Argh! I'm wrestling with this now. Our house has a really old, patched together AC and an ancient furnace that the contractors tell me they won't work on, so if one goes I'll probablly have to replace them both. I just can't decide if the warrantee is worth it though, I'm afraid I'll pay and when the thing breaks down they'll call it a pre-existing problem and I'll have wasted my money. The one that came with the house expires in 10 days.
Our situation is similar. I had someone come yesterday to inspect and tune up our 23-year-old furnace and A/C, and he wouldn't even touch the furnace and didn't charge me for the inspection. He forbade me to even turn on the heat again without replacing the furnace; you can see piles of rusty debris that has fallen out of the heat exchange resulting in a carbon monoxide risk. It's falling off in sheets. As for the A/C he said it's safe to use it this summer, but strongly recommended replacing it along with the furnace because it's ancient, uses R-22 freon which is being phased out and I probably won't be able to get the thing serviced anymore.
I went ahead and called in a claim to our Home Warranty (American Home Shield) which expires this Tuesday. Verified that as long as I called it in before the contract expires, any service or replacement will be covered under our existing contract even if it's not completed before it expires (which it obviously won't). Granted, I will have to pay the $75 deductible...even for them to come and tell me that they're not going to do squat for me...but I decided to take that risk, because I think there's a chance they will get me at least a new furnace.
It's hard to say, since the contract states "3. AHS will repair or replace items which malfunction due to insufficient maintenance, rust, corrosion, or sediment." They may well say that since the furnace hasn't actually "malfunctioned," (i.e. it does still heat the house), it's not covered. On the other hand, they may wish to avoid liability/bad press for a family of 5 dying from carbon monoxide poisoning and replace it for us on that basis. :)
The nice thing about AHS is that they do give you a cash option. That is, if you'd rather go find your own contractor and choose your own equipment, they'll give you some money to do so. Granted, it won't really be enough in this case, since I can't get the same prices on stuff and I probably want better stuff than they would give me---but it does help. If the claim is covered, I will for sure get well over the $500ish that I paid for my coverage this year (which I already recovered, and then some, when they replaced our dishwasher).
Does anyone have any advice as to tactics I might take in arguing our case if they try to deny the claim? I've had some luck negotiating with them in the past (they finally replaced our dishwasher after their first contractor tried to blame the leak on plumbing but agreed to send out another contractor for a second opinion and he agreed with me that the dishwasher needed to be replaced), so I'm open to some suggestions on how I could make the case that they really should cover it, since while the thing may "work," it's obviously unsafe to use. Do they really want me to keep using it until it actually breaks, and in the meantime expose myself and my family to a significant health risk?
Anyway...in either case, I may drop the coverage for this next year. I mean, since the furnace and A/C are the last remaining things that I worry about, if they cover it under our current contract, great, and then I won't need them anymore (can self-fund from now on, bargaining that most of my stuff shouldn't need replacing for awhile). If they don't cover it, shame on them and I will drop them like a hot potato and then shout it from the rooftops that they would rather let their clients die of carbon monoxide poisoning than provide them with safe equipment to use in their home.