There is no way to know when an HVAC system might bite the dust or a garbage disposal will grind to a halt, but home warranties can provide protection when these unexpected mishaps occur. If a home warranty is in your future, consider these points before choosing a provider:
What is a home warranty?
A home warranty is just what it sounds like: a contract between the homeowner and a service company that covers the cost of repair and/or replacement of appliances and other aspects of the home, such as electrical and plumbing.
How does it work?
More often than not, home warranties are sold with the purchase of a home. In today's market, it is common for homeowners to add a home warranty as a feature to attract potential buyers. Purchasing a home warranty is a relatively easy process. Most warranty companies will set up a plan over the phone, but some will require a walk through and inspection before offering coverage.
What's the cost?
A home warranty is not much different than health or car insurance. The prices vary depending on how much coverage is needed. A higher end warranty that covers multiple systems and appliances can cost as much as $650 to $800 a year. A more limited warranty, which might cover certain appliances but not electrical or plumbing; or house systems but not appliances like a washer and dryer, can cost substantially less, often in the $200 to $400 a year range. The option to make an annual or monthly payment is usually available, and down payments are generally not required. A flat fee payment for repair visits to the home generally ranges between $50 and $100.
What will it cover?
A multitude of coverage options are available, so it is important to read the fine print and understand the contract before signing on the bottom line. Standard warranties usually cover HVAC, electrical, plumbing, ceiling fans, garbage disposals, ovens and even garage door openers. A more extensive warranty can include well pumps and swimming pools, among other things.
Having a home warranty can potentially save homeowners a bundle when it comes to repairs. Instead of bearing the full cost of replacement and repairs on malfunctioning systems and appliances, the homeowner usually only pays for the cost of the service visit.
Check the policy to determine specific homeowner responsibilities. General cleaning, upkeep and maintenance on all appliances and systems are required for the service provider to fulfill its obligation of coverage. If evidence exists of neglect, companies have been known to decline repairs or replacement.
Pros vs. cons
When it comes to pros vs. cons in the home warranty business, there are two points that continuously come up.
On the pro side: a standard flat fee covers almost all repairs.
On the con side: claims can be denied seemingly at the whim of the service provider.
How to pick a company
Research the warranty companies under consideration before committing to a coverage plan or paying any money. It is important to ensure the company you select is reputable and will be there when you need them most. After becoming well-informed and satisfied with a potential provider's references, then you can make an educated decision about which company to choose.