A home warranty is a contract or agreement between the homeowner and the issuing company. It protects the homeowner against the cost of repair or replacement, or furnishes repair or replacement, of any structural component or appliance of a home, caused by normal wear and tear or a defect of a structural component or appliance.
A home warranty contract or agreement can be written by a Home Warranty Association who is licensed pursuant to Section 634.303, Florida Statutes, or by an authorized insurance company who is authorized to write this line of business.
Florida Law does not prohibit the giving of usual performance guarantees by either the builder of a home or the manufacturer or seller of an appliance, as long as no identifiable charge is made for such guarantee.
Any person who solicits or sales home warranties in Florida or from Florida must have a license per Section 634.303, Florida Statutes.
A complete sample copy of the terms and conditions of a home warranty contract must be provided to a consumer prior to the time of sale if requested by the consumer per Section 634.336, Florida Statutes.
The home warranty association may provide the consumer an actual copy of the terms and conditions of the home warranty contract or they may direct the consumer to a website that displays a complete sample of the terms and conditions of the contract.
Subject to the insurer’s or home warranty association’s requirement as to payment of premium, every home warranty must be mailed or delivered to the warranty holder no later than 45 days after the effectuation of coverage, and the application is part of the warranty contract, per Section 634.312, Florida Statutes.
Home warranty contracts must disclose exclusions, restrictions, or limitations in boldface type per Section 634.312, Florida Statutes.
All home warranty contracts are assignable. Per Section 634.312, Florida Statutes, the contract must contain a statement informing the purchaser of their right to assign it, within 15 days from the date the home is sold or transferred, to the purchaser of the home. The home warranty company may charge an assignment fee not to exceed $40. Home warranty assignments include, but are not limited to, the assignment from a home builder who purchased the home warranty to a subsequent home purchaser.
Effective July 1, 2011, each home warranty contract sold in Florida must include a written disclosure to the consumer that the rate charged for the contract is not subject to regulation by the Office of Insurance Regulation. The disclosure may be included in the contract or in a separate written notice provided to the consumer at the time of sale. Also, effective the same date, the companies are no longer required to submit the forms they use for approval. (However, the Office of Insurance Regulation still has the authority to order a company to stop using any contract that does not comply with Florida law per Section 634.3123, Florida Statutes.)
Effective on new and renewal contracts as of January 1, 2020 a Home Warranty sold in the state of Florida may not exclude coverage because of the presence of rust or corrosion unless the rust or corrosion was a contributing cause of the mechanical breakdown or failure of a covered appliance, unit or system.
As per Section 634.346, Florida Statutes, for contracts excluding wear and tear failure specific to an AC unit, the contract must offer additional coverage for an additional premium to cover the replacement of the otherwise functional components of the AC unit. If the consumer does not purchase the additional coverage for the replacement of functional components of an AC system due to wear and tear, the contract must contain a statement in boldfaced type advising of such.
Every home warranty contract must contain a cancellation provision per Section 634.312, Florida Statutes.
Within 10 days: A home warranty agreement may be canceled by the purchaser within 10 days after purchase. The refund must be 100 percent of the gross premium paid, less any claims paid on the agreement. A reasonable administrative fee may be charged, not to exceed 5 percent of the gross premium paid by the warranty agreement holder.
After 10 days: After the home warranty agreement has been in effect for 10 days, if the contract is canceled by the warranty holder, the return premium shall be 90 percent of the unearned pro rata premium less any claims that have been paid. If the contract is canceled by the association for any reason other than for fraud or misrepresentation, the return premium will be 100 percent of the unearned pro rata premium, less any claims paid on the agreement.
A renewal premium may not exceed the then-current cost for a new warranty contract, unless the increase is supported by the claims history, or impose a fee for inspection of the premises per Section 634.308, Florida Statutes.
Extended warranties can be a great way to provide continuing protection when purchasing valuable assets such as a home, automobile, or even electronics.
If you are interested in purchasing a warranty, the Department of Financial Services recommends you follow these tips to make sure you get the coverage and benefits you want:
Be sure you know the complete name of the warranty company providing your coverage. It may be listed as “underwritten by” or as "obligor" somewhere in the materials provided at the time of solicitation or purchase.
Verify the warranty company is licensed in Florida to sell the product you are considering.
Research complaints involving the warranty company through the Division of Consumer Services at www.MyFloridaCFO.com or by calling 850-413-3089 or 877-693-5236, the Better Business Bureau, the Internet, and repair facilities.
Read the warranty materials provided and be sure you understand the coverage, including deductibles, service charges and the length of the coverage period, before you purchase.
Find out what repairs are covered and for how long before you purchase an extended warranty. Also, find out how long products are covered by the original manufacturer before.
Be sure you understand the “exclusions” (what is not covered or is limited by the warranty). For example, warranties may have “age limitations” and cover the appliance up to a specified number of years. Some warranties require maintenance records for the item being covered. You must understand your responsibilities as well.
Be sure you understand your responsibilities and the process if you have a claim.
Keep all documents related to your warranty (receipts etc.) together in one location. This documentation may be needed when you submit a claim.
Don’t rush into a purchase.
Please note the majority of solicitations received through the mail are not from the manufacturer of your product. They are generally solicitations from marketing agencies representing extended warranty companies.
If you purchase a warranty and the warranty company is ordered into receivership, your warranty and any pending claims will not be covered by any Florida guaranty association.
Should you need additional information, you may speak with an insurance specialist between the hours of 8am–5:00pm at one of the telephone numbers listed below:
Out of State Callers: (850) 413-3089