Home warranties provide peace of mind when purchasing a home that has been previously owned. It eliminates the worry that a home seller may be hiding a defect in the house or that there is a problem that may crop up after the papers are signed.
The Facts
Home warranties cost between $250 and $400 a year and are prepaid a year in advance. At the end of your first and consecutive years of home warranty, you will very likely receive a special offer to renew your policy. There is also a small service fee when a repair is needed. Home warranties typically do not cover and repair outside items, faucets, permit fees and hauling. Some warranties do not cover appliances, pools and spas. Home warranty companies may deny payment if an item is not properly maintained, if there are code violations, if there is excess damage or it something has been installed properly.
Misconceptions
Home warranties do not make home purchases worry free. It is up to the home owner to manage the warranty, from reading the policy to policing the warranty company to ensure they get repairs done and done well should the need arise. Home warranties do not eliminate the need for emergency funds or a home maintenance budget. There will be many home repair items that will not be covered in your home warranty.
Risk Factors
Many people report problems with home warranties. Some will use loopholes to avoid making repairs. Others will send contractors to do the work who you may not feel comfortable with and who you would not hire to do the job if you had the choice. Home warranty companies will attempt repair before they replace an item even when replacement is warranted. Unfortunately, the home warranty industry is unregulated.
Benefits
Home warranties are designed to warrant pre-owned homes against problems and defects. Home sellers most often purchase them for the period of one year to give home buyers peace of mind that the house does not have any hidden problems. Home warranties will cover items that home insurance does not such as plumbing and appliances.
Function
If and when a covered item in your house breaks, the homeowner is to call the warranty company who in turn calls a service person. The service person calls the homeowner to make an appointment and comes out to fix the problem. If they cannot fix it, the warranty company will pay for replacement.
Expert Insight
Never assume that your policy automatically covers all repairs in your home. If the home seller purchases the home warranty, the home buyer should read it and get familiar with it. If you are buying your own home warranty, make sure you read and understand it before you commit to anything.
Tags: Home warranties, home warranty, warranty company, your home, home seller
