We have all heard the stories, someone we know buys a house and has problems right after they move in. Big problems like the water heater bursts, the furnace stops working, etc... Although these problems are a normal part of home ownership, it always comes as an unwelcome surprise. Additionally, the financial stress can be an even bigger problem.
The best way to ease some of the financial strain is to have a Home Warranty in place before the problems happen.
A home warranty is an insurance policy that typically covers the repairs and or replacement of your home's major systems during the term of the policy.
There are a myriad of options for home warranty plans but here is a list of the basics that a plan should cover:
- Heating System
- Plumbing System
- Water Heater
- Built-in-Whirlpool Tub
- Sump Pump
- Electrical System
- Garage Door Opener
- Central Vacuum
- Kitchen & Bathroom Exhaust Fans
- Built-In Microwave
- Garbage Disposal
- Trash Compactor
More extensive plans will cover items like:
- Roof Leaks
It is important to read about the extent of a warranties coverage before purchasing. There are often unexpected costs associated with claims, especially for major systems. Warranty companies won't cover the cost to bring a system up to current building codes. For example: On an older home requiring a furnace replacement. The warranty will cover the cost of the furnace but not the cost of bringing the supporting ductwork up to current building code. This can cost hundreds of additional dollars, the home owner still ends up with a new furnace but might be surprised when the contractor asks for a check to cover the work not covered by the warranty.
Most home warranties have a deductible. This is usually paid to the repair person at the time of their first visit. These deductibles are generally in the $50.00 to $75.00 range.
Home Warranties are negotiable between Buyer and Seller. Buyers will often ask for a home warranty in their initial offer. Additionally, sellers will often offer them as a buyer incentive.
As a home buyer, it's a good idea to ask the seller in your initial offer to include a home warranty. If they are not willing to do this, it's still a good idea to buy one prior to closing.
Sellers, should really consider offering a warranty when it's time to sell. This acts as tail coverage in the event of a problem and the warranty could keep the buyer from pursuing the seller should there be a problem with any of the major systems.
These policies are affordable ranging from $300 to $800 depending on the level of coverage and the premium is usually recouped in the first claim.
Although problems with a home are inevitable, a home warranty can really take the sting out of paying for those surprises.