When a person buys a home, they take on a lot of risks involved in that purchase. Although a thorough home inspection may help identify problems or potential problems, they cannot guarantee that they caught everything or that something else will not go wrong later.
The cost of buying a home is often extensive and can leave new homebuyers with very limited resources after the closing. A major breakdown with a home’s heating system or even an appliance that stops working can sometimes mean financial disaster for the homeowner. A home warranty can offer protection in these situations.
What is a Home Warranty?
A home warranty is a contract policy that can cover repairs or replacements on covered systems and appliances in a home that was due to normal wear and tear. Each policy can cover different options in the home and should be reviewed before purchasing. Individuals can contact a home warranty provider if you have questions about coverage options.
For those who are buying a home, this policy could provide protection from the costs of an unexpected breakdown of a system or appliance when money is tight. It can also make it easier to find a service provider when new to the area. Often, the warranty provider will dispatch a service provider from within their network of trained professionals in the area when there is an issue.
What’s the Difference Between a Home Warranty and Homeowner’s Insurance?
Homeowner’s insurance is very different from a home warranty. In many cases, homeowner’s insurance is required by the bank that provides the mortgage for the home. Homeowner’s insurance protects the structure of the home and sometimes its contents in the event of a destructive event. It also provides liability protection in case someone is injured on the property.
Homeowner’s insurance only provides coverage for damages caused by an unexpected event, such as a fire or a storm. It does not provide coverage for things that break down due to normal wear and tear. A home warranty can provide that protection.
What Does a Home Warranty Cover?
There are several different options a person can choose for their home warranty. Typically, a homeowner will choose both a system plan and an appliance plan. However, they can choose to only purchase one or the other.
A system plan typically covers the major systems in the home. This can include the heating and cooling systems, the plumbing and water heater, and the electrical panel and wiring. An appliance system covers the basic appliances of a home, such as a refrigerator, oven, dishwasher, built-in microwave, and washer/dryer.
What Additional Coverage can be added to a Home Warranty?
To provide more protection to the various aspects of a home, homeowners may want to add additional coverage to their home warranty. This can provide protection for pipe or roof leaks. There are even options to cover septic systems, water softeners, and well pumps, depending on the needs of the home.
Homeowners that have additional appliances or features to their home may even be able to get coverage for these items. For example, additional refrigerators, wine coolers, or stand-alone freezers can be covered under additional options. For those who have or want a pool or spa in their home, there are options to add coverage for these as well.
Is a Home Warranty Only for Home Buyers?
Although a home warranty is especially beneficial to new home buyers, it is not exclusive to those purchasing an already established home. A home warranty can also be beneficial for those purchasing a newly built home. This is because even new systems and appliances can break down without warning.
A home warranty policy can be beneficial for those building a home, as well. It can provide protection for the structural aspects of the home and protect the contractor in case of defect. A home warranty can also be purchased by a home seller to entice buyers to the property. Even real estate agents can purchase a home warranty to protect against a breakdown during the selling process.
Even those who have been living in their home for years can purchase a home warranty. The only difference with this type of warranty is that many of the services are not available until 30 days after the policy is purchased. This can be a great option for elderly homeowners to provide convenient repairs when they are needed without the hassle.
What is the Downside of Buying a Home Warranty?
As with anything, there are often drawbacks that can concern people when deciding to purchase a home warranty. Many of these drawbacks are not always indicative of every home warranty company. This makes it vitally important that each individual thoroughly read and understand their policy before making a purchase.
The main issue people have with a home warranty is that it may not cover items that have not been properly maintained. Unfortunately, this can be a big gray area and a major source of disagreement between policy owners and the company. Some may require proof of maintenance. This can be difficult for those who have recently purchased the home and do not have access to the maintenance records of the previous owners.
Another issue that some homeowners have found to be bothersome is the inability to choose the service provider. In general, the service provider is dispatched directly by the home warranty company from a list of providers in their network. This can also complicate the repair process when the company is involved instead of being able to deal directly with the service provider.
Another difficulty can be the type of service received. In many cases, the homeowner may not get much say in whether a repair or replacement is needed. Even if a replacement is made, the replacement may not be equivalent to the appliance or system being replaced.
Although these downsides can be a bit intimidating to those considering a home warranty, many of them can be rectified by exploring options and speaking with the home warranty company to determine what they do and don’t cover, as well as the process for repairs. In the end, the benefits still far outweigh the negative aspects of a home warranty.