A home warranty from a reputable provider can save you a lot of money on repairs and maintenance around your home. But a home warranty from an illegitimate provider can cause you major financial headaches.
Good home warranty companies will pay out for major appliances and home systems that break down from normal wear and unforeseen circumstances. You pay the company a monthly fee, and you get money to repair or replace them when something breaks down. The peace of mind a good home warranty can provide is priceless.
Unfortunately, the home warranty industry has a number of scam companies and providers. Some use misleading marketing to get business. Others have so many exclusions and caveats built into their contracts that the “coverage” you get is more or less worthless.
Sorting out the good from the bad is key when shopping for a home warranty. In this guide, we’ll expose some of the worst home warranty companies, explain how to identify scam providers, and offer some reputable companies to choose from instead, including the three mentioned below.
Which Home Warranty Companies Should You Watch Out For?
We’ve done hours of research on all of the large home warranty providers in the U.S. Based on our findings, an analysis of customer reviews, and ratings from sites like Better Business Bureau (BBB) and TrustPilot, we’ve determined that the following three home warranty companies have significant issues. All three have been flagged by either the Better Business Bureau or state attorneys general for deceptive behavior.
- U.S. Home Guard
- Like New Home Warranty
- Home Warranty Direct
U.S. Home Guard
U.S. Home Guard is a young home warranty provider based in Missouri and has been in operation since 2019. Unfortunately, in that short amount of time, the company has garnered a reputation for poor service, unreliability, and misleading marketing tactics. Numerous customer complaints have been filed with the BBB, which currently issues two warnings about the company’s marketing tactics and advertising practices. Both pertain to shady marketing strategies.
What are Common Complaints about U.S. Home Guard?
U.S. Home Guard has mostly negative reviews, and, unfortunately, they don’t all pertain to marketing. We’ll summarize the complaints we found throughout dozens of customer reviews online below.
- Questionable marketing tactics: By far, the most common complaints we see in reviews and on the BBB’s site are about the company’s marketing tactics. They are known to send coercive, misleading, and even threatening letters and notices to trick homeowners into believing their homeowner’s insurance policy will lapse if they don’t sign up for a home warranty. This is a common scheme used by disreputable home warranty providers. This company’s practices even earned a press release from the BBB.
- Poor customer service: Another common issue customers complain about with U.S. Home Guard is the poor customer service they receive. Countless people online have mentioned rude and abrasive customer service representatives that hang up on customers and get loud and aggressive if cancellation is requested.
- Challenging policy cancellation process: Not only are the customer service reps with this provider known to be rude, but they also make canceling your policy challenging. Customers who have filed BBB complaints have mentioned getting passed from supervisor to supervisor in an attempt to keep their business. In some cases, customers have stated they haven’t received cancellation confirmation and then continue to see charges for the plan.
- Disreputable service technicians: A few customers have mentioned that the company requires that the homeowner find a service technician and then submit for reimbursement. When pressed for technicians, the provider will send one, but it seems the wait times are long and resolution isn’t always guaranteed.
Like New Home Warranty
Like New Home Warranty is another relatively young company headquartered in Saint Peters, Missouri. The company’s website doesn’t make it clear which states it serves. It has garnered a lot of negative attention from homeowners, the press, and even the BBB, including a press release discussing how the company allegedly defrauded customers and failed to respond to BBB complaints.
What are Common Complaints about Like New Home Warranty?
Below, we’ll include a quick breakdown of the complaints we saw over and over again when reading through customer reviews for Like New.
- Failure to pay out for covered items: The biggest complaint we see, which appears in most of the complaints filed with the BBB, is that Like New Home Warranty just doesn’t pay out when customers believe it should. Homeowners are left paying monthly subscription fees, only to be denied coverage or fail to get a response after making a warranty claim.
- Misleading marketing: Like the other companies on this list, the BBB issued a warning about Like New’s misleading marketing tactics. It is known to send urgent and official-looking notifications to homeowners with misleading information. The notices have made it seem like the homeowner’s insurance policy would lapse if the property owner didn’t sign up for a home warranty plan. This is a big reason for the F rating with the BBB.
