What does a home warranty cover?
A home warranty cover service, repair, or replacement of major home appliances and systems. While insurance provides financial relief in case of unexpected perils like fire, wind, hail, vandalism, or theft, a home warranty cover specific appliances and systems listed in the contract.
When you purchase your new home, you will likely spend hundreds and thousands of dollars on this investment through means of your down payment, homeowner’s insurance, tests, inspections, and appraisals.
Often times you are draining the savings that you have built-in order to make your dream of homeownership a reality.
The last thing that you want to have happened is to have a major out of pocket expense within the first months or year of owning your new home.
Make sure that you take steps to protect your investment by not only having your new home inspected but also negotiating or purchasing a home warranty with the purchase of your home.
Unforeseen breakdowns in major appliances can occur and a home warranty will help alleviate the pressure of a large out of pocket expense after you have just purchased your home.
A home warranty covers a terrific solution to help offset these expenses, simply because these breakdowns of major appliances and mechanicals are not covered by homeowner’s insurance.
If you are purchasing a home that features older mechanicals, a home warranty is a safeguard to your investment. Moving is stressful enough and you certainly want extra protection against future problems.
Here is an example of what most home warranties cover:
- Air Conditioning
- Electrical System
- Plumbing System
- Built-in Dishwasher
- Built-in Microwave
- Garbage Disposal
- Built-in Trash Compactor
- Clothes Washer
- Clothes Dryer
- Water Heater
- Ceiling Fans
If you are selling your home, it is also a great advantage over your competition to offer the Buyers a home warranty upfront with the purchase of the property. It allows the Buyers to shop with confidence knowing that the home will be covered under the warranty after the time of closing.
Oftentimes the warranty company will also offer a coverage plan to the seller during the time that the house is listed so as they seller you have peace of mind knowing that you also have coverage during the stressful time of selling your home.
Lastly, you will want to shop warranty companies to ensure that you are not overpaying for the upfront warranty premium or being shocked with a high deductible for a service call, which can ultimately negate the whole financial reason that you would offer a warranty.
Each warranty company will cover different items, so it is important to make sure that the warranty company you choose does have good core coverage for the major mechanicals in your home.
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What Does a Home Warranty Cover?
Worrying about malfunctions that can happen in a new home that you have just about closed the sale on is the last thing that you would want to think about.
This is quite common nowadays and types of equipment that you have bought as part of the sale do end up malfunctioning or breaking down completely.
Since such issues are of paramount importance for the daily running of the house, for peace of mind, it’s a good idea to get a home protection plan.
It’s especially a good idea to obtain a home warranty if you’re a first time home buyer.
This cover is normally known as a Home warranty and is basically a service contract that covers the repair and replacement costs of home appliances.
This warranty generally covers equipment and appliances such as dishwashers, plumbing systems, and electrical systems that fail due to normal wear and tear.
As the definition describes, a home warranty essentially covers the costs of the repair or maintenance that is required to be done for your household pieces of equipment that are covered as part of the warranty plan.
A home warranty is a new concept and most homeowners have not even heard about these. Though in most cases, the buyer pays for the premium of the warranty plan, sometimes the seller also pays for the premium.
He does this as a goodwill gesture and also to ensure that he is not called by the buyer after a few days, to take care of equipment malfunction. This is how the concept works.
For an annual fee of $250 to $600, the warranties cover repair or replacement of certain basic home systems such as plumbing and heating, plus major appliances.
What does a home warranty cover?
Air conditioning, pools, spas, wells, and sometimes roofs can also be added to the warranty list, at an extra cost. Mostly, the warranty companies contract local repair companies to provide service.
If something breaks, the homeowner calls the warranty company, which arranges with the local company to dispatch a repair technician.
Such warranty companies work on a simple principle that out of a hundred homes that have warranty plans and pay the premium; only less than twenty homes have major repairs that cost them real serious money.
This makes their profit. A home warranty is most often purchased in conjunction with a home purchase. Sometimes it is an extra enticement offered by the seller.
Other times, a new homeowner will purchase a warranty to protect themselves from potential problems that may have been missed during an inspection.
The only problem that is connected with a home warranty plan is that there are many conditions that must be met for a warranty to cover service and many homeowners sign a contract without reading all of these lines of conditions.
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What is a Home Warranty?
For many people, landing your first real estate is one of the most fulfilling and yet most difficult things to undertake.
The purchase of your first home is also one of the highlights in any person’s career because it is often seen as proof that the person has already attained a sort of financial stability as characterized by the capacity to buy and keep a home.
Because of this, one of the best practices is to purchase your first real estate with a home warranty.
