Buying a home is one of the largest, and sometimes the most important, investment many of us will make in our lifetime. Just think about how important your home is to you: It’s you and your families refuge, it’s where you keep all your valuable belongings and it’s probably the largest asset you possess.
For all these reasons everyone knows how crucial home insurance can be to protect your home, and in turn yourself. Often times it is a requirement for purchasing a home, or getting a mortgage.
I wanna talk to you about another option for those that want more coverage for their home, as well as the more expensive and integral appliances inside: Home Warranties.
What is a home warranty?
Home warranty coverage usually fill some of the gaps left by home insurance policies. A home warranty, when issued, basically guarantees to keep all working items in your home going for the duration of the warranty. This could mean either a repair of the appliance/system or a total replacement.
You can be forgiven for thinking that this sounds a lot like home insurance. The main difference is that home insurance usually covers stolen goods, or damage in case of an accident. Warranties cover big appliances when they break down or simply stop working through general wear and tear.
Home warranties are taken out on a fixed term, which usually covers between 6 months to a year.
Although many people don’t believe in the necessity of a home warranty, having home insurance and warranty in place can provide you the ultimate peace of mind.
What do home warranties cover?
As I briefly mentioned, a home warranty covers all kinds of in-home appliances and systems. These items can be expensive to repair or replace on your own, and include:
- Air conditioning
- Heating
- Other electrical appliances in the kitchen and washing room, e.g. dishwasher, washing machine, oven and dryer.
- Plumbing
- Other “add-ons” like a swimming pool or an extra refrigerator, usually at additional cost.
- Some warranties also include roof leaks or minor structural issues.
We also differentiate between two main types of home warranties:
Home warranty for new homes
Also called a “builders warranty”, the purchase price of the home includes the warranty. The warranty should also cover additional areas such as:
- Structural integrity for a long period, often 10 years.
- Wall coatings such as paint, drywall or textures like stucco for a shorter period, maybe a year.
- It should also cover the appliances and heating/cooling systems listed above.
Home warranties for existing homes
This type of warranty is mostly purchased by the home’s current owners, realtors or agents who want to sell the home, as an incentive for potential buyers. It is usually less extensive than the new home warranty, but should cover all appliances for repair or replacement.
How does home warranties work?
Let’s assume that your washing machine just suddenly gives in one day. You “sigh” at the prospect of having an unexpectedly large out of pocket expense this month. Luckily for you, you remember that you have a home warranty.
Your home warranty provider is usually your single point of contact. So you call them and inform them of your problem. Usually, their teams are available 24/7 depending on how busy they are in your area. They then send a licensed technician that has also passed a screening process to your doorstep.
The technician then assesses the state of the appliance/system to see whether it should be repaired or replaced. It will also be determined whether the service contract covers the type of breakdown. Depending on the action to be taken the item will be repaired or replaced as soon as possible.
You are then charged only for the service call by the technician. This is usually in the range of $50-$100 and you can think of it like a deductible when you claim insurance. Usually it’s not the case, but it depends on your warranty provider whether two appliances and a single service call is charged once or twice.
This brings us to another difference between home warranties and home insurance. When you make an insurance claim they assess whether it is covered by your policy how much they should reimburse you. If your claim is approved you are usually issued a payment (minus a deductible) and it’s up to you to replace or hire a technician to fix your appliance.
Home warranty coverage, however provides you with their own certified technicians, taking a lot of time, stress and organization off your hands.