- Lack of transparency: Like New home warranty doesn’t have much information posted on its site. There are no plan prices, no exclusions mentioned, and no explanation of what components of each covered item are actually covered. This isn’t always a bad thing, but it is a red flag that is often indicative of a company looking to scam its customers.
- Poor customer service: A poor customer experience should be expected when you work with a company with low ratings, and is no exception. Many of the complaints online mention rude or aggressive customer service representatives who often make it difficult or impossible to cancel plans.
Home Warranty Direct
Home Warranty Direct closed its doors in 2020 after countless instances of misleading advertising, poor customer service, and an overall lack of payouts, even for what should have been covered items. The company had a history of ignoring service requests and continuing to charge customers who were trying to cancel their plans. Both the BBB and the attorney general of Tennessee issued warnings about the misleading advertising this company was using to get new customers.
What are Common Complaints about Home Warranty Direct?
We’ll include a list of a few of the issues we uncovered about Home Warranty Direct below.
- Lack of response to service requests: A good portion of the complaints we found in customer reviews and on the BBB website were in regard to a total lack of response to requests for service. It seems that, even if an item in your home is covered, it’s likely that you’ll never see a payout or even be able to report the issue to Home Warranty Direct. These complaints date back for years and have occurred as recently as 2020, when the company eventually closed its doors.
- Poor customer service: Additionally, there are some complaints about poor customer service in general, which isn’t surprising. Some customers have mentioned unhelpful representatives and slow response times to all inquiries, even if they don’t pertain to payouts.
- Misleading marketing: Another serious offense mentioned in BBB complaints for Home Warranty Direct pertained to the shady advertising practices. The company is another that was known for sending urgent and even threatening mailers to trick homeowners into thinking they needed to sign up. Unfortunately, this kind of marketing is often targeted at elderly homeowners who aren’t privy to home warranty scams.
What are Common Signs Of A Bad Home Warranty Company?
Unfortunately, it’s not always obvious when a home warranty company is a scam and when its products and home services can actually benefit you. However, there are some red flags to watch out for, which we’ve seen in the companies we mentioned above and in others that seem less reputable overall.
We strongly recommend reading through this section carefully and assessing home warranty providers with these issues in mind to ensure you don’t end up wasting money or getting poor service for your home.
- Lack of transparency: The company doesn’t provide a sample contract or specific information about exclusions for each item the home warranty covers. Alternatively, the company doesn’t provide specific information about service call response times or cancellation policies.
- Low customer ratings: The company has below-average customer ratings on sites like Google Reviews, Yelp, Trust Pilot, and BBB. The BBB and TrustPilot ratings can also be helpful in determining how attentive a company is to upholding its reputation and should be considered separately from customer review scores.
- Negative media attention: The company is the focus of negative press releases or has been involved in class action lawsuits. The company could also have garnered the attention of the BBB and may have fraud notices or other customer warnings on its primary BBB company page.
- Misleading or high-pressure marketing tactics: The company uses aggressive or deceptive marketing tactics, including sending threatening letters or notices to customers stating that their coverage will “lapse” if not “renewed.” The company may also have aggressive representatives managing phone lines that dissuade customers from canceling using high-pressure sales tactics or flat-out misleading homeowners.
- Unrealistic promises: The company might make bold claims about unlimited coverage, no service fees, no pre-inspections, or no exclusions for things like known pre-existing conditions or intentional damage. The company may also advertise monthly premiums that are well below average based on the coverage provided.
How To Research Home Warranties To Avoid Ripoffs
Based on the reviews we’ve read through for the companies above, the last thing you want is to sign a contract with a disreputable home warranty provider. It’s very clear that the entire process is a headache from start to finish and can lead to a lot of money and time lost.
Below, we’ll walk you through some steps we recommend you take when searching for a home warranty company. These should help you get the best deal possible and avoid scams along the way.