Your money’s worth
A home warranty is a contract that is often provided by major real estate agents to ensure that you will get your money’s worth behind one of your most major purchases – you’re home.
Here, a contract is signed between you and the agent or party where you bought your home.
Any breakdown in the major systems in your house during the time specified in the warranty agreement will be replaced or fixed by the warranty insurance provider.
Thus, the home warranty is one of the best ways to ensure that your real estate will be an investment worth the time and effort you have exerted to acquiring it.
For quality investments
The home warranty is often used in conjunction with the home inspector as a means for someone looking to invest in real estate to ensure the quality of the home to purchase.
In-home inspectors, the basic idea is to ensure that the home is in good enough condition to ensure that there will be no major breakdowns after the house has been bought.
In the same way, the warranty works to ensure your safety in the case of a home system breakdown, but in this case, after the property has been bought.
One of the first things that an experienced real estate buyer will tell the novice real estate buyer or investor is that with houses, what you see is not always what you get.
With minimal costs laid out for a paint job, some houses may seem to look like absolute beauties. However, there are sometimes unforeseen and unwanted details that tend to show up only after the purchase. The warranty is a safety net against these.
Other important reminders
Some other important reminders when it comes to home warranties is that these contracts can be used any number of times by the homeowner, as long as the home system breakdown occurs during the time frame covered by the insurance.
Equally important to keep in mind, however, is that the coverage of the home warranty differs from one type of home warranty plan to the next.
For this, it is important that you look into the fine print in your contract to see where your home warranty works and where it doesn’t.
What does a home warranty cover?
In general, however, the home warranty does not cover the home system breakdowns that occur as an effect of negligence or improper use of certain appliances.
Also, the home warranty will not cover the faulty or improper installation of basic home systems, as this will eventually lead to a breakdown.
Now that you know the various means to safeguard something as valuable as your real estate, the next step is to go about canvassing for your first real estate purchase.
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A home warranty covers service, repair, or replacement of major home appliances and systems. It provides peace of mind, especially if covered items are older and no longer under the manufacturers’ warranties.
Home warranties are considered a consumer product, so they aren’t the same as homeowners insurance.
While insurance provides financial relief in case of unexpected perils like fire, wind, hail, vandalism, or theft, a home warranty covers specific appliances and systems listed in the contract.
Home warranty coverage can minimize the expense of fixing or replacing big-ticket items that you might not have saved money for or factored into your budget.
Items available for home warranty coverage may include kitchen appliances, clothes washer and dryer, and the major components of central air conditioning systems, central heating systems, plumbing systems, and electrical systems. Many of these items are covered based on the home warranty plan that you choose.
What does a home warranty cover?
An American Home Shield® Home Warranty Plan covers many of the repair and replacement costs of over 20 of your home’s major appliances and system parts when they break down due to normal wear and tear.
With several coverage options to choose from, we’ve made it simple to pick the plan that suits your family best.
Home warranty coverage varies, but there are some standard coverages for appliances and systems you can expect from most home warranty companies, according to the National Home Service Contract Association (NHSCA).
Typical Home Warranty Coverage Systems:
- Interior plumbing
- Water heater
- Air conditioning (sometimes optional)
- Garage door opener
- Garbage disposal
- Pool equipment (optional)
- Oven, range, or cooktop
- Refrigerator (sometimes optional, may exclude ice maker)
- Spa equipment (optional)
Some home warranty companies offer plans that only cover certain systems, such as heating, ventilation, and air conditioning (HVAC), interior plumbing, or electrical.
There are also appliance-specific plans that work the same way. You might choose a warranty program like this if you only want to cover certain items that are no longer covered by a manufacturer’s warranty.
Depending on where you live, you might want coverage for other home systems such as a sump pump, well pump, or septic tank.
Keep in mind that some appliances that you might think were covered under a standard warranty could be listed as optional, such as a refrigerator or a built-in microwave.
In addition, if you have more than one refrigerator in your home, you’ll likely need added coverage because home warranties cover only the primary kitchen refrigerator.
The most comprehensive home warranty plans often include coverage for appliances like free-standing ice machines, trash compactors, ceiling fans, and jetted bathtub motors and pumps.
You also can purchase coverage for a rekeying service, which is especially useful if you just purchased a home and want to change the locks.
Home warranty companies set limits on how much they will pay for the diagnosis and repair or replacement of covered home systems and appliances.
The limit depends on the item. For example, Choice Home Warranty will pay no more than $1,500 per covered item per contract term for glycol, hot water, or steam-circulating heating systems.
It also will pay no more than $500 for electrical systems, ductwork, and plumbing systems. This is a common reimbursement rate for heating systems among the home warranty companies we rated, but the rate can range from $1,000 to $3,500.
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