Should You Consider Getting a Home Warranty?

Home warranties have gotten a bad rap in the past, but like any warranty or insurance policy, the upfront cost could be worth it in the end. But you do need to read the fine print and understand any of the terms and conditions!

Read on to learn more about the pros and cons of home warranties and whether it’s something that will fit your particular needs and budget.

What is a home warranty?

A home warranty is a policy where your home’s main systems or appliances will be covered for repair work. It’s usually purchased through a home warranty company. It’s different from your homeowner’s insurance or a manufacturer’s warranty on a product. For example: It will cover the labor to fix a failed part on a product that your manufacturer’s warranty doesn’t. It will pay for the plumber to fix a broken pipe but not the damage to your home, which your insurance policy should cover. It can work hand-in-hand with other home policies when something goes wrong.

It’s important to keep in mind that a home warranty is different than home insurance. It’s similar in how car insurance and a car warranty cover different items. Home insurance, like car insurance, covers unforeseen damage and catastrophes, whereas a warranty fixes things that break sooner than expected.

Do I Need a Home Warranty on a Newly Constructed Home?

One of the most attractive features of buying a new home is that it’s new. Theoretically, there will be nothing wrong, and you and your new home will live happily ever after. The truth is that while your new home will come with a warranty from the builder, those warranties aren’t forever. The warranties included are usually one to two years of general workmanship, two to five years on major systems, and ten years on structure. Considering that major systems can have a lifespan of far more than five years, you don’t want to be caught without coverage when one of those systems finally fails. While you don’t need a home warranty for the first year, you may want to consider getting one that will go into effect when your builder warranty expires.

What are the typical home systems covered and yearly cost?

Policies typically include air conditioning heating systems, water heater, furnace, plumbing, any built-in appliances such as a refrigerator or dishwasher, and for an additional fee, you can add “extras” such as pool systems.

One year of coverage typically costs $450-600 depending on your level of coverage, with a $100 deductible when you make a service call. This varies based on the individual warranty company.

Who can purchase a home warranty?

Some warranty companies will allow a homeowner that has been in their home for a long time to buy a warranty. This is a great improvement since previously home warranties could only be purchased by new homebuyers at closing or within a certain number of days from closing.

What do consumers need to know before they buy a home warranty?

It’s very important to read over the fine print of your contract and understand what is covered and what is excluded. Here are some typical terms to be aware of for standard packages:

Standard warranties typically cover repairs on large systems (heating or air conditioning) but does not always cover replacements. Typically, it will help your keep appliances functioning and in working order. It won’t cover if the failure of the system is due to poor maintenance by the homeowner, but only “normal wear and tear” of an item. The warranty can exclude certain items like ice makes, while still covering a refrigerator. They also may not cover items that are beyond their serviceable life. Pre-existing conditions aren’t typically covered, which is why it’s a good idea to have a warranty already in place before selling a home, since it can be assigned to the buyer (which is a great selling point). Items need to be properly installed and in working condition at the time the warranty is issued.

What happens when I need to have something repaired?

Most home warranty companies you to contact them first when something breaks. They will then contact their service providers to send to your home, although some companies will allow you to use your own choice of service provider. They will pay the service provider once the claim is approved. If you call a service provider without contacting them first, the company may not cover the repair.

You may not control who comes to your home to repair an appliance or major system. That can be a major downside to some homeowners, especially if they have to wait a long time for a repair. If your furnace breaks down during a cold spell, you have to wait for the home warranty company to deal with their subcontractor.

What if something is not covered when I thought it was?

Like any warranty for any other type of purchase, there are times the warranty company can choose not to cover something. That’s why you need to read the fine print carefully!

Let me know if you have any questions about getting a home warranty whether you’re a current homeowner or new homebuyer. Simply email me here.

What are the typical home systems covered and yearly cost?

Policies typically include air conditioning heating systems, water heater, furnace, plumbing, any built-in appliances such as refrigerator or dish washer, and for an additional fee, you can add “extras” such as a swimming pool systems.

One year of coverage typically costs $400-500 with a $100 deductible when you make a service call.

Who can purchase a home warranty?

Some warranty companies will allow a homeowner that has been in their home for a long time to buy a warranty. This is a great improvement since previously home warranties could only be purchased by new homebuyers at the time of settlement.

What should you look for in a home warranty company?

It’s important to find a reputable company that has been highly recommended by others. Here are some steps you can take:

• Investigate its long-term history and Better Business Bureau information.
• Compare coverage levels and upgrades to standard packages along with deductibles and service fees.
• Read the fine print in the contract to understand any co-pays and exclusions.
• Understand how you can cancel a contract.
  

Let me know if you have any questions about getting a home warranty whether you’re a current homeowner or new homebuyer. Simply email me here.