As a renter, if your air conditioner, water heater or dishwasher were on the fritz, you could call your landlord or property manager. But now that you’re a fresh homeowner, you’re the one in charge of home repairs – including any malfunctioning equipment and systems.
Everything ultimately breaks and it can be expensive to repair or replace. A home warranty policy will cover electrical systems, HVACs and plumbing systems as well as an essential peace of mind.
In 2019, we developed our list of the top five home warranty firms. Our assessment technique is outlined in this list, which you can find further down this page.
Before we break down the best strategy for home warranty, here’s what you need to understand about how they operate and what to look for when you buy one.
What Is A Home Warranty?
What’s a home warranty? It’s essential to know what a home warranty provides, whether you’re a fresh home buyer or a home purchasing veteran.
A home warranty is an annual service contract that pays for major appliances being replaced or repaired. These household products include equipment (such as dishwasher) and household technologies (such as HVAC). One condition of a home warranty is that it must be on a periodic maintenance timetable to cover equipment and systems. This sort of insurance coverage is distinct from home insurance, which pays for natural disaster harm and loss.
How Does A Home Warranty Work?
Home warranty coverage stretches, usually a year or two, for a defined contract term. The new proprietor may renew or cancel the service contract after that.
In a number of respects, a home guarantee is useful. You would contact the warranty supplier instead of calling your local repairman if a significant scheme or appliance breaks. The supplier would then request a repair through a service provider with a third party with whom they have an arrangement. That service firm would contact you to arrange an inspection and repair appointment. Keep in mind that for any repairs some home warranty firms may have a service call fee. This fee is not included in the repair’s real price.
How Do You Know If You Need A Home Warranty?
It is essential to check the products in your home when considering a home warranty and determine if adding a warranty would add value. For example, if your HVAC system approaches the end of your life, a home warranty plan may come in handy and save you from additional costs.
Your home is one of the biggest purchases you are going to create, so any additional precautions you may take to save your investment are useful. When choosing whether a home warranty plan is correct for you, you have a few fundamental questions to ask before you buy a plan:
- Can you afford to buy a home warranty? Later on a huge economic headache can save you from a tiny upfront price. If a plan fits into your budget, it may be a valuable investment to prevent future economic stress.
- Are you a first-time home buyer? Many first-time home buyers are going to buy a plan when their new house is closed. It will assist them save thousands of bucks in the long run by spending a little bit more each month. It’s stressful enough to buy a house, so invest in your peace of mind.
- Do you own or plan to purchase an older home? Buying a plan to celebrate your home’s 10th anniversary is a wise investment to help you with future costs.
- Are you a “DIYer”? If you don’t want to spend cash on repairing appliances, you may need to invest in a home guarantee. It is a job that needs skill and expertise to complete repairs. Reparations can be very hazardous to the average homeowner without practice. Do a favor for yourself and save yourself from future trepidation.
- Do you own a mobile or tiny home? Home warranty strategies are also applicable to small homes or mobile homes. Even if you’ve made a minimal investment, protecting it is still wise.
- Are you planning to sell your home? If you’ve put a lot of hard work into preparing your home for sale, in your final days you don’t want anything to go awry. You will be helped by a home warranty scheme until you move. Additionally, because you can move the agreement to the fresh customer, it can be a excellent marketing tool.
- Do you own a rental property? You can add the cost of the plan to the monthly rental fee for your tenants. If you have renters like college learners, this is a wise choice. If you lease various properties, when you call their 800 number, some home warranty businesses can speed up your service claim.
You may not need a home warranty in some circumstances. If you’ve set aside 1 percent of your home’s purchase price for repairs, you might be able to afford the additional cost without buying a plan. If you bought a fresh build or your devices still have a manufacturer’s warranty, you might want to forgive a plan’s additional monthly price.
There’s never a great time financially when it comes to significant repairs. That’s why it can be a true lifesaver to have the greatest home guarantee.
‘With just about every home I sell, I advise them,’ said Sharilyn Weber, a realtor with Lion Real Estate in Fresno, Calif.
What You Should Know Before Buying A Home Warranty
Now that you have a fundamental knowledge of home warranty plans, when investigating various policy alternatives and buying a contract, we will review what to look for. Before purchasing a home warranty plan, read on to teach yourself.
Types Of Home Warranty Plans
There are three basic types of home warranty plans, with cost and coverage escalating each. The first includes a specific device, such as a fridge. The second includes various equipment, including your fridge, washing machine and dishwasher. The third includes significant HVAC and electrical equipment and systems.
Even the most costly home warranty plans may not cover all of your home appliances or systems. A second fridge in the garage or outdoor pool equipment may not be covered under the warranty agreement. You will have to negotiate with the insurance company if you want items outside the original policy covered.
