Many people dream of owning their own home. Once you secure your mortgage and find the house of your dreams, however, the work isn’t over.
Most home buyers get a house inspection to ensure there are no major issues with their purchase. Buying home insurance for a new dwelling is also part of the process. But what about a buying home warranty?
A home warranty is a service agreement that can help both sellers and buyers feel more secure in their sales transaction.
Whether you’re a seller or a buyer, finding the right home warranty provider is just as important as finding the right home warranty plan. There are different home warranty options to suit different buyers.
Here at BestReviews, we compiled this comprehensive buying guide to help readers make the best possible decision when it comes to buying a home warranty.
Choosing the right home warranty grants peace of mind so you can enjoy your new home to the fullest.
A home warranty is a service agreement that protects you from unexpected breakdowns in your home. As mentioned above, it’s a valuable agreement that both sellers and buyers appreciate.
Anyone can purchase a home warranty to protect themselves against the unexpected costs associated with repairing or buying new appliances.
The company that sells you the home warranty policy assumes the brunt of the responsibility for getting things fixed.
Most home warranty companies sell basic packages, but additional coverage is usually available for special appliances or home “extras” such as swimming pools.
Essentially, a home warranty can help you to save money, in the long run, on big home repairs.
If the items in your home are improperly installed or badly maintained, your claim could be denied by your home warranty company.
Although home warranties have the potential to benefit you as a homeowner, you must make sure you’re properly informed before committing to a particular policy. Here are a few questions to ask service providers as you shop around.
Don’t just assume that all of your appliances (kitchen, laundry, etc.) will be automatically be covered by a home warranty policy. Different companies have different exclusion policies, and you should never take it for granted that something will be covered. Find out specifically what is covered and what isn’t.
If you have two refrigerators, one of them may not be covered by your home warranty. A second freezer in the basement, for instance, may require an add-on policy to be eligible for coverage.
Home accessories such as swimming pools are often not included in a basic home warranty package.
That doesn’t mean you can’t get coverage for your pool or other accessories, though.
Ask about add-on policies for unique home systems and appliances. They’ll cost extra, but for some consumers, the cost is worth the convenience.
Most home warranty services last for one year. However, you should always clarify the start and end dates before diving into a contract.
Ask about the company’s deductible amount. Most home warranty companies charge a service fee when filing a claim. The fee ranges in price from company to company. Decide how much you’re comfortable paying before committing to a policy with a deductible.
Some home warranty service companies will allow you to choose a cash refund instead of getting a repair.
Not all home warranty service packages pay for replacements. If a covered appliance breaks down, most companies will seek to get it repaired before considering a replacement. As such, you’ll want to ask whether replacements are a possibility.
When you purchase a home warranty policy, you don’t have to worry about hiring a repair company on your own. This can save you the headache of tracking down a repairman, but with a home warranty, you don’t get to choose the repair service company. Find out which company provides repairs through your warranty before you sign on the dotted line.
Some home warranty service companies allow you to choose your repair person. If this is important to you, inquire before you commit to a policy.
Because a home warranty will cost you some money upfront, you may be asking yourself if it’s worth it. Here are some reasons why you might decide to purchase a home warranty.
You won’t have to worry about scrambling to find a repairman when something breaks or malfunctions. It also saves you from having to spend a large chunk of money unexpectedly.
For some consumers, a home warranty allows for big savings down the line. If a big ticket item goes kaput, you won’t have to shell out a large sum of money to get it repaired. A deductible (and sometimes an additional service fee) are all you’ll need to worry about.
When you have a home warranty, there is no need to perform research on different repair companies. There is no need to go back and forth wondering if an item should be replaced or repaired. Just file a claim with your home warranty service company, and they’ll figure out the rest for you.
If you barely know your way around a toolkit and would rather run a marathon than try to fix a broken appliance, a home warranty service might be your best bet. It takes the burden off those who are not handy and relieves some of the pressure and anxiety that comes with being a homeowner.
If you’re handy around the house, a home warranty might not be right for you.
As good as they can be, some people decide not to purchase a home warranty due to the drawbacks associated with it.
This is probably the biggest drawback of them all. In most cases, you have no say in who will be repairing your appliance. However, you can do your research before buying the warranty to see which repair services are affiliated with specific home warranty companies.
Do your new appliances already include a manufacturer warranty? Find out! You might not need additional coverage.
Most home warranty policies charge a deductible. Each time you file a claim, you’ll likely pay a fee to do so. Sometimes you might even have to pay an additional service fee. It adds up, so when considering whether a home warranty is a good financial decision, you’ll want to factor in these extra costs.
These policies are not necessarily cheap. What if nothing breaks or malfunctions? You’ve just spent money that you didn’t need to spend. If something does break or you suspect there’s a problem, you still need to pay a deductible and a potential service fee to get it looked at.
Filing a claim can sometimes be an ordeal. If something breaks down in your home, you’ll likely want to get a repairman there right away. But if you have a home warranty policy, you’re at the mercy of the service company.
Many home warranty service companies choose to repair items rather than replace them. The reason is obvious: It saves the company money. But it’s not necessarily the best outcome for you.
Many home warranty policies have caps or limits on how much a person can claim during a policy year. If you exceed this amount, you’re on your own. Often, the limit is around $1,000, which isn’t very high when it comes to home systems and big appliances.
You can question the decisions made by your home warranty company. Stay informed, read the fine print, and be ready to argue if you think you’re in the right.
Home warranty policies range in price from $300 to $1,000. Pricier policies generally cover more items and/or speciality items like swimming pools.
Additional packages and add-ons are usually available, as well. As a matter of course, these add-ons will increase the overall price you end up paying.
You’ll also want to take note of the company’s deductible, which can fall between $50 and $150. If you have to pay $150 each time you file a claim, you’ll need to figure out if the service is worth it in terms of your overall budget.
Consumers make two common mistakes when investing in a home warranty policy: They incorrectly assume that everything is covered by the warranty, and they fail to ask about additional fees.
We can’t stress this enough: You should never assume that all of your appliances are covered under a specific home warranty policy. Find out exactly what’s covered. You’ll be protecting yourself from potential surprises down the line.
Furthermore, you should be prepared to pay additional fees associated with filing a claim. Ask ahead of time how much the deductible is. Ask about other “hidden” fees, too, such as repair service fees. Figure out whether you’ll need to pay these fees even if a claim is denied.
Q. In general, what is NOT covered by a home warranty?
A. Coverage depends on the company you’re dealing with and the type of coverage plan you purchase. Always read the fine print, inform yourself about exclusions and exceptions, and ask questions when in doubt.
The following list of excluded items applies to many basic home warranty policies.
Q. What’s the difference between a home warranty and home insurance?
A. A home warranty is completely optional, but home insurance is usually mandatory. Home insurance covers damage due to accidents and disasters. If a fire occurs, home insurance protects you in the event of property damage or loss of items. A home warranty, on the other hand, transfers responsibility for appliance and system repairs to a company. For instance, if your refrigerator stops working (and if it’s covered in your policy), your home warranty service company will either get it fixed for you or will replace it entirely.
Q. Can a home warranty company refuse to repair or replace a covered item?
A. Yes. If the appliance or system for which you are claiming has not been maintained, was broken before the purchase of the home warranty, or was installed against code, a company can refuse your claim. Often, even if a claim is denied, you’ll be stuck paying some kind of fee regardless of whether your item gets fixed or not.
Q. How long does home warranty coverage last?
A. Usually it lasts for a year. After that, it can typically be renewed.