Terms of Service (09/23)
The Home Warranty Service Agreement sold in the Real Estate, New Home, and Homeowner channels lay out all the trades and items that are eligible for coverage, as well as many exclusions, in basically the same way. Every Service Agreement also includes the Terms of Service* that apply as an umbrella over all of the other terms laid out in the trade section. In other words, the Terms of Service are the foundational conditions applied to coverage decisions made on the list of items eligible in the trade sections.
*Sometimes called Terms and Conditions or Ts & Cs.
This document provides an overview of the terms and conditions for 2-10 Home Buyers Warranty (HBW) service agreements.
Audience: 2-10 HBW employees (Internal Use Only)
The following topics are listed below:
- Details of Coverage
- Coverage Checkpoints
- Layout Inside the Service Agreement
1. details of coverage
The Terms of Service are located in the back sections of the Service Agreement. The Terms may look different in the active Service Agreements sold across our different channels. As we will discuss frequently, it is critical that the actual Service Agreement purchased and loaded into the property record is referenced every time any discussion about coverage occurs. The foundational elements are always listed at the top of the Terms of Service on the Service Agreement / Welcome Kit document.
2. coverage checkpoints
The Coverage Checkpoints are used every time a request for service is made by Homeowner, and frequently when answering simple coverage questions.
- Is the system/appliance that has failed listed eligible?
- Has that system/appliance failed due to the normal wear and usage?
- Was the system/appliance in good and safe working order at the beginning of the Service Agreement?
- Is the system/appliance located in a residential property less than 10,000 square feet?
Though not listed as a Checkpoint, part of being able to determine if the system/appliance that has failed is listed eligible you need to know what type of service agreement was purchased first so that you are grounded in the general included / excluded / limited items offered through that Channel. Remember…
- Listing – Seller Coverage
- The homeowner is selling their home.
- Coverage is a little more limited to Standard Coverage with an opportunity to purchase Air Conditioning and Heat Pump Coverage.
- Closing – Buyer Coverage
- The homeowner purchased the home.
- Coverage is based on the Standard Coverage with the ability to purchase Optional Coverages within 30 days of the effective date.
- Renewal – Homeowner Coverage
- This coverage is the same as Closing/Buyer or Extended Coverage.
- You need to watch for lapse in coverages between renewals.
- DTC – Direct To Consumer
- We sell directly to the homeowner.
- Coverage is based what is purchased and it too has Optional Coverages that can be purchased.
Is the system/appliance that has failed listed as eligible in the trade section, and located within the perimeter of the main foundation of the principal residence or the attached garage (unless otherwise noted)?
- What item has failed at the home (if not already provided)?
- Is that item listed in the Trade Section as eligible for coverage, or is it a part of a listed item?
- If the item is part of an optional coverage package, was premium paid for that coverage?
- Where is that item located?
- With the exception of Pool/Spa, Well Pump, Septic Pumping and some pieces of HVAC equipment, all eligible items must be located within the home or attached garage.
- Items attached to the outside of the home (ex. hose bibbs) must be specifically listed as eligible to be considered.
Has that system/appliance failed due to the normal wear and usage of the seller, and now the buyer?
- How was the failure detected?
- Is there any physical evidence of the failure?
- Was there anything said by the caller that created doubt about the cause of failure? If yes, determination on “normal” must be made.
- Example: “My son used the dishwasher door to get on the counter”
Was the system/appliance in good and safe working order at the beginning of the Service Agreement? If that is questionable, could the failure have been detected prior to close of sale by visual inspection and simple mechanical test?
Part One
- What was the effective date of this Service Agreement?
- Was there a Listing Agreement?
- Is this a Renewal? If it is a Renewal, was there any gap between the expiration of the previous term and the new term (lapse in coverage can be seen in Holistic Property View)?
Part Two
- Within the first 30 days of a first year Service Agreement, or if there was a gap in terms, particular care must be given to when the failure occurred.
- When did the failure occur?
- Has the item worked for you since you’ve been in the home?
- Is this an electrical failure? (Electrical failures can often happen any time)
- When did you move in?
- Were you aware of the failure prior to closing?
- (If needed) What was your agreement with the Seller?
Coverage Checkpoint: Visual Inspection and Simple Mechanical Test
We are going to pause for a moment to dive into two Terms of Service items that can create some confusion for employees, Service Contractors and Homeowners: Visual Inspection and Simple Mechanical Test.
There is a tremendous amount of “due diligence” required from the seller, buyer and Real Estate Professionals when a home is marketed and sold. A key part of that is disclosing any known defects in the property (Seller, Listing Agent), and providing the Buyer and Selling Agent the opportunity to inspect the property to confirm that there are no areas of concern in addition to what was disclosed. Between both, the known defects are typically found. Between all parties, everything in the home has been turned on/off (simple mechanical test) and visually inspected.
Once identified, negotiation happens about who will be responsible for repairs/replacement.
We are not part of the inspection process, nor do we require one, however, they are mandatory when a loan is used to purchase the home and the Real Estate Professionals are obligated to ensure disclosures are complete and accurate. Therefore, this clause is very often “handled” through that process.
In situations where something has failed, and timing of the failure is in question relative to the Effective Date of the Service Agreement, our obligation is to determine what was known vs. unknown about that failure. Was it disclosed? Was it obvious (corrosion, soot, visibly broken, didn’t turn on)? What was the agreement about the item during the sale?
The new Homeowner may not have done the looking and testing themselves, but a failure close to the Effective Date on a regularly used system or appliance is very likely to have been disclosed by the seller, and/or noticed during the sale process by one of the aforementioned methods. Our job is to determine what, when, and how while making our claims decisions.
Is the system/appliance located in a residential property less than 10,000 square feet? (If it is a residential property that is being used for commercial purposes, with the exception of a residential rental, it is not eligible for coverage).
The questions around this are typically only necessary if there are key words used by the caller that indicate that there may be an issue:
- Commercial terms: residents, Air BnB, customers, students
- Square footage: second/third unit, attached apartment, square footage specifically
- If it is determined there may be more than 5,000 square feet, has additional premium been collected (5,001 – 9,999 square feet). If not, additional premium will need to be collected, and the call transferred to Agent Services.
- If it is determined the home may be more than 10,000 square feet, research will be needed to validate it and a refund will be needed if it is over 10,000. Engage your Supervisor.
3. layout inside the service agreements
The “Trade” detail is generally located in the middle of the Service Agreement brochure, and looks fairly similar in each version of the Product.
However, the “Terms of Service” (or Terms and Conditions), and specifically the Coverage Checkpoint, can look quite different in each version of the Product.
Disclaimer: This information intended to be solely informative in nature, and does not modify, alter, amend or otherwise affect in any way the terms of any Service Agreement or Warranty Coverage. Please refer to the Home Warranty Service Agreement and/or New Home Builder Warranty Booklet applicable to your specific home for all coverage details, procedures, rights and obligations. 2-10 Home Buyers Warranty is a family of companies with a mission to improve the experience of homeownership. As a Provider of Home Warranty Service Contracts, 2-10 Home Buyers Warranty is: 2-10 HBW Warranty of California Inc. in California; Home Buyers Warranty Corporation VI in Florida; 2-10 Home Buyers Warranty of Virginia, Inc. in Virginia; 2-10 Home Buyers Warranty of Oklahoma, Inc. in Oklahoma and Home Buyers Resale Warranty Corporation in all other states (OR Lic # 202003). As the Warranty Administrator for New Home Builder Warranties, 2-10 Home Buyers Warranty is Home Buyers Warranty Corporation III in New Jersey and Home Buyers Warranty Corporation in all other states.