‘They’re very particular about what they’re doing and they’re not covering,’ Weber said.
Negotiating might be worthwhile. Weber involves the cellular-powered chlorination system of her pool in her own home guarantee of $670.
‘We lived in our home for six years and our cell went out three times, which would cost $1,000 to replace each time. So, the warranty has paid more than for itself in our case, ‘she said.
A Home Warranty Is Not The Same As Homeowners Insurance
Many homeowners get home warranties for the first time and homeowners get confused with insurance. It is very essential to know the distinction between them. Homeowners insurance includes accidental harm caused by theft or natural disaster to your home or property.
An insurance policy for homeowners includes four main fields: the home’s interior and exterior, private assets, and general obligations. When theft, loss or harm happens to your home, personal property coverage is essential. Where someone is injured on your property, general liability coverage is your protection. If you purchase a house with a mortgage, insurance is a necessity for homeowners. Read our homeowners insurance manual and the benefits for more data.
Due to wear and tear, a home warranty enables to repair or replace an appliance or system element. A home warranty can help protect your HVAC, electrical, plumbing, and appliances components. You don’t have to buy a home warranty.
Home Warranty Costs, Service Fees And Other Expenses
Make sure you fully comprehend how much it will cost when assessing a home guarantee. This involves taking into consideration original costs, charges for service and any other expenditures.
The precise cost of a home guarantee relies on the amount of coverage you choose. A typical annual price could be $200 for significant devices and $800 for HVAC, plumbing and electrical systems policies.
If you buy a house, the premium warranty is component of the cost of closing. However, negotiation is open to the issue of which party pays the premium. Payment responsibilities can be assigned to the vendor entirely or shared between the vendor, buyer and realtor.
Some home warranty policies have approximately $100 deductible or cost of repair, whichever is lower. If your warranty bears a deductible, each repair would be subject to that fee. And while you’re not going to pay the real cost of repairing or replacing, you may be liable for paying a $65-$125 trade service fee for each repair. This fee will cover the service provider coming to your home to diagnose the issue, as described in your contract.
Limitations Of Home Warranties
There may be an annual restriction on how much the supplier is going to pay, depending on your plan. The limit could be $1,000 – $2,000 each year for plans covering one item, whereas more costly plans will have a greater limit. To determine your precise coverage, be sure to read your policy.
Providers may also decrease under certain circumstances to make payments. This may be the case if a repair is deemed too costly. The supplier may give to replace the item or pay the depreciated value when that occurs.
For a few other reasons, the home guarantee supplier may reject payment. You may receive a denial if you have not done the required maintenance. You may also be denied if the appliance or system has not been correctly installed or if code breaches occur. Finally, if there is excessive wear and tear or a pre-existing condition, you can also obtain a rejection.
Questions You Should Ask
While most of your home warranty issues may have been answered, there may still be some that you are uncertain about. Here are some of the most frequently asked questions that we find:
- Is the home warranty I want redundant? With fresh building, it may be redundant to add coverage. Home builders often include fresh build guarantees. These cover for variable periods of time structural defects, systems and equipment.
- Will I have to complete a home inspection before I buy a policy? There are distinct requirements for every home warranty business. Some will not need a record of home inspection or maintenance.
- How does the claim process work? If your HVAC goes out, you probably won’t want to wait for it to be repaired for a long time. If a company does not provide customer service and assistance 24/7, you need to understand the length of time it takes to repair.
- Will there be a charge repeat visits if the problem continues? If you continue to face the same issue, extra charges should not be incurred. Make sure that you check the warranty business with this data. You don’t want to spend more than you need to spend on the same issue.
- Can I cancel my policy at any time? You will be able to cancel your policy at any moment by many businesses. They may even reimburse the remaining quantity of the premium you have not used. Check with your warranty business to see if you decide to cancel any charges. Some charges may vary between $50 and $75.
Managing Risk
A home warranty can be of great value, particularly if you buy an elderly home.
“Things are so expensive now to get repaired – just having a repairman out costs $75. In comparison, home warranties are not that expensive,” said Weber.
Some buyers may not believe they need them, particularly if they have gone without problems for years.
“If nothing breaks during the coverage period, the customer may, in hindsight, feel the fee was a waste of money, but that’s what managing risk is all about,” said Angie Hicks of Angie’s List. “But are you financially prepared to replace major components as they are needed, or would you rather pay a set amount per year whether something breaks or not?”
The best concept is to get suppliers to compare rates and coverage with several quotes. Then decide which, if any, is for you the best home guarantee company. We studied and ranked our own list of the top five home warranty businesses for 2019 in order to make this method simpler for you.