American Home Shield refuses repair recommended by its own contractor

You know that saying, “the customer is always right?”

Well in this case, Andrew Smith is very right. But when it comes to consumer disputes, rightness doesn’t translate to success.

And particularly with this dispute. Smith’s problem is with American Home Shield (AHS), an insurance company. And as you know, insurance companies are not eager to pay claims.

(Disclosure: Smith is the director of our editing team and asked advocates to help him with this case.)

Back in August, Smith’s central air conditioning system failed, and he sought repair or replacement under his American Home Shield warranty, which covers his whole system. AHS sent one of its contractors to have a look.

The technician recommended a compressor replacement, and the contractor even called in his manager to see the unit as well. Smith was also entitled to get another opinion from another AHS-designated contractor, which he did.

All contractors who looked at his unit concluded that it would not make sense to replace only the compressor because his unit was over 30 years old. Piecemeal repairs in an attempt to keep the old system running could ending up costing more in time, money and resources than simply installing a new system. The contractors, including the manager, agreed that a new system would be a better way to go, but none of them would put that in writing for AHS to see.

Given this input from the contractors, Smith corresponded with the manager at the AHS-contracted service company that initially inspected the system saying:

You stated that a compressor replacement would be an acceptable repair, but this does not comport with previous statements made to me by both you and the technician who performed the initial diagnosis.

Both of you stated that it is physically and technologically possible to replace just the compressor. That might be the reason for your characterization of compressor replacement as “acceptable”; however, to me, “possible” and “acceptable” are not equivalent.

I remain puzzled by your apparent unwillingness to communicate to AHS the same information you communicated to me.

Smith reminded the AHS-contracted service company that its technicians ran diagnostics on the central air conditioning unit at his Virginia home, and when they concluded that the compressor had failed, they informed Smith that because of the age of the unit, replacing the compressor alone did not make sense. It made better sense to replace the entire system. Smith was even given a quote for this work.

Related story:   Dollar charged me twice for insurance after I said no

AHS, it appeared at this time, would not pay to replace the system. Rather, their contractor would replace the compressor at no charge except for the refrigerant, or Smith could have a contractor of his choosing do the repair, and AHS would then reimburse him $503, their cost for replacing the compressor.

Smith began his attempts to get everyone to see why it made more sense to replace the entire system by emailing United Air Temp (the AHS contractor) in late August.

The initial response from the contractor manager from United Air Temp was:

Due to the R22 phase out and your non-covered cost for the refrigerant I recommended upgrading. However, a compressor replacement is a good repair on your existing unit. Should you disagree, please contact AHS for a second opinion.

A little later, the same manager wrote:

We recommended an entire new system upgrade because of the R22 refrigerant phase out. We can put in a new compressor and that repair is covered by AHS. It would also be an acceptable repair. However, you would have to pay for the R22 refrigerant that is currently being phased out.

I gave you an estimate for a new R410A system which would be an upgrade to the replacement of the compressor only. I talked to AHS and they have authorized the compressor replacement. We could schedule that repair if you would like or you could upgrade the system. We would be happy to do whatever option you decide.

In early September, Smith emailed Alison Bishop (she is listed on the contacts section of our site), and he mentioned that AHS told him that the cash amount he could get was $503, covering only the compressor.

I recognize that AHS wants to take an incremental approach and also that AHS’s contractors are incentivized to recommend the absolute minimum work, however, due to the age of the unit and the expressed professional opinions by four separate technicians that a compressor only replacement makes no sense, I believe that the case warrants a second look.

He got an initial reply from Glenda Pudenz from AHS executive relations, essentially repeating that the cash out amount of $503, based on what AHS would expect to pay for the covered compressor failure, would be available to him upon AHS’s receipt of a copy of the paid invoice for whatever work was done.

Next, in further attempts to gain a more satisfactory resolution, Smith sent a certified letter to Michael Clear (next on the list in the contacts on our site).

He had emailed first, but the email came back undeliverable. In his letter he repeated that the United Air Temp manager had refused his direct request to convey to AHS the opinion he expressed to him about replacing the entire system, and recounted how he had written to Alison Bishop via email requesting a reconsideration of the decision to replace only the compressor, and how he had received a reply from Glenda Pudenz reiterating the decision.

