Home purchasers are offered a home warranty at most real estate closings. Sellers quite often make it part of the purchase to the buyer to provide them solace their home component repairs will be paid for in the event of failure. After the purchase of a home, buyers receive lots of direct mail home warranty offers.
The immediate peace of mind of a home warranty sounds really, good because home owners look at it as a great way to protect against catastrophic home component failures. Does a home warranty provide the vail of protection for a homeowner if a furnace, air conditioner or refrigerator goes out?
Home Warranty Defined
Let it be known, a home warranty is not a homeowner’s insurance policy. A homeowner’s insurance policy covers insurable risks like fire, hail, burglary and some types of water damage (not flood). A home warranty is a policy contract offered by a home warranty company covering certain repairs and replacement services on the primary components of a home, including its furnace, air conditioning system or swamp cooler system and its plumbing and electrical systems. Certain home warranty policies cover major appliances like a home’s washer, dryer, refrigerator and its swimming pool.
A home warranty provides basic set policy coverages to homeowners. Additional coverages covering additional repairs and replacements that can be purchased are offered by many home warranty companies.
A home warranty is not home owners insurance, which covers unforeseen risks such as fire or hail damage. A home warranty is a contract between a home warranty company and a home owner providing discounted repair service and replacement service on the major working components of a home, many times including a force air furnace, a boiler, air conditioning, swam cooler, electrical systems and plumbing systems.
Approved service providers have contracts with home warranty companies to repair broken components or install replacement components offered in the services agreement. Homeowners’ call their home warranty company when a component covered by a home warranty agreement breaks. The home warranty company will then send a service provider out to the home to inspect the problem and then either fix the problem or install a replacement if they make the assessment that the problem is covered by the warranty. When services are provided by a home warranty company, homeowners are required to pay a service call fee.
Home Warranty Cost
Home warrant agreements are anywhere from $300 to $100 per year and they are due in full at the time the warranty is provided to a homeowner. Occasionally home warranty company’s payment plans to customers. Home warranty plan annual cost is dependent on the type of property. Home warranty premiums for single family detached homes, condominiums, townhouses and duplexes are all different, with a home warranty for a single family detached home being the most expensive normally. If it is an extended contract with additional coverages it is more expensive.
The Home Warranty cost does not go up or down with the age of a property, but if a home is new, it the cost of annual coverage is higher. The price normally not higher if a home is bigger or smaller, but it will be higher if a home’s square footage is in excess of 4,999 square feet. If there is a separate guest house or caretaker living quarters the components in these structures are only covered when an additional fee is paid. Components in a garage are covered.
The cost of a home warrant is its annual premium plus service call fees. This fee is payment for each time a service provides comes to the to the home of a home warranty holder to assess a problem. When a home owner has several different kinds of service provider visit their home for different problems, they most likely pay a separate fee for each visit.
Bear in mind, just because a home owner has home warranty it does alleviate them from ever spending money on home repairs or home appliance installation ever again. The fact is that certain problems are not covered by a home warranty because the home owner did not purchase that coverage or because their contract does not cover every problem. A home warranty contract will not take care of repairs or replacement for covered components that are not taken care of by the home owner. Additionally, if it turns out that a home warranty company will not cover a particular claim, the homeowner must pay for the home visit by the service provider, and it will have to pay for any repair expenses.
Home Warranty Advantages
Home warranties cover big unexpected home repairs, which in turn gives homeowner’s solace knowing they have home warranty in place in case it’s needed. These days lots of people don’t have the savings to pay for a big repair or they may want to protect their savings with a home warranty, so they don’t have to pay for an expensive out of pocket. Additionally, most people do not have the expertise to repair the sophisticated appliances in today’s modern world and they don’t want to have to find a dependable service provider to fix a big problem like heating repair such as installing a new furnace when the old one gives out. Home warranties are particularly wise to own if your home features high-end appliances including big multi-burner stoves and giant refrigerators.
When a home is up for sale or it is being purchased, home warranties are normally part of the conversation and the sale. Home buyers gain confidence and feel good about a new home purchase and moving forward with a closing on the sale more easily because a home warranty with extended coverage is included.
By providing a paid in full 1-year home warranty to a buyer, home sellers give the buyer protection on major home component systems and alleviate any hassles from occurring down the road if one of the home’s system needs repair or replacement. Bear in mind, home warranty does not mean a home seller no longer has to provide information about major component problems in the home
The Downsides of Home Warranties
Home warranties sound amazing, but since it sounds so amazing, why does not have every home owner buy one ever year.
A home warranty does not cover components which have to be maintained properly. The definition on the practical side of home component good maintenance is point of contention between home warrant companies an home owner warrant contact holders. As can be the case, warranty companies operating in bad faith many times deny claims because the component in question was not maintained properly supposedly.
When a newer homeowner buys a home that is used, it could very well have a furnace that is 7, 10 or even 15 years old. The prior owners may not have maintained the furnace. Regardless of how much effort the newer homeowner puts in to maintaining the old furnace it cannot make up for the prior lack of care. Home warranties include a variety of warranty exclusions with spelled out limits on the dollars allowed to pay for repairs and for the age of the unit.
The cost of a home warranty is low when you look at it opposed to the cost of repair or replacement of the expense components of a home. This makes a home warranty contract with a home warranty attractive. Many years can go by where none of the components in a home break or completely fail. During a phase where nothing happens, a home owner pays for coverage when it’s not needed, but it’s better to have it and not need coverage than the other way around. The annual premium could have been saved to cover repairs or major component replacement instead. The other side of the coin of paying a home warranty premium each year could be one where a claim is filed against a home warranty and it’s denied due to age of the unit or lack maintenance. Then it feels like the money paid was not worth it at all.
A home warranty does make the hassle of finding a contractor to make a repair or install a new appliance go away. But it also means you do not get to pick the service provider to do the repair if you elect to file a claim against your home warranty. If the work is below par or you don’t care for the service provider your out of luck. Plus, it’s hard to get things done quickly when the repair work is getting done indirectly through the home warranty company, instead of you and the contractor dealing with each other directly. Homeowner does not get decide what component gets installed. But most warranty agreements to state the component needs to be a quality product like the one that broke.
The Final Say
Home owner’s relying on a home warranty need to know it’s not the be all to end all way to mitigate the risk of an appliance going bad, but it does lower the cost of repairs and the cost of replacing a major appliance, such as furnace. Be sure to read the entire contents of a home warranty agreement before buying to ensure it covers what you need and it’s worth the cost. Both the home seller and buyer should take the time to find the best home warranty provider with best reputation that does pay when a claim is made when including a home warranty as part of a home purchase agreement.