The Brief on Home Warranties
A home warranty is a yearly service contract that protects specific home systems and appliances. With a home warranty, you pay a monthly or yearly premium that will help offset the costs of maintenance, repair, or replacement of your appliances and systems.
The contract covers specific items that are listed in the user agreement, so choose your home warranty company and contract carefully. Home warranties generally cover systems such as heating, air conditioning, and plumbing, and appliances like dishwashers, ovens, laundry machines, refrigerators, and more. When a covered item breaks, the home warranty company will send an approved service contractor to your home to diagnose and repair or replace the item, depending on the contract coverage.
So who buys home warranties?
Home buyers may want to consider a home warranty because they are unfamiliar with the home, local repair companies, and they've spent serious money getting their new home and don't want any big financial surprises.
Home sellers may want to consider a home warranty because helps reassure prospective buyers, adds value, and helps protect their budget while the house is on the market.
Homeowners who are not so handy or who just want some peace of mind. Not everyone has tools, knowledge, inclination, or desire to do their own home repair. A home warranty might just fill the bill.
We've known people who give their kids a home warranty when they buy a house. It's a wonderful housewarming gift.
How much does a home warranty cost? These plans are fairly inexpensive, typically about $600 a year, but you can get more comprehensive plans that offer more coverage for a bit more money.
Don't get confused between home warranties, home insurance, and builder’s home warranty. Home warranties are not insurance but are a contract between the homeowner and the home warranty company. Homeowners insurance protects your home against damage from fire, storms, vandalism, and more. On the other hand, a home warranty protects your systems and appliances. A builder’s home warranty applies to new construction or a remodel that is completed by a builder. Unlike a home warranty, which is purchased by the homeowner, a builder’s warranty on a new home is provided by the builder or from a third-party provider.
The trifecta of protection includes 1.) a home inspection, 2.) a home insurance policy, and 3.) a home warranty. Those three elements can set you up for success as a homeowner and bring you peace of mind. All three also apply to condos. In the end, make sure you compare companies and their contracts to make a fully-informed decision if you choose to buy a home warranty.