Home Warranty – How to Decide if it’s a Good Idea

home warrantyAfter buying a home the thought of repairing or replacing appliances or a major system such as the air conditioning system can be scary. The typical home warranty costs between $400-$600 and lasts a year after closing.  Home warranties provide peace of mind for many homeowners however, they don't cover all repairs and do have some drawbacks.

Deal With a Reputable Home Warranty Company

As with any insurance policy, the insurance coverage is only as good as the reputation of the company that stands behind that policy.  The same can be said about a home warranty policy.  Research the companies track record by visiting the Better Business Bureau to check for any complaints that have been filed against the company and more importantly if the claims were resolved satisfactorily.

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What’s Covered?

A home warranty is a contract to repair or replace, at the discretion of the warranty company, those appliances or home systems specified in the contract.  Warranty coverage differs depending on the type of service contract and the company but in general most contracts cover the following items:

  • Plumbing
  • Heating/Cooling Systems
  • Water Heater
  • Kitchen Appliances such as oven, dishwasher, and built-in microwaves
  • Electrical Systems
  • Garbage Disposal

Additional coverage may be purchased to cover items such as washer and dryers, refrigerators, garage door openers, swimming pools or septic systems.

What’s Not Covered?

Warranty companies will require regular preventative maintenance be performed on appliances and major home systems.  If an appliance stops working due to failure to maintain the item, repair likely won’t be covered under the terms of the warranty.  Also if there is preexisting damage to an appliance that was not discovered during the inspection and the damage contributed to the break-down of the appliance, the repair most likely won’t be covered.  Most homeowner complaints about home warranty companies involves misunderstandings about what exactly is covered by the warranty so it is a good idea to read the terms of the contract carefully.

Warranties will repair the malfunctioning part in an appliance but will not cover the damage caused by that malfunctioning part.  In other words, if the pump in your dishwasher breaks and causes your kitchen to flood, the warranty company will repair the dishwasher pump but will not cover the damage caused by the water.

Why It’s a Good Idea for the Seller to Offer the Home Warranty

Selling a home within the first 30 days depends on getting your listing in front of the right buyers and a home warranty will increase the interest in your home.  Homeowner’s that are selling a home, especially with older systems and appliances that are approaching the end of their useful lives, will want to look at purchasing a home warranty.  A good home warranty covers most appliances and major systems and can provide peace of mind for a buyer that may have concerns about repairing or replacing aging appliances.  For the seller, offering the home warranty can provide an advantage over homes that do not come with a warranty.  The warranty should provide coverage while the home is on the market and the can be transferred to the buyer at closing.

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