When the furnace breaks down or the refrigerator suddenly quits working in a recently purchased home, it can be devastating for the new homeowner. In today’s economy, homeowners can’t afford large, unplanned home appliance or home system repair bills. There is a way to protect homeowners from these large repair bills. Purchasing a home warranty service agreement costs a reasonable amount of money up front to cover system and appliance repairs as they occur. This can save the homeowner hundreds or thousands of dollars.
Home Warranties Can Be Included in The Home Sale
More and more often, sellers are including a year’s home warranty in the price of the house they are selling. Homebuyers can also request a home warranty as part of the home purchase. Real estate studies have shown that homes for sale offering a home warranty or service agreement sell faster and for a higher price. The home warranty often covers home systems and many appliances. This agreement is different than a home insurance policy, which is also needed.
Homeowners can learn about home warranties by going to the blog at 2-10 HBW and other online information sources or from their Realtor.
What Does a Home Warranty Cover?
A home warranty service agreement is designed to cover the unexpected repair or replacement costs for eligible appliances and systems in the home. It is important to carefully read the agreement before buying it to make sure it covers what the homeowner wants to be covered. There are different plans available at different prices. Choose the one that best meets your needs.
The covered systems may include:
- Plumbing
- Electrical wiring
- Heating and cooling systems
- The water heater
Covered appliances may include:
- Range and oven
- Refrigerator
- Dishwasher
- Built-in microwave
The homeowner will need to request coverage for appliances such as freezers or washers and dryers. Coverage for additional appliances may or may not be offered and may add to the cost of the plan. It is important to ask questions about exact coverage when shopping for home warranties. There may be dollar limits on coverage or co-pays for each repair. The warranty is limited to covering appliances and systems that are in good working condition at the time the agreement is signed.
What Home Warranties Do Not Cover
Not all home warranties are the same, and there are things not covered in traditional service agreements. Read the service agreement carefully before purchasing for these coverage limitations.
- Damages covered by homeowner’s insurance, such as vandalism, fire damage, or storm damage, will not be covered.
- Systems or appliances not properly maintained may not be covered.
- Damages caused by the homeowner’s malice or misuse may not be covered.
How does The Home Warranty Work When There Is A Claim?
When a covered home system or appliance breaks down, the homeowner calls the home warranty company and they send one of their service providers to the home to look at the problem. The warranty company has agreements with approved service providers for special rates. The provider will decide if the repair or replacement that is needed is covered by the plan. If it is covered, they will do the work needed. Depending on the plan, the homeowner may pay a small service fee or co-pay each time there is a claim.
Who Will Benefit From a Home Warranty?
People who are buying an existing home with older appliances should consider asking for or purchasing a home warranty for peace of mind. Then, if the appliances or systems break down, there won’t be a huge repair or replacement bill. People who don’t want to be bothered with an appliance or system repair or replacement might prefer to be able to pick up the phone and make a call to get problems fixed.
First-time homebuyers or people who are not familiar with how appliances or home systems work or are physically unable to deal with broken appliances or home systems might want the peace of mind of having a company to call to deal with problems. Homeowners who want to budget costs for the year and know what expenses to expect might like the predictability of a home warranty. They can add the premium and possible co-pays into their expense budget for the year.
The person selling the home might want to include a home warranty to avoid buyer complaints if an appliance or system breaks down shortly after the home sale. Offering a home warranty might help their house sell faster and for more money. People who are new to the area and don’t know local repair service providers might benefit from the warranty company finding and hiring the repair people.
When A Home Warranty Is Not Beneficial
People purchasing a newly built home will get some sort of home warranty from the builder for one or more years that covers the home’s systems, appliances, materials, and workmanship. If the appliances are not covered by the home builder, they will have manufacturer’s warranties.
When a homeowner remodels a kitchen and pays for appliances with a credit card, there may be extended warranties from the credit card company on top of the manufacturer’s warranties.
Some homeowners are very skilled at DIY appliance repairs or have a plumber or electrician they trust and want to use for system repairs and maintenance. Those people purchasing a used house with the intention of remodeling it and replacing or updating the home’s systems and appliances will not purchase a home warranty.
Home Warranty Benefits
Peace of mind and avoiding large appliance repair bills have to be at the top of the benefits list. Then, being able to make one call and have someone arrange for a trusted repair service to come and fix the broken appliance for a fixed cost is important. The convenience for handicapped, older, or very busy people is often worth the yearly cost of the home warranty.
Drawbacks For Home Warranties
There are limits to the coverage and not all home warranties are equal. The fine print can contain some limitations.
- Home warranty companies can limit the amount of money per repair or per year. It is important to ask about these limitations when considering the contract.
- Claims can be denied if the warranty company decides the appliance has not been properly maintained. Some firms use improper maintenance to deny justifiable claims. The homeowner must provide proof of maintenance.
- It is the warranty company that decides whether to fix or replace an appliance or systems, and the homeowner may not agree with their decision.
- When an appliance must be replaced, the warranty company decides on the make and model, and the homeowner may not be happy with the choice.
- The warranty company may not cover appliance repairs under some circumstances, such as damage caused by a power surge.
Is a Home Warranty Worth the Cost?
It is up to each homeowner to decide if a home warranty is worth the $350.00 to $600.00 per year they will be paying. If a person wants enhanced coverage, the cost will go up. Then, for each service call, there may be a service charge or a co-pay. These can add up to $50.00 to $125.00. If the systems and appliances are fairly new and in good working order, they may not break down or need service. In that case, the home warranty will not pay for itself.
Without the home warranty, if an appliance or system breaks down, the repairs or replacement could cost thousands of dollars, and a home warranty would have covered most of the cost. If the homeowner does not have money set aside for these expenses, they will benefit from a good home warranty.
If a person is handy with fixing things and doing small repairs, they may not realize a benefit from a home warranty. If the homeowner does frequent checks on the home’s systems and appliances, doing maintenance and small repairs as needed, they will avoid appliance and system breakdowns. If the homeowner has a trusted repair service they want to use for maintenance and repairs, they may not need additional protection.
If the home is newly built or recently renovated, the systems and appliances might be new and covered by manufacturer warranties. They will not need additional protection. Or, if the appliances are old and the homeowner is planning on replacing them and or updating the home systems, a warranty can be skipped.
Getting the Most Out of a Home Warranty
The Homeowner who chooses to purchase a home warranty can get the most benefit by purchasing the right warranty from the right company. To do this, they must read each home warranty policy thoroughly to make sure the coverage is what they need. The homeowner should examine all the home’s systems and appliances before shopping for a home warranty and make a list of the ages of each item. Then, ask the warranty company if they will be covered.
Ask each company for the limitations on coverage and for the cost of each service call. Ask what reasons can be used to refuse coverage on an appliance. Find out what their requirements are for proof of maintenance and follow them. By getting the best home warranty and knowing its limitations and coverage rules, the homeowner can get the most benefit. Have realistic expectations so there will not be disappointments.
