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Deciding if a Home Warranty is Right for You

Whether or not you should purchase a home warranty depends on your specific needs as the homeowner and whats covered by the issuing company.

More and more a home warranty is a common piece of a real estate transaction. A warranty is an attractive selling factor that helps a home get sold faster. Mentioning a home warranty in the listing can increase the value and asking price of a home because it gives buyers some protections against unknowns. Its inevitable, there will come times during the many years of your homeownership that something will break or need repair.

A home warranty is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home's major components, such as the furnace, air conditioning, plumbing and electrical system, and may be inclusive of major appliances. Each home warranty company has different protection plans for varying levels of protection.

Why You Need a Home Warranty?

Home warranties are designed to cover the things that a home insurance policy doesnt cover. Having a warranty can give you peace of mind if something goes wrong. The warranty makes good sense if youre purchasing an older home or one that hasnt been well maintained. In a home older than 10 years the chances are higher that the appliances and the homes major components have extended past their original purchase product warranties. This is where having home warranty coverage will take care of things.

Why a Home Warranty Isnt for You?

Many states require the builder to repair defects in materials and workmanship for a few years typically, two to ten yearson newly constructed homes. New appliances in these types of homes are covered by manufacturer warrantiesusually covering one to three years, depending on individual product warranties. Most home warranties will not cover repairs that existed before the policy and most have a 30-day waiting period. If you buy a house and something goes wrong with an appliance in the first 30 days, the warranty probably wont cover it.

Before You Buy, Ask These Questions

  1. Do I already have protection? If you paid for an appliance with a credit card you may be covered. Many credit cards provide additional extended coverage past the manufacturers warranty period. Its worth checking what protection your credit card already has in place.
  2. Whats the cost? The prices range from company to company and across protection plan levels. When weighing the costs be sure to factor in co-pays should a contractor come to your home to do the repair. Also, consider if the plan requires you to pay the repair cost upfront then reimburses you afterward.
  3. Do I understand what the warranty covers? The Better Business Bureaus number one complaint about a home warranty comes when a homeowner doesnt understand the coverage of the protection plan they purchased. For instance, some protection plans will cover a refrigerator but not the icemaker that comes with the appliance. Also, clarify any particular circumstances around how an appliance breaks or stops working. How you care for appliances also impacts coverage.
  4. Will my broken item be replaced or repaired? Each home warranty will have specific criteria around repairs and replacements as well as when the depreciated value of an item will be applied.
  5. What are my plan payout limits? Each warranty company and plan level will vary with the limits. Know yours ahead of time then when something happens it will not come as a surprise. Protection plans have limits that generally dont cover non-mechanical items such as windows or building structure.

As you give consideration to whether to buy a home warranty also think about if you are likely to use it. Contact the Active Adults Realty team for guidance and to ask your questions. Were here to serve you. Email us or call any time.

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