In our area, we push home warranties hardcore. We view it as a way to further protect our clients. The cost is relatively low, as a one year home warranty can generally be obtained for around $500. There are many different products out there, and every realtor has their favorite or "go-to" warranty. While they are all similar, the items covered can differ slightly among providers.
Normally, a home warranty will cover most mechanical systems in the home. This includes plumbing, electrical, and heating and cooling systems. Some warranties will integrate appliances into that coverage as well. If you have a problem with a covered system, you would normally call the warranty company and schedule a service appointment. When the service technician arrives, he will decide whether the item needs to be repaired or replaced, and you will normally pay just your deductible. This could be a flat rate or a percentage, depending on what your provider offers.
It's important to know which systems are covered upfront and what add-ons are available to you. The realtor who is processing your warranty can help you figure out what is covered and what isn't. If appliances aren't included in your warranty package, you may be able to add that coverage for a small fee. This normally includes anything built-in (stove, dishwasher, etc) and can occasionally include your primary fridge. Additionally, there may be add-ons available for pools, laundry machines, spas, and secondary refrigerators.
Additionally, if a problem arises, you should weigh your options. I personally used my home warranty to fix a leaky dishwasher. I acted on instinct, which wasn't the best financial decision. My deductible for that repair was $75. It turns out that the part causing the leak was only around $10 and was easy to access and replace (a small valve at the front of the dishwasher). In that instance, I unnecessarily gave away $65. Don't let this happen to you. Research service technicians in your area to see who gives free estimates, and have one of them take a look at your issue. Personally, I would ask technicians if they were contracted with my warranty company, and only use those that are - to insure they get the business if I have to file a claim. After all, they are taking the time to come to my home and assess my problem.
The home warranty is renewable annually. This gives you the ability to try out the coverage and see where it may need to be modified for the future. If you decide that the warranty is just not for you, you also have the option to discontinue coverage at the end of your 12 month period. Some providers even offer month-to-month coverage, which may be more attractive to you. It's almost like having an insurance policy for the items your homeowner's insurance may not necessarily cover.
I always recommend a home warranty to my buyers, and I always recommend my sellers offer one with their listing. It's a great way to have just a little bit more peace of mind when you get to the closing table.
If you have any questions or comments, please leave them below or email me at jeremyr@era-king.com!
Jeremy Reaves -The Realtor Guy
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