Home warranty companies exist to provide a service to homeowners, hooking them up with contractors to perform needed repairs if something goes wrong while the warranty is still in force. As an electrician, you may have considered partnering with a home warranty company before; after all, they provide hassle-free leads and a potentially steady amount of business without you having to put in the legwork to advertise and find leads on your own.

Are these companies all they’re cracked up to be, though? Let’s take a look at how these home warranty companies work and whether it’s worth your time to partner with one. After all, if there’s no real benefit to you then there’s no point in pairing up.

Warranty Work

Home warranty companies help homeowners keep their homes in proper working order by covering the cost of various repairs and maintenance so long as the warranty is still active. The companies don’t do the work themselves, of course; they use partners such as construction contractors, plumbers and electricians to get the work done and then pay for the work.

Signing Up

Partnering with a home warranty company typically requires you to apply to be part of their contractor network. The requirements for joining the network vary from one company to the next, but they typically look at factors such as experience, insurance coverage and proper licensing. Once the company has checked your credentials and you’ve provided any proof that they may require, you’ll be accepted into the network and become eligible for leads.

Getting Leads

Once you’re a member of the warranty company’s network, you’ll receive service calls based on the warranty company’s needs. For your part, you’ll go through with these jobs just as you would if you had been contracted by the homeowners themselves. You’ll typically have to use your own equipment and parts, though any parts used can be billed on the claim invoice once the job is done.

Some companies may restrict what you’re able to do on the job while others may not; be sure to check the company’s policies before offering to do additional work or upselling any features or services to the homeowner. If the company determines that you went outside the scope of the job, you may not get paid for some or all of your invoice.

Getting Paid

After the work is completed on a warranty job, you’ll be paid by the warranty company instead of the homeowner. You’ll have to submit an invoice claim for the work and wait for it to be processed before you’ll be paid. Unfortunately, some of these claims can be very picky on the details; if you fill out the claim incorrectly, the warranty company will simply refuse to pay because they claim that you violated the agreement you had with the company. Even if you do comply with the claims procedure, it can take months for payment to arrive from some warranty companies.

Liability

Even though you’re working for the warranty company when you’re on the job, you still have to carry your own liability insurance. As mentioned above, most home warranty companies require their partners to maintain certain levels of insurance. The implication to this is that if something goes wrong on the job, your insurance will have to cover it.

Automobile insurance is required for all trucks or other vehicles you use on the job as well. The insured amounts for your work vehicles are comparable to the other insurance requirements, since the company wants to make sure that they’re not held liable for anything that happens while you’re on their time.

Is It Worth It?

Partnering with a home warranty company can be worthwhile, but it depends heavily on which company you’re working with. It’s very important to do some diligent research beforehand. Some companies that have a reputation for denying most claims due to technicalities or using excessively long payment cycles so you are waiting months to get paid for simple jobs. There have even been a few home warranty companies that have been threatened with class action lawsuits because of their methods of dealing with contractor payments.

Your best bet is to find out what other electricians or contractors think of the company you’re considering applying to work with, since that will give you a good idea of what to expect. If they’ve had good experiences they’ll let you know – and if not, they’ll let you know that, too. Try to find out as much as you can about a company before you apply, since this can help you avoid major headaches down the road.