Every homeowner is required to have home insurance by law. Home insurance protects them if there are damages to the property.
Fewer people know about home warranties, yet they are just as important. A home warranty is similar to home insurance and it provides an extra layer of protection.
What is a Home Warranty?
When you purchase a home (whether it’s brand-new or pre-owned), you will be offered the option of getting a home warranty.
It adds to your insurance in that it covers the costs of unforeseen expenses. If your property gets damaged by fire, water, or theft, the costs of repairs may be covered by your warranty.
A home warranty is a legally binding contract between you and the provider. It may cover repairs for your HVAC system, plumbing, and electrical wiring.
Unlike home insurance, a home warranty may also cover damage to home appliances, like refrigerators and washing machines.
How Much Does a Home Warranty Cost?
You can get varying levels of coverage for your home warranty. Basic plans usually omit coverage for home appliances and in this case, the homeowner would pay for these repairs themselves.
For home warranties, you pay a fixed amount each month, similar to the payments you would make to an insurance company. Some companies also offer a one-off payment option if you’d rather pay for a full year upfront.
The amount you pay depends on the level of coverage that you have chosen, and the size and type of the property. If your home is brand-new, your warranty might cost a little more than it would for an older home of the same size.
Most home warranty companies charge a service fee each time one of their employees is called out to look at a problem in your home. If more than one visit is required for the same problem, you might need to pay twice.
Do You Need a Home Warranty?
Although home warranties are not mandatory by law, they can be helpful to purchase. They protect against significant damages and repairs on your property.
They can also be helpful to save you time and energy trying to find a contractor if you have a problem in your home. The home warranty company will provide these services for you.
However, there are drawbacks to getting a home warranty. The main issue is determining what repairs are covered by your warranty and this can cause disagreements between you and the warranty provider.
The provider can claim that you’re not maintaining the property adequately and this is the cause of the required repairs. However, you might disagree and say that the repairs should be covered in your plan.
There is also the issue of whether the previous homeowners maintained the property adequately or not. If they didn’t, you might be blamed for the poor condition of the plumbing or HVAC system.
Home warranties work for some but not for others. They are inexpensive in comparison to paying for ongoing repairs in your home, so it’s worth doing some research and seeing if a home warranty suits your needs.
