Home warranties can save homeowners money by covering the costs of repairs and replacements. However, it’s important to understand the limitations and exclusions before signing up for one.
Ask your clients to look for a provider that has a hassle-free claims process and a relationship with reputable contractors. Also, ask them about the company’s vetting process for its local service technicians. Are they technicians well versed enough to provide electrical safety tips at home or answer plumbing questions?
1. What is the coverage?
Home warranties cover a variety of appliances and systems that can break down or need repairs. They do not, however, cover everything.
It’s important to choose a home warranty company that offers a clear contract with transparent terms and conditions, clauses and exclusions. You should also be aware of the pricing details. Most plans are split into home appliances and home systems coverage, with add-ons for a more comprehensive package.
It’s also worth finding out if the home warranty has an aggregate limit for all claims or a per-item model. This could make a difference if you need to replace your fridge or water heater.
2. How long will the coverage last?
If you’re buying a home that already has a warranty, it’s important to find out when it expires and how long the company offers coverage. Some warranties last one year and others two, and you should always read the contract carefully to understand your options.
Home warranties can provide peace of mind and help you budget for unexpected repairs. However, they are not a substitute for routine maintenance and can often cover only the most basic of issues. That’s why it’s essential to ask these six questions before choosing a home warranty plan.
3. What are the exclusions?
As you assess home warranty companies, be sure to ask about their exclusions and limitations. These include things like specific parts, items or events that aren’t covered by the policy, as well as coverage limits.
Home warranties are often recommended to new homeowners by real estate agents, as they help alleviate buyer’s remorse by providing a financial safeguard against expensive systems and appliances that break down.
4. How much will it cost?
While the cost of a home warranty can vary, many providers have similar pricing structures. Homeowners typically pay a monthly premium and a service fee per repair or replacement.
When evaluating home warranties, it’s important to understand the exclusions and limits. These may include specific parts or items not covered, as well as limits on how much the company will pay for a claim.
Also, homeowners should ask about the warranty company’s local contractors. These are the professionals who will be sent to repair or replace appliances and systems. Find out how they are selected and if they have a good track record.
5. Will I have to pay a deductible?
A home warranty is similar to an insurance policy. It covers a portion of repairs or replacement costs, and the homeowner is responsible for paying the rest.
Home warranties can be expensive, but they offer peace of mind in the case that something goes wrong with a system or appliance. They also save homeowners money by connecting them with reputable repair or replacement contractors.
Many home warranty companies have sample contracts available for new homeowners to look over. These contracts will not be a full representation of the final contract, but they can help you decide if this type of coverage is right for you.
6. Will I have to pay a service call fee?
Some warranty companies may charge service call fees to cover the cost of evaluating and conducting repairs on broken systems or appliances. The fee will be listed in your contract and may vary by company.
If you purchase a home warranty and never use it, you will likely feel that the money spent on the premium and service call fee was a waste. However, many homeowners find that having the coverage gives them peace of mind and protects them from expensive repair bills.
Most home warranties are transferable, which can make them attractive to new buyers. However, it’s important to research a company before buying a warranty.
7. Will I have to pay a cancellation fee?
Home warranty companies are regulated like homeowners insurance providers. They have to keep a certain amount of money in reserve for claims payouts.
Realtors often suggest that sellers include a home warranty as part of the sale agreement to attract buyers. But buyers should understand the pros and cons before agreeing to one.