Is a Home Warranty Worth Buying for Major Home Appliance Protection – Part One?

Home purchasers are offered a home warranty at most real estate closings. Sellers quite often make it part of the purchase to the buyer to provide them solace their home component repairs will be paid for in the event of failure. After the purchase of a home, buyers receive lots of direct mail home warranty offers.

The immediate peace of mind of a home warranty sounds really, good because home owners look at it as a great way to protect against catastrophic home component failures. Does a home warranty provide the vail of protection for a homeowner if a furnace, air conditioner or refrigerator goes out?

Home Warranty Defined

Let it be known, a home warranty is not a homeowner’s insurance policy. A homeowner’s insurance policy covers insurable risks like fire, hail, burglary and some types of water damage (not flood). A home warranty is a policy contract offered by a home warranty company covering certain repairs and replacement services on the primary components of a home, including its furnace, air conditioning system or swamp cooler system and its plumbing and electrical systems. Certain home warranty policies cover major appliances like a home’s washer, dryer, refrigerator and its swimming pool.

A home warranty provides basic set policy coverages to homeowners. Additional coverages covering additional repairs and replacements that can be purchased are offered by many home warranty companies.  

A home warranty is not home owners insurance, which covers unforeseen risks such as fire or hail damage. A home warranty is a contract between a home warranty company and a home owner providing discounted repair service and replacement service on the major working components of a home, many times including a force air furnace, a boiler, air conditioning, swam cooler, electrical systems and plumbing systems.

Approved service providers, such as plumbing contractors, have contracts with home warranty companies to repair broken components or install replacement components offered in the services agreement. Homeowners’ call their home warranty company when a component covered by a home warranty agreement breaks. The home warranty company will then send a service provider, like a plumber out to the home to inspect the problem and then either fix the problem or install a replacement if they make the assessment that the problem is covered by the warranty. When repair or appliance replacement services are provided by a home warranty company, homeowners are required to pay a service call fee.

Home Warranty Cost

Home warrant agreements are anywhere from $300 to $100 per year and they are due in full at the time the warranty is provided to a homeowner. Occasionally home warranty company’s payment plans to customers. Home warranty plan annual cost is dependent on the type of property. Home warranty premiums for single family detached homes, condominiums, townhouses and duplexes are all different, with a home warranty for a single family detached home being the most expensive normally. If it is an extended contract with additional coverages it is more expensive.

The Home Warranty cost does not go up or down with the age of a property, but if a home is new, it the cost of annual coverage is higher. The price normally not higher if a home is bigger or smaller, but it will be higher if a home’s square footage is in excess of 4,999 square feet. If there is a separate guest house or caretaker living quarters the components in these structures are only covered when an additional fee is paid. Components in a garage are covered.  

The cost of a home warrant is its annual premium plus service call fees. This fee is payment for each time a service provides comes to the to the home of a home warranty holder to assess a problem. When a home owner has several different kinds of service provider visit their home for different problems, they most likely pay a separate fee for each visit.

Bear in mind, just because a home owner has home warranty it does alleviate them from ever spending money on home repairs or home appliance installation ever again. The fact is that certain problems are not covered by a home warranty because the home owner did not purchase that coverage or because their contract does not cover every problem. A home warranty contract will not take care of repairs or replacement for covered components that are not taken care of by the home owner. Additionally, if it turns out that a home warranty company will not cover a particular claim, the homeowner must pay for the home visit by the service provider and it will have to pay for any repair expenses.

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