Understanding Pre-Existing Conditions in Home Warranties
Comprehending if you should spend up the money, sometimes up to six hundred dollars on a home warranty is a thought buyers and current home owners must consider. There are many examples when buying a home warranty in position is well worth the money and other times that it may not be worth the price.
Is a Home Warranty Worth the Price?
Short sale homes and bank owned homes will usually not shell out for the buyer to have a home warranty in place and in these occurrences it may be wise to have a home warranty. One thing to remember is that home warranty plans normally do not cover pre-existing conditions so knowing that you have an air conditioning unit, that does not function is not a cause to buy the warranty. Since these homes have been possessed in general by people who are at risk of losing the home and possibly lived in the home for many months knowing they were losing the home tend not to take much care of the property. So problems could take place after you take ownership. In this case, you may want to think about a home warranty and the out of pocket cost might be money that is well used up.
In case the home you are purchasing is quite new, say between one and 5 years, then you may skip home warranty as most things usually don’t go wrong in the first few years. However, a home that is six to twelve years old will possibly start having things like the garbage disposal needing replacing, water heater going out and air conditioning units needing repair so disbursing for a warranty might very well pay off.
First, it is vital to realize that Home Warranty plans are fine to have but it is not a catch-all for replacements and repairs. It is surely not a means to overlook home maintenance. The declaration about “my a/c gets replaced, and my a/c goes out” may or may not be correct in all conditions. Thus, understanding what your contract says will help save some heart ache of what to anticipate when you call the company for a warranty in the time to come.
How to determine KNOWN vs UNKNOWN Pre-Existing Conditions
None of the Home Warranty Companies will cover KNOWN pre-existing conditions. In order to find out an UNKNOWN pre existing coverage, a home inspection is used. If a problem was prominent in the home inspection report and no action was taken, it would be considered as a KNOWN pre-existing condition. Thus, the problem will not be covered by the Home Warranty.
The reality is, most of the home warranty companies do not ask for or even acknowledge documentation as to the serviceability of anyone’s home which generates a HUGE LOOPHOLE permitting the warranty company the choice of declining the claim based on the convenient ‘Pre-Existing Conditions clause.
The immature homeowner informs them that his house and all the systems are in good operating condition. Initially, the homeowner is told that his/her word is all that is required, but when it is the time to file a claim, the homeowner will find his word against the home warranty’s service technician.
Certainly, the homeowner will lose if the technician finds a ‘pre-existing condition or other unforeseen situation, as the warranty company always goes with the word of their technician!
For instance: A home inspector observed that there was a leaky faucet in the kitchen, it becomes a known pre-existing condition for the buyer. If the buyer appeal that the Seller fix the issue and the Seller gave a receipt upon repair, the buyer would then be required to ask the plumber to warrant his/her work. The Home Warranty Company will not be accountable for the repair.
However, in some cases, where the home examiner did not account a problem or no home examination was carried out before closing, the Home Warranty Company would need a contractor to send so as to diagnose the problem. The Home Warranty Company would also request the contractor if it be a problem caught by the home examiner. In case the answer is “Yes”, then the buyers will be accountable for the repair and if the answer is “NO”, then the Home Warranty will suppose it as an unknown pre-existing condition, and so repair the problem at no cost to the buyer.
Keeping it Conveniently Unclear
Some home warranty companies even show off that a inspection is not required! But that is just what should be needed to begin the condition of the home and its systems and to remove the reason of the ‘pre-existing conditions’ clause. It is safe to have a third party inspection done to protect yourself from future claim denials.
Credentials would show that there were no pre-existing conditions, there were no inappropriately set up or sized systems. But the home warranty companies don’t want documentation as that would remove the chance to take your money.
Clearly the homeowner is the victim in the long run. However, realtors who sell them the incorrect warranty product will lose a future referral. To be fair, there has not been a substitute home warranty product obtainable until now.
So what you expect from your home warranty company?
There are companies which do business differently. One that
- Requires an inspection first.
- Has no ‘Pre-Existing Clause’.
- Will pay on all warrantee able items
- Realtors can have faith with their reputation
- You will not find any complaints about.
If any item does not go by inspection, you have the choice to either have it repaired and be covered by the warranty, or to not repair it and eliminate it from the warranty.