What Is a Home Warranty Company?
A home warranty is a service contract that helps cover the cost of repairs or replacements for systems and appliances in your home. The company works with a network of approved service providers who come to your house when an issue arises with one of the covered systems or appliances. The homeowner pays a service fee, usually $60-$150, and the contractor will fix or replace the item.
What Are the Most Common Systems and Appliances Covered?
A typical home warranty plan includes coverage for the major kitchen appliances and a home's electrical, plumbing, and heating systems. Many companies offer more specific plans that can be tailored to individual needs, such as a plan that covers air conditioning and a swimming pool.
What Are the Most Common Problems With Home Warranties?
Some of the most common problems with home warranties are that they need to provide more coverage, deliver what those selling them a promise, and can be difficult to use. For instance, you may need help connecting with the company and getting a repair technician to your home. And the warranty company's claims process may take too long to pay out.
Why Do Home Buyers and Sellers Get Home Warranties?
Homebuyers and sellers typically buy home warranty plans to protect against unexpected repairs and replacements. These plans cost between $300-$600 per year and are usually bundled with other services like a home inspection and termite treatment.
What Is the Best Type of Home Warranty?
Some homeowners choose to customize their home warranties to include particular types of systems and appliances, while others opt for a basic plan that covers a wide range of systems and appliances. In both cases, the contract will specify what is and isn't covered by the warranty company.
What is the Most Important Part of a Home Warranty?
The most important part of a home warranty is the service agreement itself. The service agreement should clearly outline what the coverage is, what the limitations are, and how much it costs to repair or replace a covered system or appliance.
What Does the Service Agreement Look Like?
Most home warranties are arranged in a two-tier structure, with an aggregate coverage limit and a per-item limit. The aggregate model gives you the most flexibility when it comes to repairs, but per-item limits are useful if you have one or more expensive systems or appliances that need frequent maintenance and repairs.
What Are the Most Common Systems, Appliances, and Add-On Coverage Options?
A home warranty is most effective if you purchase it when you're in the market to buy a new or pre-owned home. It can also be an excellent option to get when you're building a new home or have just moved in.
Home warranty plans can be a great way to keep your home running smoothly and protect you against the high costs of repairs and replacements. But they aren't for everyone and need to be carefully considered before a decision is made.
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