Home ownership is a treasured experience. It is most people’s dream to own a home someday. However, the average costs of homes are hiking to $226,800. There is also the fact that an average homeowner spends more than $2000 in repairs when the home is not new.
That is why you need a home warranty. The warranty gives you peace of mind. No homeowner after closing wants to deal with malfunction or broken utilities.
If you have no previous experience owning a home or maintaining one, you need to get yourself a home warranty.
Home warranty plans can be confusing for a first timer. The following is some information on home warranty plans and how they work.
What Are Home Warranty Plans?
First, you need to understand that homeowners insurance is not the same thing as a home warranty plan. The insurance will mostly cover hail, fires, property crimes, and some types of water damage that can affect the entire structure and the personal belongings in the home at the time.
With a home warranty, the homeowner has an agreement with the warranty company that they will provide needed repairs and replacements at a discounted rate. They mostly cover major home appliances like refrigerators, dryers, swimming pools, and washers.
If you are wondering what does a home warranty cover? In most cases, the plan has basic components like the dryer, heaters, doorbells, dishwashers, garbage disposal, furnace, and electrical systems. Any additional components you need to be added to the policy will be at an additional cost.
The home warranty companies work with approved service providers and cover any items within the policy agreement, once called by the homeowner. However, they have to look at the items first to determine that they really need repairs.
In addition to the money spent on purchasing the warranty, the homeowner will also have to pay a small service fee.
Who Pays for the Warranty?
In some, the seller will pay for the warranty, and in some, the buyer will be the one paying. The one paying for the warranty will vary from one state to another. Therefore, you have to investigate what the local customs are.
Find out more about the seller, in many cases, because they have the most to gain.
When things break, buyers have a habit of calling the seller to fix. However, with the warranty, the seller will not have to deal with these stressors. The buyer will need to speak with the warranty policy provider.
As a closing gift, some real estate agents will give buyers a home warranty.
How Much Does the Warranty Cost?
A home warranty will cost between $300 and $500 annually, paid up front. Many factors go into calculating the amount to be paid. It depends on the type of property you purchase.
It will also vary depending on whether the owner purchases basic or extended plans for their properties.
The age of the property will determine how much you will pay. For a new house, you will pay much less. However, the older the home, the more you will pay for the cost of the warranty.
In many cases, they do not charge for the home in square footage unless the home is more than 5000 square feet. You will also pay more if there are separate structures that need coverage from the policy. Your garage, however, a basic policy will often cover.
The companies also charge a service call fee each time you request them to come to your house and examine the issue. If the issue requires them to hire different contractors, then you will have to pay all the contractors individually. This fee is not included in the warranty, so it will vary from one contractor to another.
However, the warranty does not mean that you will never spend a penny on repairs.
How Do They Work?
Each type of coverage will work differently. However, most will do the same job and will have similar verbiage.
• Once a home system or appliance malfunctions, you will call the company
• The company will call the provider with whom they have an arrangement
• The provider will make an appointment with the homeowner
• The provider will fix or replace the item
• You will have to pay a small service fee which should be less than $100
Either way, you can find out all this information before you make the purchase.
Types of Coverage
There are five types of home warranties, which include manufacturer warranty, sellers warranty, home warranty, and extended warranty. The type of warranty the company offers will vary, so you need to read the policies in details.
It is also important that you pay close attention to the repairs that the company will make with the warranty. You need to make sure that they are in line with the new regulations.
It is also critical to verify any information you do not understand.
What Doesn’t the Warranty Cover?
You should always find out what the warranty covers. Even further, find out what the warranty does not cover.
Warranty plan companies will not cover the following utilities in the home:
• Outdoor items like the sprinkler systems
• Faucet repairs
• Permit fees
• Exclusions discussed within the policy
• Pools, spas unless you specifically request them to cover
• Items that are broken before closing
• Some plans will not cover washers and dryers, garage doors and refrigerators
The last thing you need is to have an incidence and not have your warranty cover it.
When Can They Refuse to Fix Broken Items?
When the companies refuse to repair items that covered in the warranty, buyers are upset and frustrated. Sometimes it seems that the company is actively refusing to reimburse the homeowner.
Here are occasions when the company can legitimately refuse to refund the homeowner.
- Code violations
• Improper maintenance
• Pre-existing conditions already listed during home inspections
• Unusual wear and tear
Ensure you maintain your home and adhere to all the code violations.
Conduct Thorough Research to Ensure That You Get the Best
Ask all the companies you visit for a copy of the policy so you can compare. Not all home warranty plans are the same. Never assume that an item is covered because it might not be covered.
Read more on our blog to learn about how to make your home tasteful.