What Exactly Are Home Warranties?
Imagine closing on your home and right after moving in your dishwasher breaks, the basement sump pump stops working, and your heating system begins to malfunction. None of these issues were discovered during the home inspection and now you are stuck with repair costs that are adding up quickly. This would not be a pleasant situation to be in for a new homeowner. As such, many real estate agents are recommending their buyer purchase a home warranty.
A home warranty, also known as a home service contract, costs on average $550 per year. It is a program that covers the normal wear and tear of major mechanical and electrical systems in a house. Some items covered include the home’s heating and air conditioning systems, sump pumps, kitchen appliances, and water heaters. Home warranties do not cover insurance incidents that are normally included in your homeowner’s insurance coverage, such as structural defects, damage from fires, or natural disasters. Most expire after a set time period and there are certain levels of coverage based on your home’s size, condition or age.
When you file a claim with the home warranty company, a contractor will be sent out to diagnose the problem for a set service fee. Getting a claim approved comes down to whether your home warranty covers it. Are home warranties worth the cost? It really comes down to understanding what the policy does and does not cover. Not all home warranties are alike so before deciding on a provider, do some online research, read the contracts and ask questions.