Home
warranties pick up where insurance leaves off
Traditionally, home warranties have protected
homeowners from repair costs that aren't covered by
home insurance. Home warranties cover such things as
the plumbing, heating, air conditioning, and major
appliances.
The
mechanics of the home warranty
While home warranties aren't necessary for every
homeowner, they can help sell a home by providing
the buyer with added protection.
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Home warranties cover malfunctions of major
appliances.
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Generally, home warranties cover malfunctions of
major appliances such as washers, dryers, ovens, and
refrigerators. They also cover ductwork, plumbing,
the electrical system, heating, and
air-conditioning. In some cases, or for additional
fees, the warranty might extend to garbage
disposals, doorbells, ceiling fans, garage-door
openers, water softeners, trash compactors, and
built-in microwaves.
The National Board of Realtors describes home
warranties as service contracts, typically lasting
one year, that cover the repair or replacement of
major home systems and appliances that break down
due to normal wear and tear. Home warranties don't
overlap or replace the homeowners insurance policy.
Think of it as a cause and effect relationship: If a
hot water heater burst and destroyed a wall in your
home, the warranty would repair the water heater and
your insurance would pay to fix the wall.
Similarly, if your refrigerator were to stop
working while you were on vacation, there could be
spoilage, leakage, or floor damage. Your homeowners
insurance might pay for the damage to the linoleum,
while the home warranty would cover the fridge.
The age of your home usually doesn’t matter, as
far as warranty coverage is concerned. You can
obtain a home warranty, as long the covered items
are in good working order at the start of the
contract.
Home warranties cost about $250 to $400 a year,
plus $35 to $75 per service call. If your home is in
good condition, the expense might not be necessary.
On the other hand, when you do need to pay
for repairs in an aging home, the costs can mount
quickly.
Making
a warranty claim
Making a claim on a home warranty contract is
straightforward. You're generally given a toll-free
number to call. After the warranty company verifies
your coverage, the company will dispatch an
independent trade contractor to your home. The
contractor diagnoses the problem, repairs or
replaces as necessary, and the homeowner pays a
small service fee. The contractor then bills the
home warranty company for the remaining charges.
Generally, home warranty companies don't limit
the number of claims you can make, but you will have
to pay for the service call every time. Plus, there
might be a dollar limit on repairs to certain items;
for example, there may be a $1,500 limit for hot
water heater repairs. Your contract will spell this
out.
Check
them out before you buy
A home warranty is only as
secure as the company that offers it. The National
Board of Realtors warns consumers to find out as
much as they can about the reputation and track
record of any home warranty company. Realtors
frequently work with home warranty companies, and
can recommend firms with a proven track record and
financial stability. You can also ask if the company
is a member of a professional association that
monitors business practices. It’s also a good idea
to check with the Better Business Bureau or your
state’s department of consumer protection.
Each home warranty plan is unique in scope and
service, with specific coverages, limits, and
exclusions. Review home warranty contracts
carefully before you buy.
Advice for anyone buying a home warranty.
·
Always understand the length of the
contract and when it begins.
- Look over the contract to
understand what is, and is not, covered. Some
contracts will list specifically what is
covered.
- Look over the procedures
for reporting a claim. Some contracts require
customers call a claims number prior to ordering
repairs to the product under warranty. Things
will go more smoothly that way.
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