Buyer Step by Step November 20, 2018

Step 6: Do You Want a Home Warranty?

A Home Warranty is not the same thing as homeowner’s insurance, nor is it a replacement for homeowners’ insurance. Homeowners insurance covers major perils such as fires, hail, property crimes, and certain types of water damage that could affect the entire structure and/or the homeowner’s personal possessions. A home warranty is a separate contract covering repairs and replacements on systems in your home. Usually, coverage is for one year. For new construction that has never been lived in, the builder should give you a one-year warranty and after that, the home warranty kicks in for a certain amount of time.

What does a home warranty usually cover?

Policies differ depending on which company your warranty comes from. In general, a home warranty will cover your home’s appliances and systems, such as electrical and plumbing. The home warranty usually does NOT cover exterior features such as the roof, fencing, decking, landscaping, or water intrusion due to a structural issue, etc.

The cost depends on several factors, such as how old your home is, how big it is, and what you want to have covered. Usually, the cost is between $500 and $1,000. Always compare policies before purchasing.

When something breaks, there is usually a service call fee of approximately $75 per trip. With most warranty programs, there are no additional fees to repair an item beyond the service call. Also, while home warranties cover many of your new home’s crucial systems and appliances, those items must be in working order before the contract. When you buy a home warranty, consider premium and optional coverage to customize the plan to fit your needs, especially if your home has more than one oven, dishwasher, a wine fridge, etc. These extra appliances may not be covered under the standard warranty.

Who pays for the home warranty?

That depends. Sometimes we negotiate for the seller to provide a home warranty as part of the contract negotiations. In that case, the home warranty would be provided and paid for by the seller. You’ll then receive the details of the home warranty at the closing. If we did not ask for a home warranty as part of the contract, then you need to decide if you want to purchase one.

What if an appliance can’t be repaired and needs to be replaced?

The home warranty company will try repairing the item first. If that doesn’t work, they will usually replace it with a model that has similar features. For instance, if you have a fridge that has an ice machine and a water dispenser, you’ll get one with the same features. However, it most likely won’t be the same brand. For instance, American Home Shield normally replaces all appliances with a GE brand. Therefore, if you have a Sub-Zero fridge, you’re most likely not getting another Sub-Zero. Instead, you’ll get a GE fridge with similar features. If you really want a Sub-Zero, most warranty companies will give you the cost of the GE fridge in cash and you can put it toward purchasing the Sub-Zero on your own.

Where can I buy a home warranty?

You can find the best home warranty for your needs by searching for websites that compare and rate home warranty companies. A trusted site like Consumer Reports  is a good place to start. Or I can order one for you through HSA Home Warranty to begin on the day of closing.

When a home warranty is understood and utilized for its intended purposes, it saves on home repairs and reduces the extra stress that comes with buying or selling a home.