Individuals often hear about home warranties and wonder what these protection plans cover. Basically, the warranty covers the cost of many household appliances and systems if they break down. The warranty operates much like any warranty on one of these appliances does. It offers the buyer financial protection from unexpected expenses related to these appliances and systems.
Why Purchase a Home Warranty?
The homeowner may wonder why they should purchase this type of protection from a home warranty company. Doesn’t their homeowner’s insurance cover these items? Actually, the two plans cover completely different things.
The homeowner’s insurance policy pays for repairs or the replacement of the home’s structure and belongings in the event of many disasters. For example, if the home burns down, the insurance policy will pay to replace the structure and the owner’s belongings up to the policy limit.
A home warranty company, in contrast, pays for the repair or replacement of a home system or household appliance covered under the warranty. The warranty pays for damage due to normal wear and tear rather than damage resulting from a calamity.
What is Covered Under a Home Warranty?
Every warranty differs in terms of what is covered. However, basic household systems are typically part of the plan, including the heating, cooling, plumbing, and electrical systems. Household appliances, including the washer, dryer, and garbage disposal are also usually covered when a home warranty is purchased.
The Cost of a Home Warranty
Most mortgage lenders don’t require a home warranty like they do homeowner’s insurance. The homeowner determines whether to invest in this additional protection and will find they can choose a plan that best meets their needs.
Basic coverage will run a few hundred dollars a year, although the homeowner will pay more for a comprehensive plan. In addition, the homeowner might find they can choose to add on their warranty coverage if they desire. This coverage may offer protection for a certain appliance in the household or a feature on the property, such as a swimming pool.
When to Purchase a Home Warranty
Homeowners can purchase this protection at any time. However, most people find they get the best deal if they obtain this coverage when they first purchase a residence. When doing so, they get the highest level of coverage and a variety of price points to choose from. The warranty will then need to be renewed yearly.
However, a person might find they wish to invest in a warranty after they have owned a home for a certain period. When a person chooses this option, they must understand that only those systems and appliances that are in good working order when the warranty is purchased will be covered under the service contract.
Who Purchases This Warranty?
A homeowner might assume they must purchase the home warranty. They have the option of doing so, but other people may also purchase the warranty on their behalf. Explore these options when purchasing a home.
Ask the seller to purchase the home warranty as an added layer of protection for the buyer. This will increase the likelihood of the sale going through while providing the buyer with peace of mind. They know they won’t have an expensive repair to deal with soon after moving into the home.
A real estate agent may purchase a home warranty on behalf of a buyer or seller. The agent may do so as a gift to the new home buyer. They might also purchase this coverage on behalf of the seller to provide a layer of protection while the property is up for sale.
At times, a title company will purchase a home warranty. It does so use funds from the sale of the home. However, this isn’t as common. Finally, a homeowner may purchase a warranty at any time when they own a residence. As the warranty protects household systems and appliances, the age of the home doesn’t matter.
The Benefits of a Home Warranty
Homeowners find they receive peace of mind when they purchase a home warranty. They know they won’t be hit with a high repair bill once they have this coverage in place. They will be responsible for any deductible, and the warranty company will cover the remaining cost up to the policy limit.
A home seller might also choose to invest in a warranty so they are covered if something breaks down during the sale of the home. They won’t have a high repair bill to pay as they try to sell the residence. A seller should speak to different warranty companies to see if any offer free coverage when a home is for sale. Some companies now offer this coverage in the hopes the buyer will keep the plan when they take possession of the residence.
Should a Warranty Be Purchased?
A person might wonder if they need this type of coverage. If all appliances in the home are covered under manufacturer’s warranties, a home warranty might not be needed. However, a person will find they benefit greatly from this coverage if they have lived in the residence for a few years and have older appliances. They won’t have high repair bills for several aging appliances at one time, which is what seems to happen to many people today.
What Homeowners Must Know
A homeowner must read the contract carefully to know what is and is not covered. In addition, they must understand the coverage only applies to those systems and appliances in good working condition when the coverage was obtained. Finally, there is a deductible that must be paid before the warranty coverage applies, and there will be a service call fee for each visit to the home.
Many people find they benefit greatly from a home warranty. It’s always best to have this protection in place if something goes wrong in the home. The homeowner will have help to pay for any necessary repairs or replacement and peace of mind knowing they have protected their investment in the home. There is no price that can be put on this.