Do You Need a Home Warranty?

home-warrantyWhen you purchase a house, you are making the decision to invest a lot of money as well as time into one property that will serve as your home. Your home is often considered your greatest asset and as such should be protected. Home owners insurance covers certain things, but not everything that can go wrong within the home. This is where a home warranty comes into play. Whether you are a first time home buyer or already living in your dream house, a home warranty can provide you with an added layer of security that might save you money in the long run.

What is a home warranty?

A home warranty plan may also be referred to as a home protection plan or a home owners warranty plan. In essence the home owner enters a contract with the home warranty provider, where for a specific price certain home appliances and systems are covered if they break or are in need of maintenance. A home warranty plan may be purchased when a house is bought/sold or by a home owner who is currently residing in their home. In the case of a home sale, the home warranty plan may be purchased by the buyer, the seller or in some cases even the real estate agency as part of the sale.

The home warranty plan covers the maintenance, repair and replacement of appliances as well as heating, cooling, plumbing and electrical systems. These are things that are generally not covered by home owners insurance, thus the cost of maintaining, repairing or replacing would fall squarely on the shoulders of the home owner.

What does a home warranty cover?

Home warranty plans are as varied as the companies that provide them. As a general rule, they all work relatively the same, however it is important to note that each company and contract are different. For this reason it is important to carefully review each potential company as well as the agreements they offer to find the contract that best suits your needs. With certain exceptions, most home warranty plans operate in the following manner:

  • The home warranty company will then contact a service technician with whom they have a contract, who will in turn contact the home owner to set up an appointment.
  • The service technician repairs or replaces (based on contract) the malfunctioning appliance or home system.

The homeowner pays the one time service fee (usually less than $100)

The following items are generally covered by a home warranty plan; dishwasher, garbage disposal, range, oven, air conditioning, furnace, water heater, duct work, indoor plumbing stoppages, electric system, ceiling fans and telephone wiring.

Is the value worth the cost?

Unlike other insurance policies where you hope to never be in a position to need the coverage, a home warranty plan is something that may be of value if you purchased the right policy. With standard policies ranging from $200-$600 per year, the cost is fairly affordable and can certainly save you considerable money in the event a major repair or replacement is covered. The most common reported problems with this type of protection is that policies vary from one company to the next, many with loopholes, restrictions and exclusions that end up making the contract worth little more than the paper it is printed on.

To ensure this doesn’t happen, take the time to research and review many home warranty companies as well as the agreements they offer. Just like getting multiple insurance rate quotes before buying insurance, it’s also a good idea to get home warranty quotes to compare prices. Read the fine print and ask for recommendations from trusted friends, family member and co-workers. This will help in weeding out the companies that provide little to no real protection should you need maintenance, repair or replacement of appliances and home systems.



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