Buying a new home is expensive. Not only do homeowners have to pay the price of the home, but there are property taxes, closing costs, and moving expenses. New homeowners don’t want the added expense of fixing appliances and systems in a new-to-them home. A home warranty may be just the solution. With a home warranty, buyers pay an annual fee (and a service fee for each claim), and they are covered if items break down during the year. Having a home warranty allows homeowners to enjoy their homes and worry less about budgeting for repairs.
Home Warranty vs. Homeowners Insurance
Many companies offer warranty plans for homeowners. A home warranty and homeowners insurance are two very different things. A home warranty pays for repairs and replacements of certain home appliances and systems when they break down from normal use. Homeowners are not required to purchase a home warranty, but many do.
On the other hand, lenders require homeowners to have homeowners insurance. Homeowners insurance covers a home in case of damage or loss because of natural disasters, such as fire or hail, and theft. Homeowners insurance covers the physical structure of the home and personal belongings.
Benefits of a Home Warranty
The biggest benefit of a home warranty is that homeowners won’t have to spend large amounts of money when a covered appliance or system breaks down. Homeowners must pay a small service call fee each time a claim is made, but this usually ranges from $55 to $150. If the system is covered, the home warranty company pays the rest of the cost to repair or replace the system.
An additional benefit of using a home warranty company is that homeowners don’t need to find a reputable service company. Homeowners call their home warranty company, and the home warranty company contacts a service company to come out and do the job. Homeowners who have moved to a new area and don’t know the service companies available find this a nice benefit. All contractors are licensed and insured, and many of them offer guarantees for their repairs.
Usually, homeowners can pay monthly for a home warranty policy to make it more affordable. Most companies will allow the contract to be transferred to a new homeowner if the home is sold during the contracted year.
Appliances and Systems Covered
Different companies cover different appliances and systems. Typically a home warranty covers electrical systems, ductwork, and plumbing through a home. A home warranty also covers an HVAC system, furnace, air conditioner, and water heater. Additionally, dishwashers, garage door openers, garbage disposals, ovens, washer/dryers, refrigerators, and oven/range/cooktops are the standard appliances covered.
Be sure to look carefully at the listed items in a warranty. Homeowners with sump pumps, well pumps, or septic tanks usually pay an additional fee to cover these items. Pools, spas, and saunas also require an additional monthly fee from most companies. Most policies do not cover roofs, and if they do, it is usually only for small repairs, not a complete replacement. Homeowners with more than one refrigerator or other appliance should check to ensure that both are covered, as some companies only cover one per house.
A home warranty can provide peace of mind for homeowners, as it minimizes the expenses of repairing or replacing home appliances and systems.