Smith said Pudenz’ communication was prompt, professional and polite. But she disregarded the issue he raised, and instead she further introduced irrelevant references to the upcoming R22 refrigerant phase-out. Smith was taking all the right steps, but now even more people became entangled in the situation.

After never receiving any response from Clear — not even an acknowledgment of receipt of his certified letter other than the USPS certified return receipt in his mailbox — Smith wrote to Tim Haynes, president and CEO of American Home Shield.

He repeated everything again, including the chain of people he had reached out to thus far, and he asked Haynes to read this:

Servicemaster’s website states, under the heading “Purpose,” “… we’re committed to delivering exceptional customer experiences and service that customers are proud to recommend.” I do not feel that the decisions made by AHS to date comport with its parent company’s statement of purpose, and therefore I request your reconsideration of the issue.

In October, still without any response from AHS, Smith contacted one of our advocates to see if we could contact the company on his behalf. We did. No reply.

On Nov. 15, our advocate having expressed the opinion that AHS was never going to respond, Smith faxed in the necessary paperwork and invoice to get the cash out amount. One day later, our advocates emailed to tell him he finally heard from AHS saying they will look further into Smith’s claim.

It is not yet clear whether this means they will pay toward his new system or just the compressor. And Smith is also concerned that AHS understand that his faxed request for the $503 reimbursement does not mean he is giving up his attempts to secure reimbursement for replacement of the entire system rather than just the compressor.

This story is an important reminder that being a savvy consumer means keeping details on everything, saving names and emails, fully documenting everything discussed and staying on top of issues as they escalate toward a hopefully positive conclusion.

We reluctantly consider this a closed case, but will update you if that changes.

Jeff Filipov

Jeff Filipov is a destination planner and a frequent commenter on this site. He became interested in advocacy when his father died on American Airlines flight 11 on Sept. 11, 2001.

  • Altosk

    When I bought my first house, I mistakenly bought a warranty from these clowns. (Well, the seller paid the first year and then I renewed). They refused to make repairs, charged me “trip fees” for their sub contractors because my house ‘was too far away’ and even tried to charge me for a repair they were supposed to cover! It’s cheaper to just pay RELIABLE contractors than this sham of an operation and whatever ‘technicians’ or ‘subs’ they use.

    My advice–Never EVER do business with “American Home Shield” They are on the scam level of Time Shares.

  • AJPeabody

    The price of the phasing out refrigerant is exorbitant. Getting the compressor replaced free and paying for the recharge would cost far more than $503. Take the money and replace the 30 yr old system with a new high efficiency system and you will be money ahead.

  • Dutchess

    The purpose of insurance is to put you back in the same position you were in before a covered loss or incident. In this case, Smith has an outdated/old A/C system that has a broken compressor. AHS offered $503 to replace the failed compressor, doing so would put Smith back into the same position he was in before it broke. If AHS replaced his “entire system” they would be putting him in a better position than he was when he started. Why should they do that? If replacing the compressor doesn’t solve the problem or the A/C isn’t repairable THEN you advocate for an entire system replacement.

    Smith is getting hung up on is the technicians recommendation to upgrade the system. If a technician sees an old system that’s being phased out, is inefficient, and giving an owner issues of course they’re going to recommend upgrading to a new system to avoid future repairs and outages. That upgrade would be the homeowner’s responsibility, not the insurance company’s.

  • John McIntosh

    Dutchess, you are exactly correct. They insured his AC unit. They did not say they’d update it. If he has a beef it’s with the Federal Government and the phase out of his coolant.

  • MF

    I bought a home with an AHS warrantee in place, and they were worthless on my claim as well. AHS = SCAM.

  • MF

    John, the refrigerant that is being phased out damaged the ozone layer & allowed excessive UV light onto the planet, which in the long run would damage all species on earth. Phasing such a chemical out was the ADULT thing to do.

