What Buyers Need To Know About Home Warranties
Home warranties are a service contract for your home that can cover failure in major systems and appliances due to wear and tear—items that are not usually covered by homeowner’s insurance. If you have a system or appliance problem, instead of calling a local repairman or tackling the problem yourself, you call your warranty company.
The company then arranges for a service provider in your area to complete the repair, or to replace the system or appliance. Most offer around-the-clock call numbers for emergency service.
What Does a Home Warranty Cover?
That depends on the coverage you choose and where your home is located (which state). Like insurance, you can select among several companies. Before purchasing a home warranty, compare options and pricing. Some warranties provide basic coverage; others offer add-on coverage for luxury systems and items, as well as upgrades in situations where a replacement is necessary.
Items covered by home warranties may (or may not) include:
Refrigerator
Freezer
Dishwasher
Range/cooktop
Washer
Dryer
Garbage disposal
Trash compactor
Garage door opener
Electrical system
Plumbing (including clogs)
Toilets
Whirlpool/spa tubs
Security system
Water heater
Sump pump
Heating system
Cooling system
Ductwork
Ceiling/exhaust fans
Central vacuum
Pool/spa
Septic system/tank pumping
Well pump
Roof repair
Read your service agreement and make sure it covers what you need before signing the contract. There may be exclusions and limitations on how much the warranty will cover per appliance or system or incident. Coverage may also require written documentation/proof of regular maintenance on each system/appliance.
How Much Will A Home Warranty Cost?
The more extensive the coverage of your warranty, the more expensive it will be. Some companies offer a “systems only” warranty, some offer an “appliances only” warranty, some offer a combination of the two. If you have add-on coverage for luxury items like spas, pools, additional air conditioning units, etc., you will be charged more. If you opt for “pre-existing condition” coverage, your warranty will cost more.
Most home warranty providers require a flat fee for every service call. Some offer lower monthly coverage rates if you opt for a higher fee for service calls. Your contract may also require a “deductible,” which you must pay in addition to the service call fee before the warranty coverage begins. Systems and appliances that have not been properly maintained may be excluded from coverage.
Service calls can range from $50 to $125 or more, depending on your home warranty provider and your plan. The more coverage you require for your contract, the more expensive it will be. Plans can start as low as $32 per month for basic coverage of a single type of system or appliance and can surpass $300 per month with extended coverage.
When Is A Home Eligible for a Warranty?
Home warranties can be purchased on existing homes or when buying or selling a home, depending on the warranty company. You may be able to negotiate with a seller to include a one-year home warranty on the home you are buying.
Do I Need A Home Warranty?
These warranties may reduce the amount of “emergency funds” a homeowner needs to keep on hand—or at least reduce the number of times each year those funds need to be accessed. You will, however, incur a monthly fee for every month of an annual contract period.
Consider your needs and, like insurance, determine what you can afford to replace with savings before choosing a warranty or overpaying for coverage you don’t really need. If your systems are in good shape and you have some savings for emergencies, this may be an unnecessary expense.
On the other hand, if you are a first-time buyer with little or no home maintenance experience, a home warranty may be a worthwhile investment until you become more comfortable with the responsibilities of maintaining your home. If a major system or appliance issue would crush your budget, and you can afford the additional monthly bill, a home warranty could be a smart choice.
Before Buying a Home Warranty
Before buying a home warranty, or any other service, be sure to do a little research and read customers’ reviews. Also check the Better Business Bureau’s website (BBB.org) to see if there are any outstanding complaints against the warranty company you are considering.