What is a Home Warranty?
What Is a Home Warranty?
A home warranty is a contract between a home warranty company and a property owner and provides coverage for repair and replacement services on like appliances, plumbing, and HVAC as examples. These policies are also available for rental property owners.
If anything in your home breaks down, and the warranty covers it, you call the warranty company, a repairman comes out and fixes the problem and you pay only the amount of the deductible. Which is stated in your policy. Keep in mind, this is NOT a homeowner’s insurance policy.
What Does a Home Warranty Cover?
A home warranty covers the repair or replacement of something that malfunctions in your home. Each warranty is unique, so you’ll want to review what’s included.
Here is a list of some items that can be covered by a home warranty:
- Kitchen appliances
- Washers & dryers
- Central vacuums
- Motorized bathtubs
- Ceiling fans
How Much is a Home Warranty?
A home warranty typically costs a few hundred dollars per year, in the ballpark of around $400 to $600. These policies can be paid upfront, in installments, or through monthly payments, based on the types of payment plans offered by your home warranty company.
The cost of the warranty also depends on the type of property being covered such as a single-family home, a condo, a duplex, or a townhouse, to name a few. The cost also varies based on how much coverage you opt for. A home warranty company will typically offer different packages, such as basic coverage or more comprehensive coverages.
Finally, each time you call your warranty company for a service request, you’ll be charged a deductible amount ranging anywhere from $50 to $125 for them to send someone out to look at your problem. This fee does not include the cost of any repairs or replacements that aren’t covered by the warranty.
Pros and Cons of a Home Warranty
A home warranty can greatly benefit some homeowners by giving them peace of mind and is designed to protect you when expensive, unforeseen repairs come up. You’ll know how much your premium, deductible, and service fees will cost. You can budget for these set costs in advance so when something breaks, you’ll be financially prepared. That said, if nothing breaks you will still be responsible for these annual fees.
A warranty can also be a huge savior if you aren’t handy at all, or you don’t know how to screen and hire contractors. All you have to do is place a phone call to your warranty company, and they’ll take care of the rest. However, keep in mind you’ll be stuck with the contractors, replacement parts, and quality of work selected by the warranty company. You won’t get a say in the process of repairing or replacing things that break down in your own home. That’s why it’s important to go with a reputable company with good reviews.
There are great home warranty companies out there and there are some poor ones as well. To find them, you have to do your homework, read the fine print, and make sure you’re going with a reputable company.
If you would like help or want to learn more, please reach out to us.