The Ins and Outs of a Home Warranty

A home warranty is a contractual agreement between a homeowner and a private company that covers the maintenance, service, and replacement of household items that may breakdown over a period of time. A warranty can reduce unexpected expense and stress that often come with buying a house. Typically, basic warranties will cover the repair or replacement of kitchen appliances, washers and dryers, plumbing, HVAC, and electrical systems. A home warranty is not an insure policy, it is a service plan. It typically has a service deductible, which may be charged for each item repaired or replaced. The warranty also may require the homeowner to use the service contractors that are stipulated under the plan. Most warranties are for 12 months and only allow for approved service providers to be used for maintenance calls. Fees typically range from $50 to $100 per service call. Most service plans cost between $300 and $500. To understanding the true value of a home warranty, you should have realistic expectations about the repair or replacement service. A home warranty company will pay for the cost to repair or replace the system or appliance, if it has broken down from normal wear and tear. If the system or appliance failed because it wasn’t maintained, the service plan will likely not cover the repair. Buyers should read the warranty contract carefully to understand coverages, limitations, and exclusions.

Most contracts have limitations stating what items they will cover. Service contracts vary on what items are excluded from coverage, these items may include: intentionally damaged appliances and systems, appliances that have been misused, pre-existing conditions, and appliances that have not been properly maintained. Pre-existing conditions are typically noted in home inspections, usually the appliance or system issue is noted in the home warranty. Claims may also be denied because homeowners cannot prove the problem wasn’t pre-existing or that routine maintenance of the item was performed. The service plan may require detailed records on each item’s repair history. There are also limits which stipulate how much money the contract will pay towards the repair or replacement of a claim. Before purchasing a warranty carefully read through the contract to know what limits are set on the coverage. When buying a house, there is always the possibility of unexpected repair costs, home warranties offer added protection and peace of mind. Enhanced plans costs more and are available for add-on items, such as: spa and pool systems, trash compactors, septic systems, and outdoor kitchens.

A home warranty is not an insurance policy, but rather a home service contract that covers the repair and/or replacement costs of home appliances and major systems, such as: heating and cooling, and possibly other components of a home, structural or otherwise. Coverage varies significantly across home warranty companies and contracts do not cover all home repairs. Coverage and annual costs can vary greatly, so be sure to check and compare your home warranty options and choose the plan the best suits your concerns.