You’ve just bought a home and nailed down a home insurance policy to cover your new purchase in the event of a natural occurrence. But what about your major appliances and things like electrical, plumbing and HVAC? Considering a home warranty to make sure these things are covered should they break down is an important financial decision. Here are six questions to ask before buying a home warranty.
- Are there any costs beyond the initial home warranty premium?
Home warranty service fees cost as little as $29 and go up to $100 with the average being $75 per home visit. This fee is paid at the time of service. It’s determined based on the type of call, what needs to be serviced during the call and what your plan allows. It is also based on product availability. Each home warranty company has different rules about a service call, so this should be inquired about during the selection process.
- Is the manufacturer’s warranty sufficient?
Do the items covered under the home warranty have their own warranty coverages? If they do, you may be able to go without a home warranty. Though manufacturer warranties may only cover the cost of getting the new part and not installation or any other fees, for some people this is enough as they have the means to fix the appliance or know someone who can do so. Check to see what the manufacturer’s warranty covers.
Additionally, depending on how you purchased the item, you could have coverage you don’t even know about. Certain credit cards may double the manufacturer’s warranty or offer additional protection regardless of warranty length for items you purchased using the card. If you have this type of credit card, an additional home warranty may not be necessary or you could even spring for partial coverage for uncovered items.
- Does the home warranty have to be purchased immediately after I close on my home?
You can purchase a home warranty at any time, including after moving in. Many sellers buy a home warranty as an incentive for the buyer. Some companies have a waiting period to ensure they are not paying for a problem already in existence. The plan normally extends one year from the start date. There is also an option to extend the warranty past the initial year for those who wish to do so. This means you could technically purchase a warranty once the original warranties run out.
- If I don’t purchase the warranty will I be able to afford the cost of appliances or home systems breaking down?
If you have an emergency savings account, have new appliances or routinely maintain your appliances, you may wonder if you truly need a warranty. Keep in mind, for some items the insurer may only offer to replace parts rather than a full replacement. If you are the type of person that prefers a new item when the old one breaks, a warranty may also not be in your best interest. You also have to consider the money you are paying out over time and whether that money could be best used elsewhere or simply saved for when something breaks.
- What does your home insurance cover?
Although homeowner’s insurance and home warranties usually cover different issues, you don’t want to pay for duplicate coverage. Take a look at your homeowner’s insurance policy and know what is covered. Typically, certain events such as items being stolen or belongings being damaged during natural events such as a fire or a flood from a burst water heater are covered under your insurance policy.
Though some natural disasters are covered, others are not. Overall, homeowners insurance is meant to cover liabilities, personal property, the house itself and other structures on the property. Policyholders can often buy extended coverage that goes along with their homeowner’s plan as well. Travelers insurance offers policies that include loss of use if homeowners have to temporarily move out as well as extensive valuable protection options.
- What does the home warranty include and exclude?
A home warranty is a one-year service agreement covering the repair or replacement of many major home system components and appliances that typically break down over time due to normal wear and tear. Breakdowns due to failure, standard usage and other problems that happen due to age are also covered. Remember, there are different types of home warranties. There are systems and appliances warranties, structural warranties, appliance-only warranties, and an all-inclusive option.
Certain aspects like doors, windows and things that relate to the function of the home itself will not be covered under the home warranty. Before selecting a plan, make sure to note what is not covered. For example, your sewage pipe may be covered unless it is damaged by tree roots. Make sure to inquire about the limitations of coverage. If you have not been maintaining the home or appliance properly, coverage may be voided.
Considering these six questions can help you in your search for a great home warranty that fits your needs. They can even help you to truly decide if you even need a warranty or if you can get by without it. As a homeowner, saving money is important and preparing for unexpected repairs is one of the biggest financial issues you’ll face.