The term home warranty raised my curiosity. What is it and how does it work?
What is a home warranty?
A home warranty is an agreement/ contract that helps cover the cost of repairing or replacing any home appliance or system (dependent on the type of plan you have) that malfunctions or breaks when under regular use.
Who would typically use a home warranty?
First off, depending on the age of the house and the situation, there are 4 primary groups of people that home warranties suit well. They are:
- first time homeowners – buying a house will always be one of the biggest transactions person will ever make, especially when it’s your first! New homeowners may not have excess cash to cover the expense to fix things that may go wrong in their new home. A home warranty really comes into play here, especially if the home is older.
- sellers – a home warranty can serve as an incentive for a potential buyer to decide to purchase a home, knowing that repair costs will most likely be covered by the warranty plan.
- real estate agents – agents may purchase a home warranty as a courtesy for clients. This can be especially beneficial if the agent is working with a seller and the house listed needs updating while on the market.
- owners of older homes or homes with aging appliances and home systems – a home warranty is a good idea for homes with appliances or systems 10-15 years or older. Note, this speaks to help with repairing older items or help with replacement costs; coverage and amount of coverage will depend on numerous things. If improper installation, maintenance or unusual wear occurs, coverage may be denied. Speaking from experience, my husband and I purchased our first home during the fall of 2015 (we do not have a home warranty). We have an aging washer, dryer and dishwasher. They all still function, but they are older models and sometimes don’t work like well-oiled machines. We’ll see how long they’ll last! In addition, the appliances aren’t as old as the house itself (built in the 60s), but they’ve definitely got a few years in.
How does it work?
Each home warranty company and plan are different. You’ll have to research and read up on which is best for you and your situation. Furthermore, not all items are covered, dependent on the plan you choose. In general, there are a handful of types of warranties available such as buyer plans, seller plans and renewal plans. Plans also range in cost.
What types of things could be covered by a home warranty?
- heating system
- water well pump
- kitchen appliances
- central air
- attic & exhaust fans
- water heater
- trash compactor
- garage door opener
- duct work
- light fixtures
- central vacuum system
Information on groups of people that may want to consider a home warranty is sourced from consumeraffairs.com. Other information is sourced from America’s Preferred Home Warranty, Inc.