All there is to know about Home Warranty
Are you a homeowner? We all desire to own our dream home. A peaceful haven away from our hectic lives. A home is the ultimate financial investment and source of accomplishment. After scrimping and saving for years, you can finally pay for that down payment.
Without due diligence, making some rookie mistakes in your home owner’s journey can plunge you into financial debt, especially if you are a first-time buyer. Overwhelming maintenance costs can sink you into a financial rut if you lack a home warranty.
What is a Home Warranty?
Your new home is like a brand new car. With everyday use, it is inevitable that some parts will breakdown. We all know how costly it is to chip in for repairs without insurance.
A home warranty is a comprehensive home insurance cover. It is a contractual service agreement between a homeowner and a home warranty provider which covers you for any repairs or replacement services on specific components and systems in your home.
A home warranty provider is bound to a contractual agreement with a third party approved service provider.
The service provider is responsible for repairs or replacement of faulty appliances and systems in your home. A home warranty is an ultimate back up plan and a stark contrast from homeowners insurance.
What does a Home Warranty Cover?
Warranty coverage differs with the service provider. Here are some of the instances that are pretty much uniform across most providers. You also get a comprehensive checklist plan when shopping for a good home warranty.
- Carpeting
- Concrete foundations and floors
- Roofing and siding
- Thermal and moisture cover
- Waterproofing
- Clapboard and shingles
- Doors and windows
- Insulation
- Electrical
- Garage doors
- Heating and cooling
- Septic system
- Central vacuums
- Plumbing
- Garbage Disposals
- Swimming pools, and spas
Is my Home Warranty Cover Full Proof?
Even though a home warranty offers comprehensive coverage insurance for a set of components, there are some situations where your home warranty falls short.
- Household appliances such as microwave or toaster
- Insect or pest damage
- Cracking of the house
- Dampness due to inadequate or faulty ventilation
How much do I have to pay for a Home Warranty?
A home warranty can set you back by a couple of hundreds of dollars with typical ranges for most providers falling between $250 and $500 per year. You either pay the fees upfront or in instalments as per your payment plan. Comprehensive insurance can cost you up to $1000 each year.
You need to chip in additional costs for the service call fee or trade call fee. The service call fee ranges between $60 and $130 per contractor. Each time you request for a contractor’s visit such as a plumber to inspect a fault, you have to part with the service call fee. For some warranty companies, this fee scales up depending on the scope of work to be covered.
What type of property do you own? The pricing of a condo is different from that of a duplex or studio apartment. A standard plan also attracts a separate fee compared to an extended plan. Check out the first american review for various home warranty comprehensive packages and payment plans.
Is my Home Warranty Limited or a Lifetime Purchase?
Home warranty providers have different coverage policies. Most warranty insurances last anywhere from six months to one year — some last up to two years while others stretch to 10 years as insurance for significant structural impairments.
Extra insurance: Is a Home Warranty worth the Investment?
Just like weather predictions, it is difficult to predict when a home appliance or system will kick the bucket. But with a home warranty, you can rest assured knowing you are fully covered.
1. 24/7 Dedicated Service Support
A home warranty gives you peace of mind. You have a dedicated in-house customer service team to fix any repairs and replace any faulty appliances. This is beneficial more so for new homeowners who are not familiar with how the new systems work and also for the non-handy individuals.
2. Secure Platform to Access Service Providers
When an item breaks down, you no longer have to rummage through dozens of contractors whose skills and work ethics you cannot vouch for. A warranty gives you an all under one roof policy with readily available contractors at your beck and call anytime you need them.
3. Protect your Budget from Unforeseen Costs
With a home warranty, you can plan effectively for any repairs which are covered in your annual plan. There are rarely any anticipated costs that you’d have to incur in case something broke down unexpectedly, and you had no warranty. It makes budget planning effortless.
What are the Drawbacks of Purchasing a Home Warranty?
Are Home warranties beginning to sound like the perfect investment right? Wrong. Why isn’t everyone clawing for this lifesaver?
1. Limited Coverage
Home warranties strictly cover appliances and systems with proper maintenance. “Proper maintenance” can be a grey area and brew sharp disagreements between the warranty holder and warranty provider.
Shrewd warranty providers can deny claims and ignore repair costs at the expense of the homeowners. If you purchase a home full of old appliances, your warranty provider will not honor the service agreement. And most home warranties have several exclusions including dollar limits per repair and year.
Home warranties cover up to 5000 sq feet area in their standard warranty. Above this, you pay for additional coverage.
2. Zero freedom on Choice of Service Provider
Warranty providers usually have a standby outsourced service provider. In case of a faulty appliance, the service provider dispatches a contractor to your home. If you find the contractor annoying or poorly skilled in their services, you are stuck with them.
You have a limited to zero opinion on the contractor who comes to inspect repairs unless you want to foot the bill. There is also no room for price negotiations with the third party contractor as the fee is set and final.
Be Smart.
Buying a home can be quite a scary process. Home buyers have a lot of fears and concerns. There are some rookie mistakes in your home buyer’s journey that can sink your further into a financial pit.
Prior research is vital to avoid buying a money pit. You need to find a reputable and suitable home warranty service provider. Make sure you read and understand the fine print of the warranty. Is it worth the investment or a rip-off?
A home warranty is not the ultimate safety net from home repairs or replacement costs. Some warranty providers give their clients a false sense of security. Check with A.M.BEST or the better business bureau among other reputable consumer insights and rating agencies to ensure that the home warranty provider is worth their claim.