Home warranty insurance
almost seems too good to be true, but it's not. For a set monthly fee, you can have all of your major appliances covered and enjoy the attendant peace of mind. The last thing you want to worry about is something breaking down in a new home, or even a home you just sold, because it could mean thousands of dollars in out-of-pocket expenses. Purchasing home warranty insurance is often a wise idea, especially for first-time home buyers.
Function
According to some experts, home warranties are often confused with home insurance policies. An insurance policy indemnifies a homeowner against possible damage or liability that may occur due to an unforeseen event. A home warranty replaces or repairs specific items, such as major appliances, an electrical system, plumbing systems, and heating and air-conditioning units that may have failed due to normal wear and tear. If you have a broken water pipe in your home, a home warranty will replace the pipe, while your home insurance policy will repair damages caused by that pipe. Most home warranty insurance policies cover a specified dollar amount. If you need further coverage, the policies will become more costly.
Types
There are four main types of home warranty insurance policies: seller home warranty, buyer home warranty, home direct warranty and new construction warranty. Seller home warranty is basic insurance coverage placed on the home while it is listed, and runs for the entirety of the listing contract. A buyer home warranty is bought by the purchaser of the home. Within the buyer home warranty coverage, there are two subcategories: implied warranty and extended warranty. Both cover materials and construction if damages to the building occur during a natural disaster or due to any other unforeseen problem. A home direct warranty is for current homeowners. A new construction warranty is bought by a homeowner who has purchased a newly constructed home.
Time Frame
If you are unaware of the time frame of your home warranty insurance, your warranty may expire without your knowing it. Seller home warranty insurance is good for 180 days during the listing contract. The warranty may extend beyond that time frame, depending on the company. Buyer home warranties are effective at the date of closing, and are good for 1 year thereafter. This also includes implied and extended warranties as well. Home direct warranties may be purchased for 1 year, but can take up to 30 days to take effect, and the process will not go further until payments are received. New construction warranties are valid from the date of purchase of the home; they are good for 1 year. The insurance company will need payment within a reasonable amount of time (usually 10 days) in order to keep the warranty valid.
Considerations
When you decide to buy, sell or even make home improvements, having a home warranty will only make the process smoother. If you are selling a home, advertising that you have a home warranty may make the property sell faster, especially if it is an older home. Home warranties will cover older appliances as long as they are in good working order.
Consider the deductible before purchasing a home warranty. Some companies may charge anywhere from $50 to $75 per breakdown. However, there is usually no limit as to how many times you can call on a serviceperson to fix the problem.
Warning
If you do not purchase a home warranty, you could find yourself with a big bill that you have to pay for out of your own pocket. Fixing major appliances or a heating system is not cheap. For a minimal monthly premium fee, you could save yourself thousands of dollars with just one claim. Even if you never need to use your warranty, it's reassuring to know that it's there. Unfortunately, most home warranty insurance policies will not cover an appliance that is already broken, so the best thing to do is purchase it before any problems occur.
Tags: home warranty, home warranty, home warranty insurance, insurance policies, warranty insurance, buyer home, buyer home warranty
