Home Warranty Benefits
The rewards of having a home warranty benefits all buyers, regardless of your status or the size of your new home. The last thing you want when you buy a new home is to pay for expensive repairs right after you have moved in. You can however protect your new property against unforeseen equipment malfunctioning by purchasing a home warranty.
Often times you will be offered a home warranty contractual agreement when you buy your property and sometimes they are even offered as an incentive by the seller (for the first year of ownership). If not, ask your agent about them, request that one be added to your contract, or just wait for an offer to show up in snail mail (it will arrive!) The home warranty benefits include covering the expenses when a failure occurs and it gives you piece of mind knowing you will not have to shell out a lot of money if something important breaks.
In general, a home warranty benefits the new homeowner by offering protection if a major component in (or attached) to your home gets damaged. Not having to worry about huge repair costs is a major benefit of having a home warranty! The home warranty ensures that covered items will be fixed or replaced. Each policy is different, and options vary, so ensure you know exactly what is covered and what is not.
So what exactly is a home warranty, how will it protect you, is it worth the cost, and what are the benefits of having one?
Home Warranty vs. Insurance
It is important to make a clear distinction between a home warranty and homeowners insurance. The latter takes care of major issues such as flood, fire or property crimes. Anything that affects the structure of the building accounts for the insurance coverage. Insurance coverage is mandatory if you have a home loan too. On the other hand, a home warranty is related to specific components of your estate and is optional coverage.
A home warranty is a contract between a company and a homeowner that includes discounted replacement and repair services. It accounts for major home components such as:
- Electrical systems
- Furnaces/heating systems
- Air conditioning systems
- Water heaters
- Ceiling fans
- Cooking range
- Garbage disposal units
Generally, only those appliances that are built in to the home are covered by warranties, but additional appliances can often be covered by paying a little extra toward the warranty. Some additional appliances that can be added include:
- Sauna or spa
- Microwave ovens
- Swimming pools
- Water pumps
It is important to note that home warranties typically will not cover these items if they are already damaged or in need of repair before purchasing the home. Therefore, buyers should make sure all items are in proper working order before closing on a deal.
There are different protection plans that cover both the most basic components as well as other optional items. The more detailed your coverage is, the more you will need to pay for the warranty. It does not include services like professional cleaning.
Home Warranty Costs
The home warranty usually costs between $300 and $1,000 dollars for annual coverage (depending on your coverage and location). You can either pay the entire price upfront or in installments. There are different warranty plans, determined by the type of property, and the expenses for townhouses, single-family, or duplex properties are different. You can also choose between basic or extended warranty plans. The square footage may also impact your expenses. If your home exceeds 5,000 sq feet there is typically an additional cost. Keep in mind that you need to pay additional fees for estates separated from your home, like guest houses or separate mother-in-law structures. Attached garages are considered part of the primary estate.
Having a home warranty does not mean that you will no longer need to spend money on repairs. Nor does it mean it is the end of domestic cleaning if the repairs or replacement causes a mess. Most plans charge a standard fee (usually around $75 to $125) each time you call in a broken or defective items and a professional has to come over your home to repair or replace it. If the situation requires more than one type of expert, for instance an electrician and a plumber, you may be required to pay for each (check your contract).
In addition, there are specific types of damages or items that are not covered by the warranty (check your plan to know what they are). In certain situations the warranty company may deny the claim and you will need to pay the service fees and the repair costs. A few examples of this would include neglect, improper maintenance by you, or what appears to be tampering with an item.
Should You Purchase a Home Warranty?
There are several things to consider when deciding if a home warranty is right for you. First, a home warranty may be a good idea if:
- You emptied your savings to purchase the home and do not have financial cushion for emergency repairs
- You have upscale, more expensive than average appliances and other components which a warranty will cover
- Your home is older and you are not sure how well the structure has been maintained
- Your home is new and you are concerned about the quality of its construction
- You want to avoid additional expenses or having to schedule repair service
A home warranty may not be right for you if:
- You are not sure if appliances and other covered components were maintained well enough to be covered for repairs
- You have concerns about the annual repair limits for your home’s age
- You will be bothered by paying for years of the warranty when no repairs are needed
- You will not be okay with the warranty company choosing the repair contractor
- You want control over brands and models of replacements
How Does a Home Warranty Work?
