These are not perfect plans and I have to wrestle with the companies at times. My ultimate leverage is …”I paid for a dozen of these in the past year. If you don’t make this customer happy, I will never buy another”: Sometimes it is necessary to go above the call center employee. Hopefully there is management in place that realizes the importance of satisfied customers, and repeat business. More often than not, the clients are happy. I would not pay for these if they consistently ripped off my clients. In fact, they would be stealing from me.

It is true these companies are out to make a profit. I too am out to make profits. Not many folks go to work to lose money. Not for long.

There are some customers who try to game the warranty companies. Some contractors are awful. Some Realtors might sell these policies only to pocket a $50 fee. I would consider that a pitifully small compensation for risking the ruin of a client relationship. The warranty companies sell to real estate brokerages because that’s where the home sales are most likely to be found. Mr. Mike seems to find that to be somehow sordid. It would be inefficient to advertise in the Wall Street Journal, and prices would be much higher.

Should every one have a warranty? No. They are pretty useful for the buyer who has depleted much of their cash for down payments and closing costs. When the furnace dies it is nice to keep your expenses down. I don’t recommend that buyers renew these. It is just a means of easing the first year of home ownership. For those with substantial sums of cash I would not recommend warranties of any kind. In fact, if one is wealthy enough one could self insure for health care. Alas my typical client works for a living and can benefit from some buffering of life’s unexpected expenses.