- Know what coverage you need: First, we recommend you understand the coverage you need for your particular home. For example, if you have a brand new home, you might have a builder’s warranty on some of your home systems and home appliances. If you just purchased all new appliances, you probably have a manufacturer’s warranty on those items. In both cases, understanding what you do and don’t have coverage for will help you determine what kind of home warranty you need. Additionally, understand that you don’t need a home warranty, although it’s nice to have. Knowing both of these things lets you keep costs down and avoid threats and misleading marketing schemes from untrustworthy home warranty providers.
- Check state regulations: All states govern home warranty regulations differently, so it’s important to check your local laws and regulations to see what’s required of home warranty providers. If you find a company that services your state but doesn’t follow those regulations — which can include contract term limitations, requirements for cancellation of policies, and more — then we recommend you avoid that company at all costs.
- Compare companies based on value, not cost: Some of the less reputable home warranty companies get homeowners to sign up because they advertise low prices, no service fees, deep discounts, and other ways to save money. Unfortunately, these “deals” often come with less appealing coverage, more contingencies and exclusions, and hidden fees that actually make your home warranty far less valuable. We recommend comparing companies based on value and not on cost alone.
- Read through customer reviews: Customer reviews and ratings on sites like Google Reviews, Yelp, TrustPilot, BBB, and others are perhaps the most helpful in determining how reputable a company is. You can also contact your state’s attorney general’s office to see if the company is involved in any pending lawsuits. If you see one- and two-star reviews on Google and Yelp and lower ratings and hundreds of complaints on BBB and TrustPilot, then that provider may have a poor reputation in the industry and should probably be avoided. Keep in mind that the home warranty industry as a whole is prone to low review ratings, so reviews shouldn’t be the only metric you use when assessing providers.
- Don’t be afraid to get on the phone: Finally, we recommend getting on the phone with a provider you’re considering and asking any questions you might have about coverage, cancellation, or transferability. If the company is open and transparent, the rep is friendly, and you don’t feel pressured, that’s a good indication that the provider is legitimate and has your best interests at heart.
So, Which Home Warranty Companies Do We Recommend That Won’t Scam You?
Now that you know which home warranty companies we think are the worst and how to avoid other disreputable providers, we’d be remiss if we didn’t mention some companies that we recommend instead. Below are some of the best home warranty companies in the industry, in our opinion.
Liberty Home Guard
Liberty Home Guard is one of our top-rated home warranty providers for many reasons, but its reliability and high payout rates are some of the most compelling. The company is one of the only ones in the industry with an A+ BBB rating and customer scores of above a 4.5. This says a lot about the provider’s transparency, commitment to its customers, legitimacy, and reputable way of doing business.
Select Home Warranty
Select Home Warranty offers some of the most affordable prices in the industry but still manages to offer extensive and reliable coverage. Its plans all fall below $50 per month, and its comprehensive coverage plan includes the widest coverage range for the cost we’ve seen. Select has a good reputation in the industry for responding quickly to service calls and providing payouts for covered items.
American Home Shield
American Home Shield is a veteran in the home protection plan industry, having been founded in 1971. It has a reputation for high payout rates and reliability, which means peace of mind and potential savings for you as the homeowner. Over its 50+ years in business, AHS has maintained above-average customer ratings and scores with the BBB and Trust Pilot.
Some honorable mentions for companies we recommend for home warranty coverage include Choice Home Warranty and AFC Home Club. Both provide comprehensive plans for major systems and appliances, affordable prices, low deductibles (service call fees), and high-quality customer care.
Since signing up with a disreputable home warranty company can lead to a lot of money being wasted, it’s not surprising that we get lots of questions about identifying disingenuous companies. We’ll answer some of the most common questions we see below.
FAQs About the Worst Home Warranty Companies
Who is the No. 1 home warranty company in the U.S.?
In our opinion, Liberty Home Guard is the best home warranty company available to U.S. residents. LHG has one of the best reputations in the industry, with a 4.59-star review on the BBB’s website as of this writing and an A+ rating with the BBB. The company is known for its high coverage caps and payout rates, which means your claims are more likely to be accepted and paid, leading to greater savings and peace of mind.
