a commercial’s goals, but it doesn’t end with brand awareness. Some commercials are intended to influence your immediate behavior. These are easier to spot because they include clear calls to action: “Order today! Call now! Call in the next hour and receive a special gift!” Ads that create an imperative can include more than just picking up the phone or going online. “Hurry in while supplies last!” and “These deals won’t last long!” are examples of ads that motivate viewers to do something — i.e., “Buy something!” Ads for insurance companies don’t fit into these first two categories because insurance is not something you can buy on an impulse. It’s not a product you can rush out to buy because it’s on sale. When it comes to insurance advertising, being memorable is not enough. While the goal of insurance advertising is the same as other advertising — to generate a sale — it takes some different routes to get there. Unlike other products, the quality of insurance is intangible. It has potential value, but nothing you can or even want to touch. The value of insurance is delivered at a later date, which means that by the time you use it, unlike a bad meal or a sweater that doesn’t fit, there is nothing you can do about your purchase. This is why it’s important to understand what insurance ads are saying and how they work, so your insurance purchases will be based on your best interests and not the contents of an ad. Weasel WordsFederal truth in advertising law says that ads cannot be deceptive or misleading. While that sounds straightforward, it’s not always that simple. Deceptive and misleading means untrue or demonstrably false, and the test of that standard comes from careful examination of the advertising claim. Advertisers know the rules and lawyers scrutinize ads to make sure they comply. However, what the law does not protect against are misunderstandings on the part of consumers. An illustration of what constitutes a misunderstanding is a T-shirt that is popular with high school boys. It features an image of an oversized pen. The text reads “My Pen is Large!” The casual reader may be offended because they read it as “My Penis Large,” but the shirt is perfectly acceptable because there is nothing wrong with a shirt about writing implements of any size. In the world of advertising regulation, the wearer of the shirt is not responsible for the misreading of the clearly spelled-out message. Advertisers do something similar with what the ad industry calls weasel words. Weasel words can make a claim sound like one thing to a casual listener when in reality they mean something else or nothing at all. Biggest, best, better, and greatest are common weasel words that, when combined with other words, sound important. For example, “readers of this column think I’m the greatest writer ever.” That’s not only a bold claim, it’s also true — my friends and family who read this column think I am the greatest. Because the statement does not specify all readers, there is no deception. What are They Really Selling?Whether it’s Maxwell the Pig for GEICO, Flo from Progressive, Professor Nathaniel Burke of the University of Farmers, or some other fictional spokes-character, they all have something in common: We like them. Flo is a mildly awkward, overly enthusiastic employee who loves her job because she works for the best insurance company in the world. The fictional Farmer’s University professor is an amalgamation of all our favorite teachers — knowledgeable, patient, and sincerely interested in helping us learn something new. The first thing they all sell is their own likability. The more consumers identify with a character, the more we see of ourselves in them, the more we trust them and what they say. Once trust is established, everything the character says or implies is accepted as factual and truthful. This is why insurance commercial characters seldom sell products; they sell themselves and recommend products. The Other GuysBashing the competition may work for selling used cars, but it doesn’t work for insurance. That doesn’t mean insurance ads don’t go after the competition. They just do it indirectly, which has the benefit of addressing multiple competitors at the same time. Allstate and their online sister brand Esurance are masters of taking down the competition without ever mentioning names. Allstate’s “Mayhem” commercials are like mini movies with fully developed story lines and a moral. They open with Mayhem identifying himself as a person, thing, or animal poised for action — or inaction, as is the case of the guard dog eating a bone while burglars pack up household possessions. They use dark humor to not-so-subtly point out that no matter how well you plan, things can and will go wrong. It’s only a matter of time until mayhem strikes. Even the expected — like childbirth, which gives you nine months of advanced warning — can lead to the unexpected. The over-the-top dramatizations are like nightmares come to life. The spots finish with the dire warning, “If you have cut-rate insurance, you might not be protected from Mayhem.” Two messages are being delivered: All other insurance is cut-rate, and Allstate is worth its higher price because it protects you better. Allstate’s partner brand Esurance takes the exact opposite tack with their highly creative commercials featuring a cadre of memorable characters, such as Beatrice the Facebook lady and Milton the copy machine selfie guy. The message they send is obvious: If you’re using some other insurance company, you’re spending twice as much time as you have to and you’re paying too much. The Esurance ads also present a more subtle message — that only people who are out of touch would buy insurance from someone else. This taps the same psychology that made you ditch your best friend in 7th grade because the cool kids said he was lame. Allstate and Esurance are one company with two directly opposing approaches — and no matter which one appeals to you, they win. The ComparisonA popular feature of insurance commercials is the rate comparison. Consider the 21st Century commercials that start out damaging a car and correctly point out that insurance is insurance and both companies will pay for the needed repairs. The difference is that 21st Century is going to cost you less for the same protection, so says the guy in the hard hat. They are telling the truth; the rates they flash on the screen are real. They just may not be accurate! Insurance