What’s Included in a Home Warranty?
A home warranty can be extremely beneficial, especially for the underwriter or inspection company charged with maintaining the equity of the property. Whether you’re a buyer, seller or investor, it’s always a good idea to research available coverage and consider the pros and cons of such a crucial purchase.
What’s Included in a Typical Home Warranty?
Usually, a warranty on a home serves as a form of monetary collateral against unexpected repairs and replacements. Generally used as a type of financial protection for those interested in the property, home warranty policies range widely in their coverage and premiums. The most important thing, however, is to understand what’s included in and excluded from the average policy.
The standard home warranty policy generally includes, but is not limited to, the following coverages:
- Plumbing Systems
- Permanently installed sump pumps
- Water heater and/or pumps
- Whirlpool motor pumps
- Pool and hot tub systems
- Faucets and fixtures
- Built-in dishwashers
- Built-in microwaves
- Built-in trash compactor
- Built-in garbage disposal
- Ovens and cooktops
- Ceiling fans
- Safety and Comfort Equipment
- Smoke detectors
- Exhaust fans
- Heating and duct work
- Air conditioning
- Central heating systems
- Electrical Systems
- Telephone and internet systems
- Interior wiring
Remember, coverage differs from one warranty to another. The geographical state legislature typically mandates what each policy must contain, so don’t forget to read through your document before committing to anything. The initial contract should contain details about the coverage offered by the underwriter.
The Pros and Cons of Purchasing a Home Warranty
According to a recent Forbes article, home warranties are usually the solution to most property ownership, management, and maintenance woes. Studies show that more than half of all homeowners end up making at least two reports to their warranty provider within the first year of closing. As a result, many states sell warranties with every home purchased within their borders.
Home warranties are relatively inexpensive. Still, spending any amount of money on a property protection policy requires due diligence. It also deserves an honest assessment of the pros and cons of purchasing, which are as follows:
These are the most commonly experienced advantages of buying a home warranty:
- Peace of mind about unexpected expenses
- Professional help available for covered items
- Expert assistance for new owners and unskilled labor
- Flat rates, which provide support for financial planning endeavors
- Fewer unanticipated costs
- Adjustable premiums and deductibles
- Effective incentives for buyers
- Savings on routine maintenance and repair costs
- Policy enhancements, usually offered by the underwriter
These are the most commonly experienced disadvantages of buying a home warranty:
- May not be needed
- May provide more coverage than is required
- Not everything in/on the property is covered
- Individual exclusions can be extremely frustrating
- Improperly maintained items or areas may lose coverage from the provider
- Upfront payments are usually required
- Only pre-selected repair firms can be used
- Repair and replacement coverages are mutually exclusive
- Not practical for renters
- Not available for some home types
NOTE: Depending on the type of warranty you decide to get, the pros and cons could vary widely.
How It All Works
When something that is covered on your warranty breaks down, contact the policy underwriter right away to file a claim. The provider will promptly send out a pre-selected service tech to either fix or replace the compromised item. Most underwriters charge a flat service call fee for each repair and replacement the policy holder requires. However, fixing those problems without the support of a home warranty could cost several times more than a basic service charge.
Generally, home warranties are affordable, costing the purchaser about $500 per year. The signee will be required to pay that price to the guarantor regardless of whether they make a claim or not. Premiums must be paid in full under the assumption that claims will eventually be made. So, even if nothing happens to your property, you’ll still need to pay up.
You should also be aware that warranty coverages and policy stipulations are almost always discussed during real estate transactions, property assessments, and home inspections. Buyers like having the peace of mind that comes with a comprehensive coverage plan, so sellers could have a hard time fetching their asking price without a warranty.
Your First Line of Defense
Your first line of defense is to get a thorough home inspection from a certified, quality organization. At J and J, we go above and beyond to find potential problems so they can be fixed before they cause major damage. Looking for a home inspection in Middle Tennessee? Visit our Hendersonville, Brentwood, Nashville, or Franklin home inspections pages to contact us today!