One of the scary things about making the leap from property renter to property owner is the idea of maintenance and upkeep. You’re no mechanic or repairman. You don’t know a socket wrench from screw driver. And calling repairmen—how do you know you’re not going to get ripped off because of your lack of knowledge? One solution is the home warranty. These are often offered as part of the buyer’s incentive package when you are buying a home. This is different that home owners insurance that you are required to have and you pay for, most times in your mortgage payment.
What a home warranty is not: It’s not a blanket insurance policy against anything ever going wrong in your home. It’s not a permanent warranty. It does have exclusions. Before you purchase or accept a warranty, it’s good to know what the warranty is, what it covers, what it doesn’t and how it works. Your realtor might make recommendations on warranty companies, however you can shop around. Not all coverages are the same.
How does it work? Most home warranties are very similar. You’ll want to read your warranty thoroughly and mark anything you don’t understand to have explained to you. But in general:
- If a home system or appliance breaks down or stops working, you call the home warranty company.
- Your home warranty company will call a service provider it has a business arrangement with.
- The service provider will call you to make an appointment.
- The service provider will fix the problem. If an appliance or system is malfunctioning and can’t be repaired, depending on your contract coverage, your home warranty company will pay to replace and install the appliance.
- You will pay a small trade service fee (usually around $75).
What If the service provider doesn’t fix something to your satisfaction or says that the problem is your fault and isn’t covered by your warranty? Call your real estate agent. Your real estate agent should seek resolution for you. If your agent was able to get a home warranty paid for by the seller, they should have contact information to help get the situation resolved.
What’s not covered? Check your specific policy, but in general: Outdoor items such as sprinklers, Faucets, Refrigerators, washers, dryers and garage door openers, Spas and pools, unless specific coverage requested. Often times some of these items can be added in at no additional charge but you have to make sure your agent request them at the time of purchase.
What can cause denial of a claim?
Improper maintenance, Code violations, Unusual wear and tear or Improper installation. All these items should be identified on your home inspection report and should be addressed by your agent with the seller prior to closing.
General coverage includes
Air conditioning, Dishwashers, Doorbells, Furnace/heating systems, Water heaters, Ductwork, Garbage disposals, Inside plumbing stoppages, Ceiling fans, Electrical systems, Range and oven, Telephone wiring. Your agent should have package information available to you for several different companies so you have review what is covered and what is not with each plan.
Your responsibility is to read thoroughly and understand your warranty before you agree to the terms. Be sure to clear up anything you don’t understand before you sign anything.
People sometimes confuse this with home owners insurance - that is total different. Home owners insurance is to cover your home and all your items in it in case something happens like, fire or burglary. This is similar to car insurance, it covers accidents not maintenance. You can choose any insurance company you want and for the life of the mortgage the policy premium is covered in your payment as part of an escrow account along with your property taxes. Most times people use the same company they use for their car insurance.