Home Warranty Business Accused of Not Paying Up

As the housing market bounces back, business is also on the rise for the home warranty business. U.S. homeowners will spend almost $2 billion on them this year. But do they come through when help is needed? Judy Osiecki is not a believer.

"It gives you a false sense of security that you are covered if something happens."

The Arlington Heights woman paid Choice Home Warranty $375 for a one year plan that promised to replace or repair appliances and home systems if they broke.

"They told me they would send a repair person out and they would either repair or replace it," Osiecki said.

So, when her furnace went out, Osiecki called Choice Home Warranty. A repairman -- who had never seen her furnace before -- came out to take a look and reported his findings back to the company.

"He said I'm not covering it. I said why? He said it was a pre-existing condition," Osiecki recalled.

Osiecki was stunned at the words. Like many home warranty companies, she said Choice Home Warranty never asked for inspection reports or repair bills documenting the condition of her appliances before she signed up. It was a denial made based on her word against theirs.

"It made me furious. Furious! Because everything you own has a pre-existing condition on it," Osiecki said.

A loophole in the contract gives Choice Home Warranty a green light to deny claims.

Osiecki isn't the only one complaining. Scores of other Choice Home Warranty customers blast the company online calling it unethical, a scam, and a business that gives any excuse not to pay a claim. The company also has a "C-" rating with the Better Business Bureau based on its volume of complaints, amongst other things. With winter on the way and no help in sight, Osiecki had no choice but to shell out $1,700 for a new furnace.

"They're basically selling these policies to hundreds of people a day and recouping who knows how much money, and they're outlaying nothing."

Choice Home Warranty told NBC 5 Investigates that it takes customer feedback seriously, and handles complaints in a fair manner. But after giving us that statement, the company then sent another message to Osiecki, telling her she could only be paid if she promised not to speak to the news media. She said the company promised her a check for about $1,700 next week.

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