Home Warranty Wisdom: Exploring The Best Protection Companies – When you buy a home, even one that is not new, there is a good chance that you will be offered a home warranty as a safety net against expensive and unexpected repairs. This may sound like a great form of financial protection, but is it really the safety net that homeowners expect? Let’s find out if home warranties are worth it.
A home warranty is not the same as homeowner’s insurance, which covers major perils such as fire, hail, vandalism, and certain types of water damage that can affect the entire structure or the owner’s personal property.
Home Warranty Wisdom: Exploring The Best Protection Companies
A home warranty is a contract between a homeowner and a home warranty company that provides low-cost repair and replacement services for major home components such as the furnace, HVAC, plumbing, and electrical systems. A home warranty may also cover major appliances such as washers and dryers, refrigerators and swimming pools.
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Homeowners insurance often does not cover these components. Or the cost of fixing them (although expensive) would not reach the policy deductible, the dollar point at which insurance coverage kicks in.
Most plans have a basic component that provides certain coverages to all homeowners who purchase the policy. Homeowners can also purchase one or more add-on components that provide additional coverage for an additional fee.
Home warranties often come up when you buy a home. The seller can offer to buy it on your behalf to give you the peace of mind that any part of your home can be repaired at a good price. If not, you will likely receive many requests in the mail to purchase a home warranty once the sale closes. Close it.
Home warranty companies have contracts with approved service providers. When something covered by a home warranty breaks down, the home owner calls the home warranty company, which sends one of its service providers to investigate the problem. If the supplier determines that the required repair or replacement is covered by warranty, it completes the work. The owner only pays a small service fee plus the money already spent on the warranty.
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A home warranty costs a few hundred dollars a year, paid up front (or in installments if the warranty company offers a payment plan). Plan costs vary depending on the type of property—single family, condo, townhouse, or duplex—and whether the owner purchases a basic or extended plan.
Costs generally do not vary with the age of the property, unless the home is new, which increases the cost of coverage. Also, the area of the house in most cases does not affect the price, unless the property is greater than 5000 square meters. Individual structures such as guest houses are usually not covered by the basic policy, but may be covered at an additional cost. However, garages should be included as a standard feature of the warranty.
In addition to the annual premium, home warranties charge a service call fee (also known as a business call fee) of approximately $60-$100 each time the warranty owner requests a service provider come to the home to inspect the problem. If the problem requires the visit of several types of contractors (such as a plumber and electrician), the owner may have to pay a service fee for each.
A home warranty does not mean that the homeowner will never have to spend a dime on home repairs. Some issues are not covered by warranty either because the homeowner did not purchase coverage for the item or because the warranty company does not offer coverage for the item. Also, the home warranty usually does not cover components that are not properly maintained. (More on this drawback below.) Additionally, if the warranty company denies the claim, the homeowner will have to pay a service fee and also cover the cost of repairs.
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Like all warranties, a home warranty should protect against unexpected and expensive repair bills and give you peace of mind. For a home owner who does not have an emergency fund or wants to put it aside for other things, a home warranty can be a buffer.
Home warranties also make sense for people who aren’t handy or don’t want to worry about tracking down a contractor if they run into problems. Warranties can also make sense for people with expensive device tastes.
The topic of home warranties often comes up when selling and buying a home. A home warranty can provide reassurance to a home buyer who has limited information about how well the home components are maintained or, in the case of new construction, how well the home was built. This guarantee can also be useful for people who have just spent their savings on buying a home and want to avoid any additional large expenses.
For home sellers, providing a one-year paid home warranty with the purchase can provide protection against buyer complaints about problems or defects discovered after the sale closes. However, offering a home warranty does not relieve the seller of the legal obligation to disclose all known problems with the home.
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The main problem with a home warranty is that it does not cover things that are not properly maintained. What is considered adequate maintenance can be a significant gray area and is the source of many disputes between home warranty companies and warranty owners.
At worst, unscrupulous warranty companies can use the improper maintenance just as an excuse to deny valid claims. In another case, the homeowner and the contractor making the house calls may simply disagree about what constitutes proper maintenance.
Another common problem is that when a homeowner buys a used home, it may have a 10-year-old furnace that was not maintained by the previous owner. During this time, no matter how well the new owner tries to take care of the furnace, the previous neglect cannot be reversed and any damage cannot be repaired. Additionally, warranties have several exclusions and dollar limits per repair and per year.
Home warranties are cheap compared to the cost of repairing or replacing most major home components, a fact that is one of the main selling points of a warranty. However, there may be many years when nothing breaks or changes in the house.
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During these years, the owner receives nothing (except perhaps peace of mind) in exchange for their premium. If the money had been put into an emergency fund, it would at least earn interest. Also, an owner who tries to use the warranty and is denied their claim is likely to feel that the money spent on the premium and service call was wasted.
Home warranties eliminate the need to find a contractor when something breaks. However, they also take away the freedom to choose your own expert—an independent contractor—if you want the warranty to pay for a repair or replacement. If you don’t like the contractor or the job done, you’re stuck. Furthermore, the owner may have little or no say in the choice of one brand or model
In addition, the entire process can be more complicated when a third party (a home warranty company) is involved than when the homeowner works directly with a contractor.
A home warranty is not a perfect solution to the hidden risks and costs that homeowners face. If the seller is willing to give it to you, it certainly won’t hurt. However, before you buy one, read the home warranty fine print and carefully consider whether the warranty will pay off.
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Homeowners/buyers who would be more comfortable with a home warranty, as well as home sellers who want to offer a home warranty to a buyer, should also do their research to find a reputable home warranty company, use reputable contractors, and actually pay for legitimate Repairs. . when they are needed.
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