Whether a homeowner just purchased a new home or has owned one for many years, a home warranty is one of the offers they will likely get.
The term home warranty might be confusing for new homeowners. They are usually offered a warranty to mitigate expenses on the new property regarding unforeseen and emergency repairs.
Putting the marketing sweet talk about home warranty aside, it is important to understand what the warranty entails and why if at all, any homeowner should consider it.
What Is a Home Warranty?
A home warranty is a residential service contract between a homeowner and a home warranty company.
The contract provides discounted repair and replacement on systems and appliances in the home.
Having a home warranty gives a homeowner peace of mind. It protects against expensive and emergency repair bills. The contract term is usually one year.
If you own a house or plan to buy one, you might want to check out how home warranty works (you can learn more about this by visiting Cinch Home Services website. (https://www.cinchhomeservices.com/).
What Does It Cover?
There are different home warranty plans, which could also vary depending on the provider.
Types of Home Warranty Plans
Most home warranty providers offer three types of plans:
- Appliance plans: May cover washing machines, dishwasher, and refrigerator.
- System plans: May cover HVAC, plumbing, and electrical systems.
- Combination plans: A combo of appliance plans and system plans.
Generally, a home warranty will help you pay for repair or replacement costs for the covered appliances and systems.
Meanwhile, certain costs may not be covered by the contract. Such expenses include permits and the hauling of equipment.
You should read the warranty’s terms for limitations and exclusions. You may also ask the company for clarification on any terms before signing the contract.
Typically, a home warranty may cover major home components like furnaces, HVAC, plumbing, electrical systems, refrigerators, swimming pools, and dishwashers, washing machines, and dryers.
Home Warranty vs. Home Insurance
Home insurance, also known as homeowners’ insurance, is another safety option homeowners use to secure their properties. It is, however, different from a home warranty.
A home warranty covers repairs and replacement of systems and appliances in case they break down. On the other hand, home insurance covers damages to systems and appliances during a peril such as theft or natural disasters. It also covers liability from the appliances and systems, such as someone getting electrocuted on your property due to a faulty wiring system.
Cost of a Home Warranty
The cost of a home warranty depends on where you live and the plan you choose.
Typically, there is a monthly or annual fee, which you may call the subscription fee for the service.
There is also a service fee that you will need to pay each time you request repairs for a covered appliance or system. The fee is usually smaller compared to the actual cost of hiring a technician.
The average cost of a home warranty is between $600 – $900 annually. It may be as high as $1,700 or as low as $250.
Things a Homeowner Should Consider Before Buying a Home Warranty
A home warranty is not a free service; hence you should be sure it is a worthy investment before buying one.
Below are some things you should consider before buying a home warranty.
Appliances and Systems Warranty
New home appliances and newly installed systems are usually covered by warranty. Typically, a warranty lasts two to five years, and if you purchased the product using a credit card, it might be extended up to 24 months.
If your appliances and systems are still covered by warranty, you may not need a home warranty service except if you prefer a backup plan for repairs and replacement.
Pre-existing Issues
Pre-existing issues with appliances or systems are not covered in a home warranty, even if the item falls within the coverage type.
Also, damage from leaks, pest damage, natural disasters, and other damages other than normal wear and tear are not covered in the warranty.
If your appliance or system has unresolved issues that cannot be fixed but managed, consider replacing them.
Home Size
The size of a home may influence the kinds of appliances and systems installed. The mechanical systems and appliances in larger homes are usually more sophisticated, so their repair costs may be higher.
This will invariably affect the cost of your home warranty and hence your budget. Discuss with the company to decide on the best plan for your home.
