Buying a new home is an exciting endeavor, especially if it’s your first time becoming a homeowner. In the midst of all the excitement, it’s normal to be so focused on the achievement you made that you forget to consider the future of your house. In this case, we’re talking about ensuring that, in case any of your appliances or house structures break down or fail, you’ll have a warranty that covers the cost of the required repairs.
As it happens, you’ll almost always be offered a home warranty when purchasing a house, even if it’s not brand new. Should you accept it or reject it? To answer that, you have to understand a few things about home warranties first. Here’s what you need to know.
Whenever you buy a home appliance, a furniture set, or even home integral structures like floorings and roofing, you’ll always get a warranty covering the cost of repairing certain malfunctions or failures. The same concept applies to home warranties, albeit on a wider scale than covering just one item.
A home warranty is a service contract that’s offered to residential units to cover the cost of maintaining appliances or household items for a duration that’s specified in the contract. If an appliance of a home system included in the coverage is damaged, the homeowner can file a claim to request the services of the home warranty provider. The provider will send a representative to assess the damage and construct a report to the warrantor. Once the provider is sure that the damage is, indeed, within the policy holder’s coverage contract, they’ll schedule an appointment and send a contractor to fix or replace the damaged item(s).
That said, a home warranty is not the same as home insurance. A lot of homeowners make the mistake of thinking they’re one and the same. Here’s the difference between both kinds of coverage.
A home warranty covers the repairs or replacements needed for the items specified in your coverage list, and that is often limited to the systems or appliances found in your home. As industry leaders with more than 35 years of experience at First American Home Warranty explain, a home warranty often covers home systems like air conditioning, heating, plumbing, and even electrical systems. It can also cover appliances like ovens, washing machines, dryers, dishwashers, fridges, and others. Depending on the plan you choose, you may get additional coverage, such as garage door openers or roofing coverage. You can also choose a basic package or add additional coverage in the form of a premium package.
Meanwhile, homeowners’ insurance provides a completely different kind of coverage. While a home warranty covers home systems and appliances, home insurance covers events that are mostly outside your control. As such, homeowners’ insurance has 4 different kinds of coverage: loss of personal property, exterior damage, interior damage, and injuries sustained on your property. To put it into perspective, this kind of insurance will usually cover the cost of damage done due to perils, like hail, fire, or wind, or forms of vandalism, like theft and burglary. Once a claim is made, you’ll often be required to pay an out-of-the-pocket expense as a deductible to progress with the repair or replacement of the damaged property. As is the case with any other kind of insurance policy, there’s a limit to how much your insurance can cover.
It’s starting to look like having a home warranty is an essential part of purchasing a new house. However, that’s not always the case. Here are a few steps you should take before committing to a home warranty.
1. Consider if You Really Need a Home Warranty
Chances are, you don’t really need a home warranty. A home warranty works best in cases of old major systems and appliances that will soon require maintenance, such as an HVAC system that’s nearing its end life or a washer that needs serious repair. However, if your systems and appliances are still brand-new, they’ll probably be covered in their manufacture warranty. Getting a home warranty will be useless in this case.
2. Determine Your Needs in Coverage
If you decide that a home warranty is essential, be sure to determine your needs in advance. List all your systems and appliances and determine which ones need to be covered. Keep in mind that home warranties don’t cover pre-existing wear and tear damage or cosmetic repairs.
3. Do Your Research
Finally, be sure to research the home warranty providers before you commit. Look up their customer reviews and quality of service. Most importantly, always inspect the fine print carefully to know what’s exactly covered in the policy and what’s excluded.
As a new homeowner, it’s normal to be overwhelmed by your choices. One of these choices is going to be whether or not you should get a home warranty, but that depends on many factors. Not to worry though, you’ll be able to make a sound decision after understanding what a home warranty coverage entails and weighing your coverage needs.