When buying a home, it is also crucial that not only is the property in excellent condition but everything else in it, including the appliances and systems. A home warranty provides home buyers peace of mind that any associated repair or replacement costs will be covered if a home appliance breaks down.
Home warranty vs. home insurance
A home warranty is different from home insurance, though. Home insurance typically covers damage to the interior and exterior of the house due to a destructive event and damage or loss of personal belongings or assets, as well as injury to other persons while inside the property.
A home warranty, on the other hand, covers key items in your house and is helpful when an item breaks down, which repair or replacement can often be costly. This is ideal for first-time homeowners who have no or little experience in maintaining a home.
In some cases, it is the home seller pays for the home warranty as an incentive for the prospective buyer; otherwise, the home buyer may opt to have a home warranty plan for his peace of mind. Some real estate brokers and mortgage lenders also offer a complimentary home warranty as part of the package or service.
What does a home warranty cover?
In general, a home warranty covers plumbing, refrigerator, dishwashers, HVAC systems, washers and dryers, garbage disposals, and stoves, just to name a few. The coverage can be as extensive as one wants, depending on his needs and budget.
A home warranty may not be necessary if you purchase a newly constructed home with new appliances since they typically come with their own manufacturer's warranty or provided for by the builder.
A home warranty may not cover sprinklers, garage door openers, spas or pool, or appliance that were broker before closing. Also, an insurance provider may deny a claim, including poor maintenance, improper installation, or the item was already in poor condition even before it was purchased.
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How much does a home warranty costs?
On average, a home warranty can cost between $300 and $600 a year depending on the extent of coverage and where your property is located. Many home warranties are renewable annually, but some offer monthly payment options. For extended coverage, a homeowner may need to add $100 to $500 a year.
A home warranty deductible or service charge may also be charged every time a service professional is called for repair service, which can cost between $50 and $100.
A home warranty is nice to have as it can protect you from unforeseen and costly repairs and help you find service providers when a covered appliance or system breaks down, especially if you are new in the neighborhood. However, one must carefully review the terms of warranty as not everything may be covered to avoid frustrations and hassles.
