Important Questions about Buying a Home Warranty
When someone finally bites the bullet and purchases a home, there are a few hard truths they have to realize. One of the main ones is that anything can break, at any time. When this happens, it is up to the homeowner to pay for the needed repair or replacement.
A great way to ease the burden of needed repairs and replacements is by taking the time to read about these warranties and finding the right one for the situation. However, before diving in and making this purchase, it is important to consider a few things, including some of the most common questions that are asked about home warranties.
What Exactly Is a Home Warranty?
Home warranties are yearly service contracts designed to help cover the cost of repairing or replacing various systems or appliances in a home. This warranty goes into effect if something breaks or if the items are unusable because of normal wear and tear.
A home warranty will have various levels of coverage; however, at all levels, they are not considered a replacement for a good homeowner’s insurance policy. Instead, the warranty is activated when the covered items happen to break or wear out. Higher tier, expensive home warranties will also cover the replacement costs of items that are included in the warranty if repairs are impossible.
What Are the Different Levels of a Home Warranty?
Each home warranty provider offers individuals various levels of coverage and pricing. There are some that will only cover the main appliances, while others will only cover entire home systems (i.e., plumbing or electrical). There are other providers who offer a program where customers can build a custom warranty and where buyers can choose what items they want to be covered.
Usually, home warranties that provide coverage for a replacement along with service are going to be more costly than a simple repair contract. When a home warranty is more expensive, it is also going to have higher limits and may have a lower deductible.
How Are Home Warranties Different from a Manufacturer’s Warranty?
The home warranty is a type of one-to-two-year service contract. It is written so that it provides coverage for multiple systems and appliances. There is also the option to renew when the initial service period has expired. The manufacturer’s warranty will cover a certain appliance from the time it was purchased and installed to the set expiration date.
How Does a Home Warranty Differ from Traditional Homeowner’s Insurance?
In most cases, homeowner’s insurance will provide help after a specific, covered, unexpected event. This includes an accident, natural disaster, or theft. Also, there are usually exclusions with homeowner’s policies, such as issues due to wear and tear, unless, of course, the items had been damaged by an event that a traditional homeowner’s policy would provide coverage for.
An example would be if a pipe bursts in the home. If this happens, and water damage occurs to the refrigerator motor, the homeowner’s insurance policy would provide coverage. Home warranties would not cover this. However, if a refrigerator suddenly stopped working and there was not larger event or occurrence because of a parts malfunction, then the home warranty would go into effect and provide the needed coverage.
How Does the Home Warranty Factor into a Person’s Homebuying Process?
The home warranty will be purchased after the closing for the property and after the home appraisal and inspection is complete. At this time, the buyer will know the state of repair and age of the appliances in the home, along with all home systems. This is not something that needs to be thought about or discussed before closing on the property that is being purchased.
What Will the Home Warranty Provide Coverage For?
Usually, a home warranty is going to cover all the mechanical components of the main systems in the home, including electrical, plumbing, and HVAC. The home warranty will cover appliances, such as the oven, refrigerator, and washer and dryer. Other options and higher levels of coverage could include a septic pump, fans, water heater, spa equipment, and air conditioning systems.
It is important to never assume that every home warranty is going to cover the replacement of items that are unable to be repaired. In some situations, the replacement option will only be available with higher cost warranty coverage options.
What Does the Home Warranty Not Cover?
Home warranties do not cover any damage that is caused by fire, disasters, water, or other things that are usually covered by a person’s homeowner’s insurance. If a fire occurs in the kitchen, the warranty that is purchased is not going to cover the damages that result from this.
Also, cosmetic or fixture repairs, which include batteries and light bulbs, will not be covered in the home warranty that is purchased. The warranty will not cover other things, either. This includes appliances that are not maintained properly, appliances that do not receive regular seasonal maintenance, alternative or premium home systems or appliances, or structural parts of a home.
Why Is It Important to Read the Fine Print?
The definitions and wording in the contract, such as “property maintained” are debatable. Also, service records may be required by the company that provides the home warranty before specific claims are paid. This is a huge issue for homeowners who fail to stay in the home during the earliest years of the covered system or the appliance’s life.
Buying the right Home Warranty
When it comes time to purchase a home warranty, there are more than a few factors to keep in mind. Be sure to find a reputable company to buy from and research all the options. This is the only way to feel confident that a quality warranty is purchased and that it meets the needs of the homeowner now and in the future. Remember, there are different levels of home warranties, which means a homeowner needs to consider what type and level of coverage they want and need before moving forward with the purchase.