When purchasing a resale home, many buyers consider the option of a home warranty to go along with their new property. While there are benefits and drawbacks to a home warranty, it is important to understand the product (the home warranty itself) to ensure you make an informed decision that is best for you and your family. Let's take a deeper look into the home warranty and what it can mean for you.
What Is A Home Warranty And What Does It Cover/Not Cover
A home warranty is not the same thing as homeowners insurance, which covers major perils such as fires, hail, property crimes, and certain types of water damage that could affect the entire structure and/or the homeowner’s personal possessions. A home warranty is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home’s major components, such as the furnace, HVAC, plumbing, and electrical systems. A home warranty may also cover major appliances, such as washers and dryers, refrigerators, and swimming pools. Often homeowners insurance doesn't cover these components. Or, the cost of fixing them (while expensive) wouldn't meet the policy's deductible—the dollar point at which insurance coverage kicks in.
Keep in mind that having a home warranty doesn’t mean the homeowner will never have to spend a penny on home repairs. Some problems won’t be covered by the warranty, whether because the homeowner didn’t purchase coverage for that item or because the warranty company doesn’t offer coverage for that item. Also, home warranties usually don’t cover components that haven’t been properly maintained.
Who Pays For A Home Warranty
Oftentimes a home warranty can be negotiated into the purchase of one of the beautiful homes for sale in Lakeland Fl. While there is no strict rule on who pays for the home warranty to begin with, many sellers offer a warranty as an added benefit to potential buyers to set their minds at ease about the home. If a seller does not or will not pay for a home warranty, buyers can add them at their own expense if they feel the potential benefits outweigh the cost.
How Much Does It Cost
A home warranty costs several hundred dollars a year, paid up-front (or in installments, if the warranty company offers a payment plan). The plan’s cost varies depending on the property type—single-family detached, condo, townhouse, or duplex—and whether the homeowner purchases a basic or an extended plan. In addition to an annual premium, home warranties charge a service call fee (also called a trade call fee) of around $75 to $125 every time the warranty holder requests that a service provider come out to the house to examine a problem.
How Does It Work
Most plans have a basic component that provides all homeowners who purchase a policy with certain coverages. Homeowners can also purchase one or more optional components that provide additional coverage at additional cost. Home warranty companies have agreements with approved service providers. When something that is covered by a home warranty breaks down, the homeowner calls the home warranty company, which sends one of its service providers to examine the problem. If the provider determines that the needed repair or replacement is covered by the warranty, they complete the work.
While it may not be for everyone, a home warranty can provide peace of mind and security for many home buyers and can make the buying and selling process a more enjoyable and stress free time. Whether or not to purchase or request a home warranty for your new home is a personal choice that should be made with the most knowledge and insight possible. Make sure to weigh the pros and cons for your situation and move forward confidently knowing you made the right decision for you.