Owning a home is one of the most significant investments of a lifetime, and it is crucial to protect this asset. When something breaks down or goes wrong, a home warranty provides essential peace of mind. Discover what to expect from a home warranty and how it helps homeowners stay ahead of the curve regardless of what happens along the way.
What is a Home Warranty?
Home warranties vary based on the individual contract and the home warranty companies issuing them to homeowners. Most warranties cover components of a home’s appliances as well as heating, plumbing, electrical, and air conditioning systems. Basics are covered, and most warranties provide options for added coverage for fixtures such as a swimming pool, well pump, or stand-alone freezer. People have peace of mind knowing a broken refrigerator or dysfunctional heating system will be repaired and covered without facing out-of-pocket expenses that might exceed their budget.
What is the Difference Between a Home Warranty and Insurance?
Home warranties and insurance are two different types of contracts. Homeowners insurance covers the house itself and designated items contained in the house. A home warranty covers the repair or replacement of appliances and essential fixtures that are often not covered by traditional homeowners’ insurance. Having homeowner’s insurance is often a requirement for the mortgage company to protect its financed property interests. A warranty is an optional contract that offers a higher level of coverage to ensure most issues are covered.
What Does a Home Warranty Cover?
Home warranties cover various components and conditions, depending on the contract. Appliances, such as the washer and dryer, are covered when they are in good working condition. Warranties also cover a home’s systems that are in proper working order upon purchase of the plan. When purchasing a home warranty, verify what is covered and what is not covered by the plan. Inquire about limits on coverage and deductibles that might need to be paid before the coverage pays out.
What Happens When Something Breaks Down?
Nobody wants to come home and face a stove that doesn’t work anymore. When people are ready for a hot meal after a long day, it’s tiresome to wonder how to pay to get the stove repaired. It can cost thousands of dollars to replace a high-end appliance. If the manufacturer’s warranty expired, the homeowner is responsible for paying for the replacement stove. With a home warranty, the homeowner files a claim to get the service approved so you can get the problem checked out and fixed promptly.
How Do I Get Customized Coverage?
When purchasing a home warranty, check the specifications carefully to determine the level of coverage. If appliances or systems are not listed in the contract, inquire about getting specialized coverage to ensure they can be fixed if they break down. Premium options enable homeowners to extend the warranty coverage to luxury items such as a hot tub or a backyard swimming pool.
Does a Home Warranty Cover Everything?
Purchasing a home warranty does not mean every expense associated with a system or appliance breakdown is covered. Each contract is unique and requires scrutiny to determine coverage. Read the sections carefully to determine what is covered and what expenses you need to pay for independently. Because a warranty is not insurance, specific service providers and situations may be required to get something fixed or replaced. When in doubt, talk to a warranty service expert to determine which appliances and systems are covered and how much the contract will pay out.
How Much Does a Home Warranty Cost?
Most home warranties can run a few hundred dollars a year or more, paid in installments or upfront, based on the contract terms. The cost of a warranty is based on the size and type of home, the basic condition and age of the house, and other factors, depending on the warranty company. Consider additional appliances, fixtures, and structures that may require coverage, such as a guest house or garage. A service fee is also charged when a provider is requested, which is called a trade fee.
What if There is No Coverage?
A major question for many homeowners is what if the warranty doesn’t cover a repair? While warranties are customized to cover as many circumstances as possible, there will be omitted items from coverage based on the specific terms of the contract. Plus, items usually must be properly maintained to qualify for repair or replacement coverage. Keep in mind the homeowner will then be responsible for the cost of the service call and repair. Reviewing the terms of the contract is crucial to get the right home warranty.
Planning Ahead Matters
A home warranty offsets the cost of necessary repairs around the house. Since most warranties or policies have exclusions and deductibles, it matters to understand the contract’s terms. Remember to ask questions before making a final choice about a home warranty. Plan for repairs by having a savings account with some money set aside for the cost of potential deductibles and trade fees. Using a combination of savings, a home warranty, and homeowner’s insurance is the best way to get the highest coverage level for all types of home problems.
Is It Worth It to Get a Home Warranty?
Much like any coverage, you want to weigh the value versus the investment. Homeowners discover a home warranty is worth the cost when an appliance breaks down or a major system requires repair or replacement. A home warranty helps people save hundreds or thousands of dollars, depending on the circumstances. While some items are not covered, the coverage level ensures a homeowner has fewer out-of-pocket expenses when most home systems require fixing. Knowing you have this coverage helps reduce stress when something inevitably breaks down in the house.
How Long Can You Rely on a Home Warranty?
An important aspect to check is the term of a home warranty. Most warranties are good for one year from the initial investment in the plan. Find out how long the term of the contract is and the terms of renewal so there are no lapses in coverage. Some warranty companies allow monthly payments, while others prefer homeowners to pay for a year upfront. Know the financial terms before making a final decision so the warranty fits comfortably into your budget.
What to Look for in Home Warranties
Before shopping around for a home warranty, make a list of the necessary items to be covered. Getting the right warranty means determining exactly what you expect to be covered when it breaks down. Include items such as a refrigerator, freezer, washer, dryer, stove, heating and cooling system, plumbing, air conditioning, and other essential systems. Then figure out additional coverage you may want, such as a garage or pool house. The goal is to get comprehensive coverage for the most affordable rates without compromising the level of coverage you need to feel comfortable owning and living in your house.
What to Look for in Home Warranty Companies
Every home warranty is not created equal. Their quality is based on the reputation and service dedication of the warranty company issuing it. A home warranty company should provide answers to important questions and have customer service readily available when a breakdown occurs. Inquire about how to contact service when something arises, and look for a reputable company that stands behind its service providers. Read reviews and ask questions to determine if the warranty is worthwhile. Find out where the service providers are located and how long it typically takes to make repairs and answer service calls. All of these factors help determine the real value of having a home warranty.
Sellers Need Home Warranties to Attract the Best Buyers
Many sellers invest in a home warranty to make the house more appealing to potential buyers. Plus, essential appliances and systems are covered while the house is being sold, which benefits many sellers. Investing in a home warranty helps sellers focus on their next home rather than sinking money into a house they want to sell. Plus, buyers have added peace of mind when they make an offer on the house with an existing home warranty. Many brokers recommend getting a home warranty to make a house more enticing to buyers and increase the home’s value so sellers get the best possible price.
Buying a home warranty is a significant decision, much like buying a home and insuring it. When you have a home, you want to know it will be comfortable and functional at all times. When a system breaks down, it can cost thousands of dollars to fix it. Many people don’t have that much money on hand to handle these repairs. Having a home warranty means many repairs will be covered, based on the terms of the contract. Remember to closely review the terms of the contract and customize coverage to make sure everything is included in the warranty. Homeowners that invest in a home warranty today know everything they need will be taken care of tomorrow.