One appliance breaking down without warning can mess up the home budget. What if an appliance you can’t live without, such as a refrigerator or range, suddenly quits working and there is no money to buy a new one? Replacing a major appliance can cost more than a thousand dollars. The repair bill can be hundreds to a thousand dollars. One way to get protection from unexpected appliance replacement or repair costs is to purchase a home warranty.
What is a Home Warranty?
A home warranty is like an insurance policy to protect your home’s assets. A home warranty can protect appliances such as a refrigerator, oven, microwave, and more plus home systems, such as the air conditioner, water heater, and furnace. This is different from a homeowner’s insurance policy that covers loss from incidents such as fire, storms, vandalism, or burglary. The homeowner will pay a predetermined monthly charge and a per-visit service charge.
A home warranty works differently than a homeowner’s insurance. It covers appliances and systems that quit working due to normal use and wear and tear.
- The homeowner purchases home warranty coverage and a service agreement that meets their needs depending on what appliances and systems they want to protect.
- Then, they visit the home warranty company homeowner portal to register and complete a profile.
- When the homeowner needs service, they check the service agreement for eligible coverage. If the appliance is eligible, they submit a request through the homeowner portal.
- The home warranty company will dispatch an independent service contractor to the home to determine if the appliance is covered and then repair it or arrange for a replacement. There will be a fixed service charge for each service visit.
There are different home warranty plans to consider, including the Simply Kitchen plan, the Complete Home plan, and the Pinnacle Home top coverage plan. And, each plan can be customized to fit the individual homeowner.
What Systems and Appliances Are Covered?
The basic protected systems include the air conditioner, electrical panel, wiring, furnace, plumbing, and water heater. The basic protected appliances include a built-in, microwave, dishwasher, oven, and refrigerator.
Additional systems and appliances that can be covered for an additional fee include a second refrigerator, pool/spa equipment, roof leaks, septic system, freezer, washer and dryer, water softener, well pump, and wine cooler.
Who Will Benefit from A Home Warranty?
Some people will benefit more than others from a home warranty. People who are buying a newly built home with a builder’s warranty and new appliance warranties will not benefit from purchasing a home warranty because everything is already covered for a period of time.
Home buyers who have a limited budget for repairs of systems and appliances can benefit from the home warranty limits on expenses as long as they read the home warranty carefully and get the coverage they need.
Homeowners with older appliances not covered by warranties might benefit from the right home warranty. It is important to make sure all the appliances you want protected are covered and to read the service agreement for exceptions and limitations.
If a person is purchasing an existing home with older appliances, and the seller is purchasing a home warranty for them, it is a good deal. But, read the warranty to make sure the right things are covered. Home buyers who are in their first home and don’t know much about repairing and maintaining appliances or where to find reliable appliance repair people might benefit from a home warranty
Busy professionals who don’t have time to call repair people when an appliance or system breaks down might benefit from the convenience of a home warranty as long as they purchase a good home warranty from a dependable company. Homeowners who are handicapped or otherwise limited might do well to purchase The right home warranty.
Homebuyers who are good at doing their own home maintenance or appliance repairs will probably not need a home warranty. Home buyers who are planning on remodeling the home they are buying and will be replacing many systems and appliances in the near future will not benefit from a home warranty.
Each homeowner must decide whether they will benefit from a home warranty based on the condition of their appliances and systems and other factors.
Home Warranty Limitations
There are limits to coverage in many home warranty service agreements. They can include limitations in fine print that limit coverage.
- There may be clauses eliminating coverage for appliances that have been improperly maintained. The former owner of the home might not have maintained the appliances properly. There may be differing views on what proper maintenance includes.
- The home warranty company chooses the contractor for appliance repair and the homeowner is stuck with them.
- The homeowner may not have much say in the model or brand of a replacement appliance.
- Not all warranty companies are equal, and some may not provide good, fair service.
How to Choose a Home Warranty Company
When shopping for a home warranty, ask these five questions:
- Is the home already covered with a builder or new appliance warranties? Or are the appliances covered by a credit card?
- What are all the costs of this home warranty? Home warranty costs are different from company to company and from one area to another. There may also be additional costs, such as service fees for each repair call, and these costs can vary from $60.00 to $125 for each call.
- Be sure to read the service contract carefully to know what the contract covers and what it does not cover. The terms and conditions may limit the real coverage of the plan.
- Does the plan repair or replace broken appliances or systems, and what are the limitations? Are there limits to how much the plan pays toward a new appliance, leaving the homeowner to pay the balance?
- Does the home warranty plan list limits to what they will pay out on this plan? Some plan list yearly limits or limits for each appliance.
Finally, does the home warranty company have a good reputation for service, and what are their ratings with online rating companies? Are there complaints against the company with the Better Business Bureau? Stay away from companies with bad reputations. If you are considering a specific company, type in their name into your computer search engine for reviews and histories.
Take the time to do a little online research into home warranty companies. There are dependable rating sites that will list numerous home warranty companies and rate them according to customer ratings and complaints filed against them. These sites give the homeowner a chance to compare companies and choose the one that is right for them. Also, ask co-workers, neighbors, friends, and relatives if they have had good experiences with home warranty companies.
Read the proposed warranty agreement carefully for each prospective home warranty company. Check for what is covered and under what conditions. Read the exclusions and limits to coverage. Read the fine print for hidden exclusions, coverage limits, and other limitations.
Some things to look out for include:
- Caps on claims that are unrealistic. If the limit is too low for a replacement, you will be left to pay the balance
- Deductibles that require you to pay the first $$ for every claim
- High service fees for home visits
- Exclusions that seem unreasonable
- A repair only clause
- Required arbitration instead of lawsuits in court
- limitations on choices for replacement appliances where lesser models will be used
- A contract that has too much confusing fine print and exclusions
How To Get the Most Out of a Home Warranty?
Home warranties can be a way to keep appliance and system repair costs down and buy some peace of mind. Shop carefully for a home warranty from a reputable company.
- Read the contract carefully before signing it. Make sure all the appliances you want to be covered are listed on the contract. If an appliance is not on the basic contract, inquire about the cost to have it added to the coverage.
- Ask for the warranty company to send out a representative to examine all the appliances for condition and if they can be covered.
- Read the requirements for maintenance and use for coverage and follow those requirements. Keep a list of maintenance calls and efforts for each covered appliance.
- Since a service fee will be charged whether the repair will be covered or not, read the contract again to make sure the repair will be covered before scheduling a service call.
- By being familiar with the contract, you can insist that the warranty company honor it.
Each homeowner must decide if a home warranty will be worth purchasing. Then, it is important to choose the right home warranty company and make sure their contract covers all the systems and appliances you need to be covered. Finally, read the whole contract before signing on the dotted line and paying money to make sure you understand what is covered and what the limitations are. Finally, know what your rights are in the event of a disagreement about coverage and service with the home warranty company.