Cancellation clawbacks deduct past claim payouts so you get $0 refund

When homeowners try to cancel a home warranty mid-term, the company deducts a $50-$75 administrative fee, prorates the remaining term, and then subtracts the full retail cost of any claims paid during the contract period -- often leaving the refund at zero or even claiming the homeowner owes money. A homeowner who paid $600/year and had one $400 repair covered can cancel after 6 months and receive nothing back. This persists because the clawback formula is buried in contract terms that no consumer reads at signing, state insurance regulators generally do not classify home warranties as insurance (so insurance consumer protections do not apply), and the amounts are too small to justify hiring a lawyer.