In addition to home insurance, having home warranties will protect your homes against any unforeseen fixes. Home warranty plans usually cover appliances, including dryers, stoves, and parts of home systems (water heaters and plumbing, and so on). If you want to secure a safety net around components, such as spa, pumps, septic systems, swimming pool, etc., purchase additional add-on coverages. Home warranties might seem like a great investment (financially), but you need to check if these are essential for your home.
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What are home warranties?
Homeowners’ insurance and home warranties are two different things. A home warranty acts as a contract between a homeowner and a home warranty company, offering replacement or repairs on a home’s components, such as plumbing, furnace, HVAC, and electrical appliances. But homeowners’ insurance covers major damages caused by perils, such as fires, hail, and water damages affecting the structure of the home or the homeowner’s possessions.
Home appliances, such as refrigerators, dryers, septic systems, pumps, and others, do not fall under the scope of the components covered by homeowners’ insurance.
Home warranty companies collaborate with approved service providers to offer uninterrupted services. When a component covered under a home warranty plan needs a fix, the home warranty company would coordinate with one of its service providers to make the necessary repairs.
The service provider will examine if the repair is covered by the plan. If it is covered by the plan, they will fix the damage. Besides the money used to purchase the warranty, the homeowner is required to pay a small fee for the repair.
Costs of home warranties
Based on the type of property, such as condo, duplex, detached, single-family, or townhouse, you can choose a plan (basic or extended) that fulfills your requirements. Some warranty companies allow you to pay in installments, while some require you to make the payments up-front. Some warranties cost over a hundred dollars a year.
For a new home, the warranty might cost more in comparison with others. Factors, such as the property’s age, or area, do not determine the costs. You would need to pay an additional fee for covering separate structures, including guesthouses (basic policies do not cover these).
The service call fee would come around $75 to $125 (each time, you make a service call for a repair, you’d be charged this fee). If multiple people are required to fix the damage, you would need to pay each contractor.
Benefits of home warranties
Home warranties can be considered as a safety net to cover expenses related to unforeseen repairs. If you don’t have any funds set aside, in case of emergencies, having a suitable home warranty plan would come in handy. For those who have a taste for expensive appliances, investing in home warranties would be an ideal option.
Home warranties are equally helpful to both the buyers and sellers. A home buyer gets the much-needed assurance from a home warranty plan as he/she might have limited or no information concerning the maintenance of the property’s components. And in the case of a new home, a homeowner might be unsure if the home is well built or not. Also, if you have invested all your savings to buy the home of your dreams, a home warranty would help you to cover any major expenses.
From the perspective of home sellers, a home warranty is something they can offer their buyers as a paid-up warranty (lasting a year) when they buy the home. The home warranty plan acts as a protection against any buyer complaints concerning any defects that might arise later (when they lock the deal). Offering a home warranty doesn’t mean that the seller can conceal any known problems when closing the deal.
Who can benefit from a home warranty?
Buyer’s perspective:
- A home warranty plan will provide you with a safety net against any repairs that might arise from used appliances (when you are purchasing the home).
- When you move into your new home, if any of the covered items malfunction, you can request a repair.
- Should the warranty of one of your components expire and it happens to break down, you can get it serviced – thanks to your home warranty plan.
- You do not have to search for a professional or contractor to help fix the damage, but just make a call, and help will reach your doorstep.
- If you are not an expert at handling repairs on your own, all you have to do is make a service call, and the experts will reach your home and fix the issue.
Seller’s perspective:
- As a seller, you are required to maintain your home as it is until it is sold.
- When the home is listed under contract, should a covered appliance or component break down, the seller can reach out to the home warranty company and request a service.
Conclusion
If the seller offers you a warranty, don’t hesitate to take it. Whenever you purchase a warranty plan, go through the fine print thoroughly to understand what you are getting into.
A home warranty covers only the appliances for which the plan is applicable. For other components that aren’t covered by your plan, you would have to make arrangements accordingly. Additionally, if your warranty company denies a claim on a particular component, you will be responsible for all costs, including repair and service fees.
Are you looking for houses for sale in Lincoln? Reach out to our team at Location Lincoln today for assistance.
