Updated: April 10th, 2019
Home warranties serve as a monetary security against unexpected expensive home repairs. The most important thing is to know what is a home warranty policy. Some even cover pool coverage. But you should know what is covered in a ‘Standard’ home service contract. When it comes to buying a home, there should be a possibility wherein a home warranty is provided by the seller. You would assume that it takes care of all repairs in your home. But you should know that some items are NOT covered in your home warranty.
The first thing that you should do is look through your specific contract by going through the online sample contract.
The basic appliance and system coverage includes:
|Sump pump (permanently installed)|
|Hot water pump|
|Bathroom whirlpool motor pump|
|Attic and exhaust fans|
|Heating and duct-work|
|Electrical system (interior)|
|Instant hot water dispenser|
|Built-in trash compactor|
|Range and oven|
|Central heating system|
|Refrigerator and ice maker|
|Washer and dryer|
|AC refrigerants and coils|
|Plumbing faucets and fixtures|
|Freestanding ice makers|
|Improper appliance installation|
Coverage differs from one policy to another and based on the state and this is why you should read through the policy before you commit. The sample copy would state the items that are covered under the home warranty and to what extent are these items covered.
Watch this video on the home warranty basics:
You should know by now that the contract covers only certain parts, appliances and systems which are mentioned as covered while all the rest is excluded. Just remember, you can always opt to pay an extra premium to cover these items before you sign the contract. Learn more about how to include these items under the ‘Types of Coverage’ section.
However, for items such as washer/dryer, kitchen refrigerator, air conditioning, spa equipment, pool, roof leak repair, etc, additional or optional coverage are available for an extra fee at the time of contract. Verify your contract to check which items are listed under optional coverage, if any, were paid for. Now you know what home warranty covers.
A home warranty is not a replacement for homeowners insurance . The homeowner’s insurance policy covers natural calamities, fires, property crimes, water damage and theft that have an effect on homeowner’s possessions and the home as a whole.
A home warranty does not cover these hazards but it covers particular components of the home. It usually covers regular wear and tear defects which may include an older air conditioner break down or requiring certain parts changed if you have kept up with the needed maintenance. In simplest terms, a home warranty is an additional coverage for the items in your home which might initially have been covered by a manufacturer’s or builder’s warranty.
When you purchase a home warranty, you are principally signing a service contract. The contract provides for low-priced repair and replacement service on a number of major home appliances. Most plans have a basic component that offers all the homeowners who pay for a policy with certain coverages. The contract will spell out which appliances it’ll cover, how much is required to be paid per occurrence and what is not covered. For instance, structural aspects of your home are not covered. So if your roof falls down, that would be covered by homeowner’s insurance. In case your water heater leaks, the water heater would be covered by a home warranty but the consequent water damage would be homeowner’s insurance issue. Homeowners are also allowed to procure one or more optional components that give additional coverage at additional cost.
They are quite inexpensive, usually ranging from $350 to $600, based on the coverage. Home warranty companies usually have a discount policy prices or special sales or give you additional coverage for the same price. These policies are prepaid for a year in advance and they can then be renewed. Companies provide you with an option of breaking up the premium into monthly payments to reduce the burden of making a one time upfront payment.
Home warranty plans offer specific or definite types of coverage and operate in a similar manner.
Watch this video to know how the home warranty works –
As all home warranty plans differ, you are required to ask specifically what is covered under your plan. Inquire with your real estate agent if upgrades are available. Make sure to know whether the home warranty company will pay for your repairs to make certain types of appliances or systems compliant with new regulations. Pay close attention and read the home warranty coverage contract cautiously to know the coverage, limitations, and exclusions.
Home warranty companies have three types of coverage – basic coverage, enhanced coverage, and an optional coverage. Some companies may not have basic coverage but have a standard policy instead.
A basic home warranty coverage includes major systems and everyday use appliances. The items covered in a home warranty coverage sometimes differ from state to state. The list of everyday use appliances varies depending on climate conditions and other factors. For example, the plumbing system, built-in microwave, ceiling fans, etc
Not all companies include the same list of items in their standard policy. What one home warranty company may include in its home warranty coverage, another company may list under an enhanced coverage.
The enhanced coverage includes certain systems and appliances that are not included in a basic plan but are commonly used. An enhanced coverage costs slightly higher than a basic coverage. In certain home warranty policies, your HVAC, refrigerator, washer/dryer, etc, are not included in the basic coverage but are a part of the enhanced coverage.
Optional coverage include those items that are not covered under a basic or enhanced coverage. This coverage gives you the option of adding your pool, spa, wine cooler, well pump, etc, to your home warranty policy. You need to pay a fixed extra premium to add an optional item to your home warranty policy.
Most home warranty company websites have a sample policy that states what items are included in a basic, enhanced and an optional coverage. Make sure to read through the document to gain a clear understanding of the items included under each policy.
Home warranties may be procured by individuals buying a new or used home, landowner, and sellers or investors. Each company’s coverage is decided by the terms of its contract, but basic home warranties usually cover the parts and labor on or replacement of chief home systems and equipment.
Most home warranty firms provide a variety of plans, all offering different levels of coverage, so be sure to study the details of any contract before procuring. Even if you decide to renew the contract from year-to-year, double check the details of your plan as the coverage can change every year. If the policy does not cover some of your appliances, you can check with the company’s representative whether you can opt to include additional appliances in your plan by paying a slightly higher premium.
A home warranty provides a cushion to unknown issues that homeowners face right through the year. Before you buy, you should ensure that you read the home warranty contract and ensure that most of your appliances and systems that you actively use are covered. Home sellers that would like to provide a home warranty to buyers and homeowners will make them feel reassured that any repairs or replacement would be covered with a home warranty. This is why, you should do extensive research to get a reputable home warranty company that will, in fact, pay for legal genuine repairs when they are required.
Watch this video on more home warranty tips –
A home warranty will cover repairs and replacements on appliances and systems due to normal wear and tear. Home warranty covers items like electrical systems, plumbing and kitchen appliances like oven, range and garbage disposal.
If you have bought a home recently then you would have gotten it along with a home warranty. However, most consumers expect more from these plans than they usually deliver. Home warranties are not insurance policies and home warranty costs about $350 to $500 per year.
Home warranty cost in terms of home warranty coverage, plans would average from $350 to $500 per year. Extended coverage, warranties would be $100 to $500 more per year based on the number and types of items. The best part is that companies charge the same warranty premium for newer and older homes.
Whether a seller pays for a home protection plan and the home warranty coverage or if the buyer pays for it is based on the local customs. In several locales, it is normal that the seller pays for coverage as it’s a sellers’ benefit.
Builder warranty policies last 10 years based on structural defects, one year for coverage of stucco, drywall and paint and two years for HVAC, plumbing and electrical. Appliances usually have a coverage of 6 months only. But home warranties usually last upto one year for covered appliances and systems.
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