Maintenance August 20, 2019

Home Warranty Facts

What is a home warranty and how does it work? A home warranty extends coverage for a specified contract term; after that, the homeowner can renew or cancel the contract. How do you know if you need a home warranty? Can you afford to buy one? Your home is one of the largest purchases you’ll ever make, so any extra precautions you can take to save your investment is beneficial. If a plan fits into your budget, it may be worthwhile to avoid massive hassles later.

Are you a first-time home buyer? Do you own or plan to purchase an older, mobile or tiny home? Do you own a rental property? Do you plan to sell your home? You may not need to purchase a home warranty if you have 1% of the purchase price set aside for repairs (see my post on emergency repair funds).

Here’s what to look for when researching policy options and purchasing a contract. There are three basic kinds of home warranty plans, each escalating in cost and coverage. The first covers one particular appliance. The second covers multiple appliances. The third covers major appliances and systems, such as HVAC and electrical. Even the most expensive home warranty plans might not cover all your home appliances or systems, so you need to educate yourself on the details.

A home warranty is not the same as homeowners insurance. Homeowners insurance covers accidental damage to your home or belongings caused by theft or natural disaster. A home warranty helps cover the repair or replacement of an appliance or system component due to wear and tear.  Questions you should ask:

  • Is the home warranty I want redundant?
  • Will I have to complete a home inspection before I buy a policy?
  • How does the claim process work?
  • Will there be a charge for repeat visits if the problem continues?
  • Can I cancel my policy at any time?

Managing Risk – A home warranty can provide a lot of value, especially if you buy an older home. Some buyers may think they’re not needed, especially if they’ve gone without issues for years. The best idea is to get several quotes from providers to compare prices and coverage. Then decide which, if any, is the best home warranty company for you.

To ensure you’re accessing the best home warranty plan, your home warranty should have a clear contract that you can easily read and understand. You should have the option to choose from a variety of plans and find one that fits your specific needs and budget.

The article linked below has many more good points so be sure to check it out. Drop and comment and let me know your thoughts!

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