Buyers and sellers of a property can both benefit from a home warranty agreement. If any of the major components in your home break or wear down, you are financially responsible for replacing them. However, a home warranty plan can cover repairs and fixing wear and tear of appliances covered by the policy. Unlike insurance, the warranty agreement covers the repair and replacement of major home systems, not damage to the house.
Things to consider
Home warranties can be essential for homeowners. Ideally, a warranty contract should cover major systems like HVAC and electrical and appliances like washers, water heaters, and dryers. The warranty helps cover unforeseen and expensive costs if the appliances require repair or replacement. Here are some things to consider when choosing the perfect home warranty plans:
Location: The cost of a home warranty can vary based on the location. Certain parts of the country can be more expensive than others. Most home warranty companies offer custom-made plans that align with the usual repair and service costs in the region.
Coverage: You should evaluate your requirements and choose a plan that covers most major appliances in your home. Plans that cover multiple appliances, expensive HVAC systems, and luxurious roofing options can cost more. To come up with an estimate, add the total number of appliances in the home and check the cost of common repairs and replacements required for each system.
Terms: Home warranties come with a payout limit, and the rest of the cost has to be borne by the homeowner for any repairs. So, you should carefully consider the terms of the agreement, including the coverage period, payout limits, and the repairs covered by the company.
Limitations
Home warranties come with certain limitations. A plan may not cover appliances that have not been adequately maintained. Here are a few things that a home warranty may not cover:
Secondary damage: Home warranties do not cover secondary damage. So, if an appliance leaks, the plan can cover the cost of fixing the leak, but damage to property caused by the leakage will not be covered.
Structural issues: Home warranties do not cover damage or defects in the structure of the home, including damage to the foundation and support beams. Similarly, the plan will not cover items destroyed by physical force or natural disasters.
Manufacturer defects: Another home warranty limitation is no coverage for damage caused by manufacturing defects. In addition, if you neglect, poorly maintain, or do not clean the appliances, the coverage claim can be denied
Improper installation: If you have any issues with the appliances or home systems because of incorrect installation, home warranties will not cover the damage. The same holds for malfunctioning appliances due to missing parts, construction damage, or inaccurate wiring services.
Cost
The cost of home warranties varies depending on the location, extent of coverage, and the type of plan you choose. Home warranty companies may allow you to customize the plan. On average, the plan can cost about $600 per year. The cost comprises the monthly premium and the service fee, both of which can vary depending on the add-ons you choose (like septic systems and swimming pools) and the terms of the policy. Some providers may charge a service fee for each claim made under warranty.