Are home warranties a waste of money?
They can be if you choose a service plan from a scam company or a disreputable provider. Some home warranty companies will ignore service requests, use aggressive sales tactics to prevent you from canceling your contract, and build exclusion upon exclusion into your contract to reduce how often it has to make payouts.
However, if you choose a reliable and reputable company, like Liberty Home Guard, Select Home Warranty, or American Home Shield, we’d say it’s far from a waste of money. A good home warranty can insulate you from expensive home repair and replacement costs, plus provide peace of mind that you won’t be on the hook for hundreds or thousands of dollars in unexpected home maintenance.
What do I do if a home warranty claim is denied?
If your home warranty claim is denied, you should first check your service contract to see if it should have been approved. Read through the exclusions carefully to ensure your issue should have been covered. If it should have, we recommend disputing the issue with your provider, filing a complaint with the Better Business Bureau, canceling your contract, and engaging with a more reliable home warranty company.
Methodology: How We Evaluated the Worst Home Warranty Companies Against Our Review Criteria
At Today’s Homeowner, we strive to bring you the most transparent, accurate information for your home improvement projects. Our home warranty company ratings emphasize what matters most to you — whether you’re looking for low-cost coverage, a hassle-free repair process, 24/7 assistance, or all of the above. For this ranking, in particular, we put special emphasis on customer reputation, reliability, payout rates, and marketing tactics.
Our ratings are based on publicly available information about each company, secret shopping online and over the phone, customer-review analysis, and discussions with real estate professionals and repair contractors.
A company can earn a maximum of 100 points across six categories converted to a five-star scale. We researched more than 60 home warranty providers to develop the following formula:
- Plans and Coverage (24 points): A home warranty provider can score highest in this category if it offers multiple robust plans that cover all basic systems and equipment, as well as optional add-ons. We examine each company's exclusions and limitations to determine the coverage amounts for each item. Companies with coverage limits of $3,000 or more perform best in this category, and bonus points go to companies that cover unusual items such as electronics and leaky roofs. We also deduct points from providers that have extensive lists of exclusions or a lack of transparency surrounding what is and isn’t covered.
- Affordability (22.5 points): When evaluating costs, we not only consider monthly plan prices, but we also take into account the cost of add-on coverage, service fees, and whether companies offer free cancellation periods or money-back guarantees. If a provider allows potential customers to view sample contracts before getting a free quote, that transparency earns more points in this category. Since we looked specifically at disreputable companies here, we paid special attention to providers that seemed great on the surface but actually provided little value for the money.
- Customer Experience (18.5 points): A home warranty company must give its customers ample support when they experience issues. We gauge overall support by looking at customer reviews and conducting homeowner surveys. We also go through the quotes process with each company and take meticulous notes about the friendliness of salespeople, how detailed each quote is, and how often the provider contacts us after giving a quote. Since the worst companies fall short in this area in particular, we also read through dozens of online reviews to see which providers had slow response times, a lack of response to service calls, and rude or dismissive customer service reps.
- Company Reputation (17.5 points): In this category, we look at a combination of customer reviews and reputable organizations such as the Better Business Bureau (BBB). We also consider the years of company experience, how satisfied its employees are, and whether it has been hit with any consumer rights violations or lawsuits. We also reviewed each company’s BBB business page to see if customer alerts were present, which are usually indicative of repeated offenses, and we considered cancellation fees to see if they were reasonable or not.
- Claims Process (12.5 points): We score providers highly when they offer short response times, multiple ways to file claims, and around-the-clock availability. Companies can earn bonus points if they have a good reputation for quick and easy claims processing. Unfortunately, we had to pay particular attention to companies that ignored service claims altogether or caused significant delays in responding that led homeowners to pay for the service out of pocket.
- Availability (5 points): Providers that serve more areas can have experience dealing with a wider range of homeowner headaches. A company earns the maximum points in this category if it offers services in most U.S. states.
We monitor company data on an ongoing basis to keep rankings and information up to date.