As a homeowner, dealing with issues like repairs and replacements can be incredibly stressful. They can also be very expensive, which can be a massive drain on your emergency fund or savings. However, a home warranty can save you a fortune on these unforeseeable and costly problems.
What is a Home Warranty?
A home warranty is a contract between the homeowner and the home warranty company that covers repairs and replacements on appliances and other systems in homes, townhomes, duplex’s, and condos. The warranty covers costly repairs, major appliance breakdown or malfunctions, electrical, and various other aspects of the property.
Home warranties are different than homeowner’s insurance, which covers property damage and theft. A home warranty does not cover any guest housing on your property, but it does cover a garage if your house has one. Warranties will only cover usual wear and tear, not accidental damage caused by people. There are different coverage policies for specific kinds of damage and repair.
You want to look closely at each policy before you decide on one to make sure that you pick the best one for your needs. Since the home warranty works with a contractor, you will typically have to choose their contractor to set up the policy though they sometimes let you work with your own if you prefer. This all depends on the home warranty company you are working with.
Most plans do not cover any pre-existing conditions found in a home inspection, code violations, or improper installations. The good news is that the warranty will start covering your home as soon as the contract is signed.
What if I Already Lived in the Home for a Couple of Months or Years?
You can still get a home warranty, but it will be more expensive than if you had purchased it as soon as you bought the house. It’s important to know that if you live in an older home and there is a pre-existing defect, most companies will not cover it.
That Sounds Great and all, but How Much is it?
According to Landmark Home Warranty, the cost involved with a warranty for your home depends on the size of the house, but on average you can expect to spend $350-$600 annually. Home warranties can cover over $20,000 of repairs or replacements for covered items in your home.
Most companies offer flexibility to pay either annually or monthly, depending on your preference. The only out of pocket expense you can expect is when you request service, then you have to pay a deductible which can cost between $75 and $200. It may seem a lot when you add the annual cost-plus deductible, but you have to think about what it would cost if an emergency did happen.
What if your dishwasher breaks down and needs to be replaced? The average cost of a dishwasher can be anywhere from $400 to $700. What if your washing machine starts leaking at the same time? The cost of the dishwasher and washing machine can average up to $3,000. This makes the annual fee and deductible seem small in comparison. There are other policies that companies offer for more coverage than the standard items in the home. These plans cost extra but can cover a wide variety of items, from pools to septic systems.
For example, the Home Service Club has two types of coverage: Standard and Comprehensive. The Comprehensive coverage covers ductwork, kitchen exhaust fan, attic exhaust fan, doorbells, smoke detectors, and alarm systems while the Standard coverage only covers the appliances and other features normally covered.
When Do I need a Home Warranty?
If it is your first time buying a home, getting a home warranty will save you some trouble. You can also get peace of mind if you live in an older home, where it’s more likely that the appliances and systems will eventually break. This is also a great idea if you don’t have a lot of money and you can’t afford any surprises. A home warranty can be beneficial for all of these reasons.
There are so Many Companies! Which Should I choose?
There are a lot of companies that offer home warranties, including Choice Home Warranty, American Home, and Select Home. Some of the companies have more coverage for the price than other companies. Select Home warranty has three different plans: Bronze, Gold, and Platinum. The price can range between $429-$499 for these plans.
Each home warranty companies offer different types of coverage, so make sure that you get a comprehensive plan that covers all of your big ticket items. You should ask whether or not you need to get a home inspection before you sign your contract but remember that most plans do not cover pre-existing issues.
Great! How do I Apply?
You have to consider what kind of coverage your home needs. If it is an older home, consider getting extensive coverage and or you can save money if items are relatively new. Your real estate agent can give excellent advice about home warranties and if they recommend one. They can also help you take a look at the numbers if you plan to sell your home in the future, to see if the home warranty will add to the sale price.
Then, choose a company that provides home warranty that meets your needs. Carefully read over the information of what the company repairs and replaces and factor this in the cost of the deductible. Deductibles can range between under a hundred and $200, depending on your plan.
Make sure that you read the fine print of the contract. This is your home; you should know what is going to happen to it. Once you decide on the right plan, you can contact the service provider for the next steps of the process.
Getting a home warranty is very important for any homeowner. This can save you thousands of dollars on repairs and replacements alone. Find the right provider and you can enjoy the peace of mind that you get when you have a home warranty.