rate commercial ads, including Progressive’s price comparison tool, all work the same way. Insurance companies are required by each state’s insurance department to provide their rate books to the state. These books then become public records that can be searched by anyone, including competitors. The problem is that rate books tell only part of the story; they are baseline rates and do not include underwriting or discounts. When ads compare rates, they will commonly cite the book rates of their competitors and underwritten rates for themselves. The result is that their rates always appear to be lower. Beware the DisclaimerRate comparison commercials will always have a disclaimer in them. Disclaimers are those messages that run in nearly-too-small-to-read print at the bottom of a commercial, and they appear that way for good reason. What the spokesperson or large text gives, the disclaimer takes away. In the case of the 21st Century ads, it’s the savings. “Actual savings may vary,” says the disclaimer. When Progressive’s perpetually perky spokesperson Flo fires up the price comparison board in this commercial for bundled coverage and assures the customer that “Progressive compares rates with other top companies so you get a great price,” a couple of sneaky things happen. First, she doesn’t actually say Progressive is less expensive, even though that’s what appears on the board. Flo uses the weasel word “great” to describe the rate. In this case a great rate can mean anything or nothing. The next gotcha is the white text with a faint black shadow on the white background that says “Comparison rates not available in all states or situations.” In plain English, the disclaimer is saying the rates shown may not apply to you. How important are the disclaimers? In the Progressive commercial for auto-homeowner bundles the disclaimer is the only place you are told that Progressive doesn’t sell homeowners insurance. The disclaimer says, “Home insurance provided and serviced by third-party insurers” — and, by the way, these “great” rates are only for six months. Later in the commercial, a disclaimer lists the actual companies that may or may not be providing your insurance. Gimmicks GaloreGimmicks are tricks that are used to draw your attention away from where it needs to be. Magicians use all sorts of gimmicks — which they call misdirection — so you won’t see something that might give away the illusion. Insurance commercials do the same thing. They use offers designed to distract you from the fact that you might not really be getting the best price for insurance. Allstate puts two different distractions in this auto insurance commercial. The first bit of advertising slight of hand takes the form of their deal with TrueCar for new car discounts. Misdirection is everywhere, starting with the claim that you can “save an average of $3,000.” This, depending on how they calculate the average, probably means you’ll save $3,000 at most. A savings on what is the real question? The small print next to the third zero gives us the answer: The savings are based on MSRP. MSRP is the Manufacturer’s Suggested Retail Price, or the sticker price. When was the last time you heard of someone paying the sticker price for a new car? In most cases even the most timid negotiator is going to pay at least $1,000 less than MSRP, with the average buyer paying about $3,000 less. You don’t need Allstate or any other insurance company to get these savings. If you’re not comfortable negotiating and really like the idea of a discount deal, check your warehouse club membership; Sam’s, Costco, and BJ’s all offer similar programs as part of your membership. The next misdirection in this ad? Safe driving bonus checks. They’ll reward you for not having an accident by sending you a check. The gimmick here is that you start out paying a higher rate, and they refund you the overpayment if you don’t have an accident. In essence, they’ll give you back your money and expect you to say thank you for the favor. Of course, there is a disclaimer here, too, that informs you that the offer is NOT AVAILABLE IN EVERY STATE. Esurance, State Farm, and USAA also offer similar car-buying services and back-end discounts. Optional CoverageWhen you shop for a car it’s common knowledge that options like power windows and heated seats come at an additional cost. The same is true for insurance. Optional coverage means it costs more even though they won’t say it in the commercials. Take Liberty Mutual’s Better Car Replacement program, which will pay for a replacement car that is a model year newer than your old one. If you don’t go blind trying to read the tiny white disclaimer on the bright yellow background, you’ll see that in addition to being optional, it’s not available in North Carolina and deductibles apply. Plus your car has to be totaled in order to collect. Totaled means that if your $20,000 car has $19,000 worth of damage you don’t get paid for a newer car. Liberty Mutual’s Accident Forgiveness is another example of optional coverage that offers little more than higher rates. Like Allstate’s Safe Driver’s Bonus Check, you are paying a higher rate to start with, and they’ll refund you the overpayment if you don’t have an accident. Bait and SwitchState Farm implies that they will find money for you when you need it — delivered by a teleporting company representative. They call it their Double Check Discount. In the commercial, a couple of friends are out shopping. The State Farm customer, after summoning an agent by singing the company’s famous jingle, receives a wad of cash to shop with. After she gets her magic money, it’s her friend’s turn — she clumsily tries calling for her insurance company and gets teased with “about” $149 less than her State Farm customer friend. Of course, the tag line reminds us all that, “Having insurance isn’t the same as having State Farm.” That sentiment is unmistakable at the end, when the voiceover tells you that State Farm is there to help you with unexpected savings. The message — that there’s no reason to shop around, and that ordinary insurance companies lure you with rates that aren’t as good as State Farm’s — is as plain as the dollar bill dangling in front of your face. Once again, watch for the disclaimer that tells you not to pay attention to what the nice young man is saying. The post Insurance Ads: Trick or Treat? appeared first on The Simple Dollar. |
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