Home Warranties
Home Warranties are similar to those on your car, computer, or even your home entertainment center. A warranty on your home usually covers all of your home's major mechanical systems, including hot tubs, pools, wells, septic tanks, and all of your appliances. Some policies even cover your home's roof and almost anything else you'd like to include, as long as it's specified in the policy. Here's more of what you'll learn below
- Home warranties are available for most dwellings
Home warranty policies are renewable
79% of buyers and sellers rate home as important
Home Warranties and the rule of thumb
Home warranty policies and rental property owners
Home warranties are obtainable for almost any dwelling
This includes mobile homes, condominiums, townhouses, and manufactured homes. They
can be purchased by either the buyer or the seller; some sellers will include a
home warranty when selling their home to make it more attractive to buyers. And it's a great strategy, especially if the house is
older and the systems and appliances are aging.
Since the policy can be purchased at closing, the seller doesn't have to pay the premium out of pocket. Further, the cost of the policy can be split between the buyer and the seller, depending on the terms of the sale. Return to Top
Home warranty policies are generally effective for one year and are renewable
However, you can expect to pay a little more for coverage each year as the items covered continue to age. This is reasonable. Policy costs vary according to the list of things covered, but an average price would be between $350 and $500 per year.
When obtaining a policy, it is important to be specific about coverage. You can expect to pay a small co-payment when the repair person responds to make a repair. This is an industry standard. Your payment will range from $35 to $55 per visit. Return to Top
According to a Gallup poll 79% of buyers and sellers
79% of homebuyers and sellers rated home warranties as one of the most critical aspects of buying a
home. These policies are not like hazard insurance, which covers losses due to
fires, storms, and accidents; home warranties cover normal wear and tear
breakdowns.
The builder usually warrants a new home and its major systems for at least one year; after that, your home warranty policy coverage will take effect. Be sure to understand the limitations and intent of your home warranty.
For example, should your microwave oven catch fire and damage your kitchen cabinets, your home warranty would cover the microwave cost; your homeowner's insurance would pay to fix the cabinets.
Before buying your home warranty policy, shop for the best and most cost-effective provider. Get recommendations from your mortgage company, your builder, your friends, and from the Better Business Bureau. Some companies are better and more reliable than others. Ask specific questions: Do they subcontract their work? What is their average response time? If your freezer stops running, you need someone to respond quickly. Return to Top
When deciding whether or not you need a home warranty, the rule of thumb is
Get one! The older your home, the more you will benefit from a home warranty policy. Most systems and appliances covered under a home warranty can be expected to last at least five years. Therefore, during the early years of your new home, the home warranty policy may be optional.
As the components of your home age, the need for a home warranty policy becomes more critical. It is more attractive to pay $400 or $500 in policy premiums than shell out several thousand dollars for a new furnace or even several hundred for a new refrigerator. The policy will quickly pay for itself if a major home system has to be repaired or even one major appliance has to be replaced. Return to Top
You should consider a home warranty policy if you're a rental property owner
Unlike the appliances and systems in your home, you have little control over the frequency and manner in which your tenants use these things.
The odds are that you will have to replace or repair items and systems more frequently in your rental property than in your home. As a landlord, your home warranty policy may very well save you money, but just as importantly, it can buy you peace of mind. Return to Top
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