Home Warranties Advice
Are you buying a new home from a builder? Or are you buying an existing home from the previous owner? Regardless of your situation, you may be able to benefit from home warranties if something goes wrong with your home.
Here's what HUD has to say about warranties: "Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner's insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped."
In effect, when you buy a "warranty" product, you are buying a kind of insurance coverage that takes over when your basic home insurance policy would fail you.
Many policies that you can purchase will cover more than the home itself. For instance, you could buy a home warranty that will provide you with the following:
- Budget protection against costly home repairs or replacements due to normal wear and tear for appliances, systems and the building itself
- Coverage of existing systems and appliances regardless of age, make or model
- Access to local service contractors 24 hours a day, 365 days per year, through the company that provides your warranty
- Special coverage in case of an emergency such that a service contractor will respond within 2 hours, including weekends and holidays, which can help to prevent or avoid claims against your regular home insurance
- If a home system or appliance can't be fixed, replacement with a new item of like features and efficiencies
- A guarantee of quality workmanship on the part of any contracted service or repair. Some warranty policies will cover you until you are happy with the work
- An option in level of coverage, from a "basic" plan to much more comprehensive and wide-ranging plans (at a higher cost)
- Flexible payment options that could include a one-time fee, yearly fee, or monthly fee
With warranty policies, you may have to pay a "service fee" each time you make a claim against your policy. This helps the warranty company to discourage frivolous claims. However, it also means that getting an item fixed is not "free" just because it is covered by your warranty. However, it can save you money on such repairs, given that many companies will charge you $50 or more just to come to your home, before the repair even begins. (For instance, the last time we called a furnace repair company, the service fee just for coming to the house was $80! On top of that, we paid for the repair, which was another $80. It was an expensive single visit.)
You can buy a warranty on a home as either the buyer of a home or the seller of a home. If you are selling a home, a home warranty plan (which will be "passed on" to the new owner) can be a selling point. If you are buying a home, purchasing your own home warranty can give you peace of mind that if something goes wrong during your coverage period, you don't have to be subject to a large repair bill.
Often, if you are buying a newly constructed home, you will be able to buy a warranty policy for a much longer time period. Most warranty policies on an existing home will be limited to a year or so. However, if you are buying a new home from a builder, you can sometimes buy warranties for up to 10 years. This can really help in those situations where it turns out that the builder made a mistake. You can go through a costly lawsuit with the builder (and not be assured of getting your money) or you can have a warranty policy. In some cases, a quality builder will even sell you your newly built home with a warranty policy purchased by the builder. Given that some building problems can take some time to become evident, it often makes very good sense to have a warranty policy on a new home, unless you have a builder with an exceptional reputation.