  • Pat

    When you have a 30 year old air conditioner, it is well past its time that is should have been replaced. Plus if the furnace is that old, the furnace and coil would need to be replaced at the same time. AHS is not going to spend thousands of dollars to replace the whole HVAC system when they can spend $503 to replace the compressor. That is probably far beyond what the contract says it will do. The choice is to replace the compressor with the money AHS gives you (plus spend your own money for the R22) or spend your own money to replace the HVAC system.

    This summer I woke up in the morning and it was real hot in the bedroom. The air conditioner that cools the bedrooms quit working. Considering the air conditioner and furnace were 15 years old, I did not even think twice and had them replace the whole system. The reduction in my electric bill was well worth the replacement and I am finding the gas bill the past few months has been lower with the new furnace.

  • John McIntosh

    I’m saying the reason for his expense was government regulation. I, personally, have no problem with it. BUT expecting the insurance company to cover the cost is wrong.

  • Helene Apper

    I’ve always maintained a home warranty policy on my home and it is currently AHS. I know what these warranties do and do not cover. Last case scenario is when they will completely replace something. In my last home, our pool filtration system failed. They did not hesitate to replace it once it was determined by two different pool services it could not be repaired. Same thing happened with my furnace (it was an old house). Now I have a new house (well it is now 11 years old) and have always maintained the same warranty. When my A/C went out, it was also a compressor unit. They replaced the compressor but it cost me $300+ for the freon. Here comes the important part….I READ THE POLICY and understood the terms and conditions. So I paid my $60 co-pay and the $300+ for the freon and my home was cool again. People – please read the limitations of things you pay for.

  • MF

    If AHS won’t pay to complete the repair (ie pay for refrigerant), then AHS should pay for a new system. Your comment about the gubbamint is really not relevant to the homeowner or this case. I don’t think that Mr. Elliott will ask the gubb nicely to bring back ozone depleting chemicals just for this case?

  • sirwired

    Of COURSE they aren’t willing to replace the whole unit. His contract says he’s due a working unit, and that’s what they are offering to provide (minus refrigerant they don’t cover.) Given that the compressor replacement cost is FAR less than the unit replacement, I don’t know why anybody would expect the insurance company to do the unit replacement anyway, no matter how much long-term sense it would make, and even if the contractor recommends it.

    It’s ALSO correct that it makes no financial sense for the CONSUMER to take them up on this offer. The refrigerant will be expensive, and a new unit would pay for itself in a very short period of time given that it would be far more energy-efficient. (The insurance company doesn’t care about the refrigerant costs, because they don’t cover them, and they definitely don’t care about energy cost to the consumer, because they don’t pay that either.)

    The solution offered by the insurance company, to take a check for what they’d have to pay out anyway, is a pretty good compromise. (Similar to collecting a check for a collision repair that makes no sense on a car, even if the insurance company is willing to do it.)

  • PsyGuy

    The LW is trying to scam the insurance company. Insurance pays for what is “needed” not what makes sense from a customer’s point of view. I am very sure the LW would like an all new unit, but that’s not AHS’s obligation. What happened is the technicians came out and after inspection concluded the unit “needed” a new compressor, of course they are a business, and they would like to get some more business and a better sale by replacing the whole system. That’s called upselling, and it’s not AHS’s responsibility or obligation to enrich a third party contractor. The broken compressor fixes the problem, that’s what the insurance does. If the LW wants a new system he needs to pay for it on his own dime.

  • PsyGuy

    The contractor is also getting a better sale.

  • Fishplate

    R-22 is still available. A 10 pound jug can be had at retail for $300. AHS should pay for the compressor and the Freon, and nothing else. Then Mr. Smith will be made whole.

    If I were him, I’d get AHS to cut a check for the full amount, and apply it toward a new system. That’s the best deal he can reasonably expect.

  • sirwired

    On another note: “You know that saying, “the customer is always right?…”

    Yeah, I know that saying. It’s a load of *bleep!*

    Neither the customer nor the consumer is ALWAYS right. (And, in this particular case, the customer ISN’T right, much less “very” right.)

  • JenniferFinger

    Comment deleted because of personal attacks.

Get smart. Sign up for the newsletter.