When a family purchases an existing home, they do not know how long the appliances and home systems will last or what condition they are in. A home inspection before the purchase can give an idea about the condition of appliances and home systems, but there is no guarantee they will not break down. Purchasing or asking the seller to provide a home warranty will alleviate some of the worries and keep costs down to an affordable level.
What is a Home Warranty?
A home warranty is a service contract a homeowner can purchase to cover repair and replacement costs of appliances and home systems such as heating and cooling, electrical, and plumbing. The service contract covers these things when they break down from normal use. The service contract costs a certain amount per year and there may be a service charge for each repair. This warranty keeps repair costs down and helps the homeowner budget for repairs. Homeowners may need a homeowner’s warranty to keep repairs affordable and give themselves peace of mind.
Home warranties may not cover every appliance or system in the home, so it is important to read the contract carefully and ask for the appliances or systems not covered to be added to the contract. This will increase the cost of the warranty but might be well worth it.
What does A Home Warranty Cover?
The general home warranties will cover these appliances:
· Built-in microwave
You might want to cover more appliances such as:
· A second refrigerator
· Wine cooler
· A stand-alone freezer
· Water softener
· Well pump
· Washer and dryer
· Pool or spa equipment
The home systems covered should include:
· The HVAC system including furnace and air conditioning
· The home’s plumbing
· The water heater
· The wiring and electrical panel
How does a Home Warranty Work?
The home warranty company contracts with different appliance repair services and suppliers for better pricing. When an appliance breaks down, the homeowner calls the home warranty company. Then the company calls one of their service providers to go to the home and decides if the home appliance or system is covered and fixes the problem if it is covered. If the appliance can not be repaired, the home warranty company will pay for a replacement appliance. Usually, the homeowner will pay a trade service fee from $75.00 to $100 for each visit.
That is a big saving considering the repairs or replacement could cost them hundreds or even thousands of dollars without the warranty. The problem comes when the repair service says the appliance is not covered under the terms of the warranty. This is why it is very important to ask questions and learn exactly what is covered and under what conditions before buying any home warranty.
What is Not covered?
If homeowners are not careful of which home warranty they purchase, they may get an ugly surprise when they call for service. Items that may not be covered include:
· Outdoor equipment such as sprinklers
· Permit fees
· Haul aways
· Items that were broken before the warranty was purchased
· Exclusions in the fine print of the policy
· Appliances that the repair service deems were not properly maintained or used incorrectly
· Appliances or systems with pre-existing defects that were not disclosed in the home inspection
· Code violations
· Improper installation
· Unusual wear and tear or damage
How Much Do Repairs Cost?
When considering purchasing a home warranty, check on how many appliances and system repairs cost in your neighborhood. You might be shocked. They can cost from $171.00 to $240.00 on average. But, with an hourly charge of $50.00 to $150 per hour they can run much more.
If the appliance or home system is beyond repair and must be replaced, the cost can run in the thousands and make a real dent in the home maintenance budget.
This is why many homeowners, and people just purchasing an existing home with appliances and systems they are not familiar with, purchase a home warranty for at least the first year or two. This helps avoid those huge repair and replacement costs.
Who Benefits From a Home Warranty?
The people who are most likely to benefit from purchasing a home warranty are those who purchase an existing home with used appliances. People who are new homeowners and are not good at repairing things themselves should consider it. People who are very busy with jobs and careers and would prefer to get anything taken care of with one phone call will benefit. Elderly people or handicapped people who do not have the physical ability to do repairs themselves and are on a fixed, limited income and so need to keep repair costs down benefit.
Some people just want the peace of mind of knowing the appliances and systems in their home will be taken care of by someone qualified and have a limited cost. Some home sellers and real estate companies give home warranties to expedite sales and the home buyer will benefit from this gift.
Some People Won’t Benefit from a Home Warranty
But for some, a home warranty is not a good purchase. People purchasing new homes will already have a warranty from the builder that covers most things in the home. Also, new appliances in these homes have their own manufacturer warranties. Homebuyers who are planning on remodeling a home, updating home systems and appliances do not benefit from a home warranty. People who are very handy at appliance repair and other home projects might not need a home warranty. If the appliances and systems are in great shape or newer, they may not break down in a year. In this case, the money spent on a home warranty will not be an advantage.
So, each homeowner must decide on their own if they will benefit from purchasing a home warranty. And, if they purchase a home warranty, they must read it carefully to make sure it covers what they need to be covered.