Benefits of A Home Warranty

What is a Home Warranty

A Home Warranty is a service contract that guarantees repair or replacement of major household systems at minimal additional cost. Customers can schedule a service visit at a nominal per-incident fee when something suddenly goes wrong with covered equipment. Typically it is a one-year service contract. A home warranty provides peace of mind, especially when purchasing an older home with older systems.

What is covered in a Home Warranty

Items typically covered are individual systems in your home like heating, cooling, plumbing, electrical, and appliances. Many warranty companies allow for the additional coverage for unique items like spas, pools, central vac,

washer/dryer, trash compactor, second refrigerator or freezer, outdoor grill, well pump, and septic system. Other Home Warranties have upgrades to cover code upgrades when repairs are needed. What they do not cover is routine maintenance.

How much does a Home Warranty Cost

Several warranty companies have slight variations in coverage and price, but most home warranties cost about $500 and have a per-incident fee of $60-125. In addition, the repair cost is often less than the cost of one repair per year. Statistics show 68% of homes will have a covered repair per year. Frequently, sellers will offer to buy a Home Warranty as an incentive to the buyer; if not, you can ask or purchase on your own if declined. In addition, if the seller provides an allowance for closing costs, it can be paid from these funds.

Do I need a Home Warranty

According to the University of Illinois Extension, homeowners should expect to spend 1 to 2 percent of the purchase price of their home each year on maintenance and repairs — that's between $3,000 and $6,000 annually if your home is valued at $300,000. If you have an older home with older systems that will need replacement, U of I Extension suggests it costs twice. Replacing major systems, including parts and labor, adds up quickly. For example, the average HVAC system costs $6400 to replace and a hot water heater $1790. Without a Home Warranty, the homeowner is responsible for the total cost. A home warranty protects your budget from unexpected major repairs.

Who does the work

As a homeowner, it is challenging to find, select a vendor, and know the quality of work and price are good values. However, the Home Warranty company has already negotiated a fair price with a reputable contractor. You can call in a claim 24/7 and expect a service repair as soon as it can be scheduled; beware, this could be several days. This convenience makes your life easier.

What's not covered

The Home Warranty contract has a lot of fine print with limitations and exceptions. For example, some impose dollar limits per repair or year. This can vary greatly between policies and coverage levels.

Some policies have a waiting period, often 30 days, for certain items before a claim is covered. Others have exceptions for preexisting conditions, damage that existed before the effective date of coverage.

The Home Warranty company can deny a claim if an item has not been properly maintained. This can be a sore point since a proper maintenance record may be difficult to provide, especially for homeowners who just assumed occupancy of a home. Be forewarned that some Home Warranty firms use "improper maintenance" as an excuse to dispute justifiable claims. Under certain circumstances, such as a power surge, an appliance likely will not be covered.

Home Warranty companies determine whether to fix or replace a system, and you may or may not agree with the decision. If an appliance needs to be replaced, you might not have a say, in some cases, about the make or model of the replacement.

Home Warranty Companies may not cover all the costs of a repair, in addition to the per-incident service fee. For example, if the current building code requires plumbing or electric service upgrades, these expenses would not be covered. Therefore, it's imperative to know what's covered and what's not. Check the protection plan to see the list of exclusions and to determine if you want to upgrade your contract.

Who are some of the major Home Warranty Companies

First American Home Warranty

American Home Shield

Choice Home Warranty

Old Republic Home Warranty

2-10 Home Warranty

Cinch Home Services

Select Home Warranty

Home Warranty of America

BPH Home Warranty

There is a trade group for Home Warranty companies, and more detailed information can be found on their website https://homeservicecontract.org/