Beginning the journey of home ownership can be incredibly exciting, but it can also be quite daunting for inexperienced home buyers. This is because there are all kinds of things that could go wrong. If something suddenly breaks down or stops working in the home, the majority of first-time homeowners will likely not even know the first steps they should take to make the necessary repairs. One of the best ways to ensure that you're protected after buying a home is to obtain home warranty coverage. A home warranty plan is especially recommended if you're a first-time home buyer with little to no experienced maintaining a home. Are you a new homeowner or seller thinking about protecting yourself with a home warranty plan? Here's a bit of information about home warranties to give you an idea of why it's so important.
Who Pays for the Home Warranty
Who will be paying for the home warranty really depends on the situation and the local customs. In most instances, the seller is the one to pay for the home protection plan and for home warranty coverage to ensure he or she is covered in case anything goes wrong. It's common for the seller to pay for the home warranty plan because it provides them the most benefit by allowing them to not worry about the home buyer calling on them if something happens to break or malfunction. Instead, the issues will be handled by the home warranty company. Many real estate agents will even give buyers a home warranty at closing as a common courtesy.
How Much Does a Home Warranty Cost?
Generally, a home warranty is fairly inexpensive and affordable for most home buyers. In most states, a basic home warranty plan costs around $200-$400 depending on the type of coverage and the value of the home's electrical or mechanical features. Many home warranty companies sometimes offer home buyers with special discounts and even occasionally run promotions that could lessen the cost of coverage. A home warranty policy is paid upfront once year in advance and covers the homeowner for that entire period. At the end of the year, the warranty expires and the homeowner can then choose to renew the policy or not.
Types of Home Warranty Coverage
The type of home warranty you need is based on a number of factors such as what you want to cover and the age of the home. Since warranty plans vary, you may want to contact your real estate agent in order to find out what would be the best plan for you. Be sure that you pay attention to what the home warranty covers as some will pay for certain repairs, while other do not.
How a Home Warranty Works
Home warranty plans are all different because they're usually constructed around the needs of the home buyer and the specific of the home they purchased. While they may differ, home warranty plans generally follow the same protocol. Below are the steps that are taken when a home buyer need his or her home warranty plan to cover a break or system failure.
- Once the homeowner realizes that an entire system or a particular appliance is broken or no longer working, he or she calls the warranty company.
- The representative or agent from the home warranty company notifies a local provider with whom they have a predetermined business arrangement.
- The provider then calls the homeowner in order to schedule an appointment for a visit to determine a plan of action.
- After reviewing the break or malfunction, the provider then fixes the problem if possible. If for any reason the provider is not able to repair the system to solve the issue and depending on the kind of coverage the homeowner has, the home warranty company will pay to replace the appliance or system.
What is a Trade Call Fee?
Whenever a service contractor visits a home in order to diagnose a problem, the homeowner is required to pay a “trade call fee”. This small fee covers the visit and the amount is determined in the initial contract.
What Does a Home Warranty Plan Cover?
Below are a few of the aspects of a home that are generally covered by most home warranty plans.
- Dishwashers
- Air conditioning
- Doorbell systems
- Heater or furnace
- Ductwork
- Water heater
- Garbage disposal
- Indoor plumbing
- Electrical systems
- Oven
- Telephone wiring
- ceiling fans
What Is Not Covered by a Home Warranty Plan?
Here are just a few of the things that are typically not covered by most home warranty plans:
- Faucet repairs
- Appliances such as refrigerators, garage door openers or washers and dryers
- Spas or pools (unless added)
- Permit Fees
- Outdoor items such as sprinkler systems
- Haul Aways
Keep in mind that things such as washers and dryers, spas or pools and refrigerators can all be covered by a home warranty if initially added to the plan.
What Can Cause a Denial of Payment?
A home warranty company can actually refuse to pay for the repair or replacement. This usually happens if the homeowner has not been properly maintaining the home, if he or she has violated any codes, if equipment was improperly installed or if there appears to be unusual wear and tear on the property. If you disagree with the diagnosis or denial of payment, you may want to call your real estate agent as he or she can talk to the home warranty company to see what can be worked out.
As you can clearly see, a home warranty plan is always recommended for new homeowners for a number of valid reasons. Since home warranty coverage can vary according to the state you live in, it's highly recommended you discuss your options with your real estate agent before you commit to any warranty plans. He or she will be able to answer any questions you have and make sure you get the proper coverage in order to provide you peace of mind as you move into your new home.
