There are so many things you need to think about and purchase when you become a homeowner – besides furniture and household items. Homeowners insurance, getting a professional inspection and home warranty are all things that should not only be considered but that we highly recommend and encourage our clients to invest in. Do you know what a home warranty is and what it covers? A home warranty is basically a policy that a homeowner will pay for that will cover the cost of repair for home appliances should they break down or need additional maintenance. If you think about it, most products come with a manufacturer’s warranty in case they break down – cars, phones, computers, TVs, etc. Home warranties provide financial protection for homeowners who may face issues with their appliances and unexpected maintenance and repair costs from service providers.
Some people could get confused and compare a homeowner’s insurance policy to home warranty, but it’s important to note that a home warranty is not the same thing as an insurance policy, and it does not replace it. A homeowner’s insurance policy is meant to protect you in the event of unforeseen damage to the home from something like an earthquake, fire or storm – it can even protect your high value belongings like art and jewelry depending on what is included in your policy. A home warranty policy protects the appliances in your home as they age, which helps you save money if you need to replace a dishwasher or service a water heater that unexpectedly stops working. Home warranty policy does work similar to an insurance policy – every year that you have coverage under the warranty you have to pay an annual premium, which can range in price depending on the size of your home. You can choose to pay for additional coverage, and you may have a deductible that you need to pay each time something breaks down – this depends on the terms of your warranty. When you file a claim the home warranty company will send out a service person who will evaluate the product and make any necessary repairs, or even replace the appliance if necessary.
Most buyers will purchase a one-year home warranty plan when they close escrow on a home, especially since this type of protection helps to provide some much-needed peace of mind that they won’t get hit with a high service bill within days, weeks or months after moving in. This type of protection, similar to homeowner’s insurance, is very beneficial because once you own a home taking care of it and maintaining it becomes a big priority. The benefits of purchasing a home warranty for College Station homes is that you can rest easy knowing that if something breaks down then a professional will come and fix it – no questions asked! For this reason a home warranty is a good idea for homeowners who are not very handy, and it is very beneficial for first time home buyers who may not be familiar with all the systems and appliances in their new home. With a home warranty there are very few costs that will come as a surprise, which makes it a sound financial investment. You will know exactly how much your premium is and the expected deductible for any repairs or replacements that are covered under the warranty – this makes it easier to deal with any unexpected breakdowns. Some of the items and appliances typically covered under home warranty include:
- Heating and cooling systems
- Water heaters
- Washer and dryer
- Kitchen appliances like the oven, range, refrigerator, built-in microwave and the garbage disposal
There is one thing to keep in mind when purchasing a home warranty, and that is that similar to an insurance policy unfortunately not everything will be covered. You will need to read over the specific terms of your warranty to understand what is included and any specific exclusions. Most warranties will not cover appliances and items that have not been properly maintained and this often becomes a point of contention between homeowners and home warranty companies because proper maintenance is subjective. For example, if the previous owner did not take care of the appliances “properly” then the new homeowner will be left hanging and responsible for the service repairs or replacement even if they pay for home warranty. Another issue with home warranty is that they often expect payment upfront assuming that repairs will take place throughout the life of the warranty, but this is not always the case. Some years there will be plenty of repairs that are necessary, but most of the time everything will work out fine and the homeowner will have paid the premium regardless. A home warranty is also typically not necessary in newly built homes, because most appliances will already be covered under the standard manufacturer’s warranty.
Home warranty benefits for buyers:
- Reliable service from certified repair vendors – there’s no need to spend time researching and asking for referrals for companies to repair or replace your appliances. Your home warranty company will have qualified service professionals on standby and available to offer convenient, quick and quality service.
- Peace of mind and protection from unexpected costs – home warranty ensures that any repairs or replacement of a covered appliance or system will be handled by a service professional without additional costs to you.
- Home warranty is available for renewal annually so that your home appliances and systems can continue to receive coverage long term.
Home warranty benefits for sellers:
- Adding a home warranty while your home is listed for sale could help reduce any out-of-pocket expenses that may come up after an inspection.
- A home warranty purchased by the seller is attractive to buyers and can serve as a powerful marketing tool because it shows that a buyer’s budget and the property are protected from unexpected high repair and replacement costs.
- A home warranty can prevent any uncomfortable disputes after the sale is completed. Buyers will be directed to the home warranty company directly instead of the seller in case an appliance or system requires replacement or service.
Before you purchase a home warranty for your home, it’s important to do some research so you can choose the best option possible for your home. Here are some questions to ask yourself before you select a home warranty:
- Do you already have protection? New appliances and new homes will already be covered by a manufacturer’s warranty, which will cover repairs and replacements. Even if your appliances are not brand new, they may still be covered under warranty if they were purchased with a credit card. Some credit cards extend the warranty, for example American Express card purchases can add up to an additional two years of coverage.
- How much will a home warranty cost? This really depends on what type of coverage you are looking for and the provider you choose to work with. You can typically choose three different types of home warranty – protection for a single appliance or system, a plan for all appliances or a plan for all appliances, plumbing and electrical systems. Apart from your premium price you will also have to budget for a copayment whenever a service provider comes out to your home to do any work.
- Make sure you understand exactly what is and is not covered under the warranty – read the terms and conditions carefully. You will want to make sure that your warranty covers the things that are important for you, for example some home warranty plans will cover a refrigerator but not the ice maker! Sometimes if an appliance stops working due to certain conditions, like a power outage, it may not be covered by the home warranty plan; or if the appliance was not maintained properly or has a pre-existing issue then the warranty provider could refuse to pay for repairs.
- Most of the time a home warranty provider will choose to replace an item that is broken if the repairs are too costly. However, they may replace the appliance with a lesser base model, meaning you will be responsible for the difference.
- Make sure to find out what the limits are on how much the home warranty provider will pay out for repairs and replacement. For example, over a year-long term a warranty provider will pay up to a certain amount to inspect, diagnose, repair or replace each item that is covered under the plan.
A home warranty plan provides a safety net for homeowners to protect them from costly repairs on their appliances and systems, but they don’t cover everything. Ultimately, it’s up to you if you would like to invest in this type of protection, but make sure you do your research before you make any final decisions. For more information and guidance on selecting a home warranty for your home, please don’t hesitate to contact us.