Should You Get a Home Warranty?


 

A home warranty complements homeowners insurance by providing coverage for home systems and appliances. Should you have a problem with your plumbing, electrical systems, heating and cooling, or large appliances, a home warranty may cover the cost of repairs or replacements. Often, sellers offer home warranties as an incentive to buy, or a real estate agent may give one as a thank you gift for the purchase of a new home.

Home warranties can give peace of mind to both the seller and the buyer of a home. The buyer feels better knowing that he or she won’t have to worry about major appliance or systems malfunction in a newly-purchased home. The seller feels better knowing that he or she won’t face irate calls from the buyer if something goes wrong. But is a home warranty something you should purchase for yourself? Here’s how they work, what questions you need to ask before buying one, and what kind of coverage to look for.

Pros and Cons of Home Warranties

One of the biggest benefits of home warranties is that they provide some coverage in the event of a breakdown of home systems or appliances. This can be especially useful if you’re buying an older home that comes with used systems and appliances. A home warranty can help cover the cost of repairs to plumbing or electrical systems, large appliances, and heating and cooling.

However, a home warranty may not cover appliances that were improperly maintained or installed, or ones that have reached the end of their usefulness. Home warranty companies may prefer to repair, rather than replace, faulty systems and appliances, and they’ll typically insist on sending their own contractors out to perform services. There may be a limit to how much they’ll pay for, leaving you on the hook for the rest if it’s an expensive repair. Some policies may exclude certain systems or components of appliances; for example, a policy might include the refrigerator and freezer, but exclude the ice maker from its coverage. You will also have to pay a deductible or service fee for the visit, usually no more than $100.

What to Expect from a Home Warranty

Most home warranty companies function in roughly the same way. If a home appliance or system malfunctions, you’ll call the warranty company and ask for service. They’ll send a repair specialist with whom they have a pre-existing arrangement. That provider will contact you to make a service appointment. They’ll come and fix the issue; if your appliance or system cannot be repaired, your home warranty company may replace it, depending on the level of coverage and the quality of the warranty provider. You’ll then pay a deductible or service fee to the provider.

What Kind of Coverage to Look For

In general, a real estate home warranty will cost between $300 and $500 a year, depending on the level of coverage you want.

A basic plan will offer coverage for:

  • Electrical and heating systems

  • Duct work

  • Plumbing

  • Water heater

  • Central air conditioning

  • Large appliances such as the refrigerator, range, oven, dishwasher, built-in microwaves, garbage disposal and trash compactor

Some policies may also include coverage for the:

  • Burglar or fire alarm systems

  • Doorbell

  • Exhaust fans

  • Ceiling fans

  • Washer and dryer

  • Garage door openers

  • Central vacuum

For an addition $100 to $300, you can get an upgrade that will include exterior systems such as the well pump, hot tub, pool, sauna, septic tank pumps, and sprinkler systems. When shopping for home warranties, consider what systems and appliances you have in your home, and how new they are. Brand-new appliances typically come with a one-year manufacturer’s warranty, so you may not need a home warranty to cover them. You may also have some form of contractor warranty on a newly-constructed or renovated home.

Questions to Ask Before Buying a Home Warranty

Before you buy a home warranty, read the fine print. Most warranties won’t cover anything not specified in the contract, and it may only cover specified items if certain conditions aren’t met. Here are some questions to ask the home warranty provider:

  • Is there a deductible, and what is it?

  • Is there a yearly limit on the cost of repairs or replacements, and what is it?

  • Is there a waiting period that must pass before the policy can take effect?

  • Will you need to request repairs directly from the home warranty company to have them covered, and if so, is there a 24-hour phone service?

  • Which providers will be performing repairs on your home? Research these providers online to make sure they’re reputable.

  • If your appliance or home system can’t be repaired, will the warranty cover a replacement?

  • Is there a try-before-you-buy option?

  • What circumstances can lead to denial of your claim?

The yearly cost of a home warranty can be a small price to pay for knowing that you won’t have to swallow unexpected large repair bills. Shop around to get the best deal on a home warranty from a reputable company. The right home warranty can ease the burdens of maintaining your home, so you can focus on enjoying it.

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