Basically, when a failure occurs you call your warranty provider who is responsible for getting in touch with a licensed professional. The professional will then call you to setup an appointment to come visit your home and determine repair or replacement needs. Home warranty companies have agreements with different service providers in each local area they provide coverage for.
As mentioned earlier, you will only need to pay a small amount for the service fee. A downside of home warranties is that you do not have the freedom to pick your own independent contractor to perform repairs. You can request another professional, but that adds to the downtime and is not always approved. Unless there is a grievous reason to not use a particular contractor, your best bet is to stick with the provider your home warranty company sends.
How to Choose Your Home Warranty
When you have decided you are going to purchase a home warranty, actually selecting one that fits your needs can be a tough choice. As an example, check out these home warranty reviews by Reviews.com. They looked at 60 different home warranty companies, evaluated coverage options, and outlined tons of other expert tips to help you find the best home warranty benefits for you.
Here are some tips for narrowing the field of options and making the right choice for your particular needs:
- Ensure your warranty offers a variety of options suited to your needs
- Make sure you are dealing directly with the warranty company when providing information and not a lead-generating service
- Compare coverage options between several companies, as these can differ significantly
- Consider how customer service treats you when you call with questions before buying a warranty, as that indicates how you may be treated after
- Check scores on sites like Angie’s List, the Better Business Bureau and online reviews
- Consider how long it will be before coverage starts after your purchase of the warranty
- Make sure the claims process is clearly explained before you buy
When deciding whether to purchase a home warranty, take the time to explore options. Consider whether it will be worthwhile for your needs. An option is to open an emergency fund account and save the equivalent of a warranty payment in that account for any repairs which may crop up.
Home Warranty Benefits for Buyers
A home warranty benefits the buyer by protecting them from unexpected and costly repairs. For many, after purchasing your new home, you probably do not have enough funds for emergency repairs or replacements and having a home warranty is a huge relief. Having something that offsets the effects of unforeseen damages, or that covers a luxury appliance, means there is one less thing you need to be concerned about when or if the need ever arises.
Another benefit is that they are extremely convenient. The warranty company will find a competent professional service provider for you from their network of providers. You do not need to search for a person to handle the repairs or worry that they will not do what they say. You can be sure the service providers will effectively deal with the problem, or you can call in the issue again, and they will need to come back out at their own expense (no business wants to do this).
Generally, home warranties are convenient for people who are not handy or who do not have a lot of time to deal with these types of issues. If you do not like the challenge of taking care of the home repairs yourself and do not have friends or family who can assist, it can be a good security blanket to ensure your appliances are covered from calamities. They are also a good option for homeowners who do not have time to do the repairs themselves.
Home Warranty Benefits for Sellers
Selling a home with pre-paid warranty can slightly increase the value of your home or more likely make the home more attractive to potential buyers. First-time buyers especially are enamored with the idea of not having to worry about appliance or system repairs.
In addition, when buying a home warranty the seller receives coverage during the listing period. This means that if a problem in a home system occurs while under contract or during the pre-contract phase of listing a home, the warranty company will carry out their duty and resolve the issue. This fact alone can save a deal if something like the air conditioning or heating goes out.
Parting Home Warranty Tips
Purchasing a home warranty requires an analysis of your situation, age of the items you are having covered, your ability or desire to absorb repair or replaces costs, and your level of repair expertise. Although a warranty may seem like the perfect solution to evade risks, you still need to determine whether the service is worth the cost. You should carefully read the contract, especially the fine print, and know exactly what is and what is not covered. Otherwise, you could end up costing yourself a lot of money.
Also, if you do not own luxury items that require special repairing, or have the means to resolve any issue that might arise, the service might not pay off in the long term. If your mind is made up and you want the coverage, the home warranty benefits will provide you with needed protection and security as you move-in and start making your house a home!
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