What is a Home Warranty?
A home warranty is an agreement between a homeowner and a home warranty company that provides repairs and replacement services on a home’s major systems, including HVAC systems, plumbing systems, electrical systems, pool and spas. Often times a home warranty will cover major appliances such as refrigerators, dishwashers, ovens and ranges, and washers and dryers. Optional coverages are available with most home warranty companies for an additional cost.
A home warranty is different from homeowners insurance. Homeowners insurance protects major damage caused by hail, fires, property crimes and certain types of water damage that could affect the entire construction and/or the homeowner’s personal belongings. A home warranty does not cover these items. Rather, it covers major systems.
Home warranty companies have agreements with approved service techs that are screened and insured. When a repair is covered by a home warranty, the homeowner calls the provided support number for an assessment of the problem. If the service contractor determines the repair or replacement is covered by the home warranty, then the repair is made. The homeowner is usually responsible for a small service fee per the agreement. The specific terms and conditions for full coverage details will be in the service contract.
Why purchase a Home Warranty?
Home warranties protect a homeowner from experiencing large unexpected expenses during home ownership. These are very recommended for first time home buyers who do not have the disposable income to make a large repair unexpectedly. Home warranties will typically cost $350-$600 depending on all of the coverages provided. So the costs of repairing or replacing one major system typically far exceeds the costs of the home warranty. Home warranties also provide peace of mind. Sometimes that is very important when making a very large purchase like buying a new home.
Who Pays for a Home Warranty?
A home warranty may be purchased by either the seller or buyer, as part of a real estate transaction. If you are the buyer interested in a home warranty, it is important to negotiate your home warranty costs in the contract. Keep in mind that a homeowner can purchase a home warranty at anytime, and may continue to pay an annual premium to keep it in affect for as long as needed.