Buying a home is likely one of the biggest purchases you’ll ever make. After the excitement of moving in wears off, the realities of homeownership set in. Appliances break down, pipes leak, and AC units stop working at the worst times. The last thing you want is an unexpected repair bill throwing off your budget. This is where home warranties come in handy!
In this comprehensive guide, we’ll have a friend-to-friend chat exploring everything you need to know about home warranties. You’ll learn how they work, types of coverage available, and tips for choosing the best plan for your home. Let’s dive in and determine whether a home warranty should be part of your homeowner’s toolkit.
What is a Home Warranty Exactly?
Simply put, a home warranty is a service contract that covers repairs and replacements for your home’s systems and appliances that break down due to normal wear and tear. Most plans cover your AC, electrical, plumbing, oven, washer/dryer, and other common home systems and appliances. It’s different from homeowners insurance, which covers damage from disasters, theft, and liability instead of mechanical breakdowns.
When something stops working, you pay a service fee instead of the full repair cost. A home warranty can save you thousands in repairs over time. It gives peace of mind knowing you have a safety net against expensive breakdowns.
Major Benefits of Home Warranties
- Budget protection – Limits expensive repair costs by paying a service fee
- Convenience – The warranty company handles finding repair technicians
- Coverage – Components like appliances, AC, plumbing, and electrical are covered
- Peace of mind – Avoid stress from unexpected home repair bills
- Increased home value – Home warranties are appealing to buyers
For a relatively low yearly cost, a home warranty provides invaluable protection for homeowners against life’s surprises.
Types of Home Warranty Plans
Now that you know the basics, let’s explore the most common types of home warranty plans available. This will help you determine the right level of protection for your home.
System-Only Home Warranty Plans
As the name suggests, these plans only cover the major systems in your home, including:
- Heating and air conditioning
- Electrical and plumbing systems
- Water heater
- Ceiling fans
- Garage door openers
The advantage here is the lower cost compared to more comprehensive plans. The drawback is that appliances are not included.
Appliance-Only Home Warranty Plans
These warranties cover just your household appliances, including:
- Washer and dryer
- Garbage disposal
- Built-in microwave
It’s a more budget-friendly way to cover higher cost appliances. But you miss out on coverage for home systems.
Comprehensive Home Warranty Plans
For maximum protection, comprehensive plans cover both home systems and appliances. This provides complete coverage under one plan. The trade-off is a higher annual cost than basic plans.
How to Choose the Right Home Warranty
Finding the ideal home warranty requires understanding your home. Follow these tips to select coverage that fits your needs:
Consider your home’s age – An older home likely needs more coverage for aging systems. Prioritize systems coverage.
Take inventory of existing appliances/systems – Do they need more frequent repairs? Target plans that cover those items.
Review which items are covered – Don’t assume all plans cover the same things. Compare coverage.
Look at dollar limits – Caps may limit reimbursement on certain claims. Pay attention to the fine print.
Understand exclusions – Certain pre-existing or cosmetic issues may be excluded. Ask questions upfront.
Compare multiple providers – Pricing, coverage and contract terms vary. Shop around for the best deal.
Read reviews – Check what existing customers have to say about claim service. It’s telling.
Consider add-ons – Optional coverage for pools, wells, septic systems may suit your needs.
Doing your homework upfront ensures you get optimal coverage at the best value.
How Do Home Warranty Companies Work?
When you purchase a home warranty, you’re connected to an existing network of local service providers and contractors. It’s a major benefit over trying to find reputable repairmen on your own.
Here’s how it works when you need a repair:
- You pay an annual fee and service call fee per incident
- Call your warranty company to file a claim request
- They assign a local contractor from their network to handle the issue
- The company pays the contractor directly based on your coverage
- You simply pay the service fee, saving hugely on repairs
Home warranty companies vet providers, manage dispatch, and handle payments – simplifying the process for you.
New Home Buyers – Discuss Home Warranties
If you’re purchasing a brand new home, home warranties should be on your radar during the buying process. Many home builders include a complimentary one-year home warranty in new construction. But not all do. Here are some tips:
- Ask your real estate agent if the builder includes a home warranty or if it’s something you must purchase separately.
- Negotiate inclusion of a home warranty if not already part of the deal. It sweetens the offer.
- Research options beforehand so you understand coverage and can make informed requests.
- Cover specifics like pools, septic tanks, and other items not always included.
- If purchasing separately, give yourself time to find the perfect plan for your new home before closing. Don’t wait until the last minute.
Having a home warranty in place provides a safety net during that critical first year in a new home as kinks get worked out.
Existing Homeowners Can Benefit Too!
While incredibly helpful for new construction, existing homeowners can also gain value from home warranties. Your home’s systems and appliances don’t know how old your house is – they can break at any time! Here are some perks:
Protect against unexpected costs from breakdowns of aging systems
Gain negotiating power if selling your home soon
Obtain coverage on an inherited or existing home
Supplement inadequate insurance if you have coverage gaps
Convenience of repairs being handled start to finish by professionals
Peace of mind knowing you have support in an emergency
Even if your home is decades old, a home warranty brings benefits. The coverage picks up where your homeowners insurance leaves off.
Regular Home Maintenance Is Key!
While home warranties provide invaluable protection, don’t neglect regular maintenance that extends the life of your home’s components. Preventative care reduces the chances you’ll need to file claims in the first place.
Follow all manufacturer maintenance recommendations for appliances and systems.
Inspect appliances, plumbing, electrical, and AC annually to catch minor issues.
Replace filters on schedule – AC, furnace, refrigerator water, etc.
Monitor for leaks, unusual noises or signals something needs repair.
Deep clean routinely – ducts, chimney, gutters, tile grout, etc.
Prune landscaping away from siding, foundations, and air conditioner units
Winterize outdoor spigots and irrigation systems in colder climates
Check smoke and CO detectors to be sure they’re functioning
Following smart preventative maintenance routines reduces costly repairs down the road – saving you money and hassle.
Home Warranties Bring Valuable Protection
As you navigated this chat on home warranties, hopefully you have a clear understanding of how they work and the many benefits they provide homeowners. While not mandatory, they are relatively inexpensive insurance against the high costs of repairs. Based on the age and condition of your home, a warranty could be a savvy investment giving you financial protection and peace of mind.
I encourage you to review the various plan options and find a provider suited to your specific home. Take the time to read reviews, understand coverage, and ask questions to gain clarity before purchasing. A bit of research upfront goes a long way.
Wishing you minimal surprises and a long, enjoyable stay in your home! Let me know if you have any other home-related topics you’d like to chat about. I’m always happy to lend some tips and insights from my experience. Homeownership is so much sweeter when you feel fully supported. Here’s to many great years ahead in your cozy abode!