How is a pre-existing condition evaluated by home warranty companies
In my experience, they will rely on the evaluation of the service person that comes out to perform the work. In most cases it's pretty obvious that something was a pre-existing condition or now.

If you read the conditions more carefully, it probably says something along the lines of the problem must be apparent to a regular user in the course of normal operation. So a slow water leak that has no symptoms for weeks but actually predates the warranty should be covered.