What Is a Home Warranty and What Does It Cover?
Home buyers should buy title insurance when they buy a home. Title insurance covers any legal claims that the buyer may not have clear legal title to the house, duplex, condo, or other home unit. Buyers should also try to buy homes that meet the local building codes instead of buying homes ‘as is.’
Generally, speculators and home developers may buy a home “as is” but families and anyone who wants to live in the home should make sure it meets the local building standards. Homebuyers should also inspect the home before they sign the agreement of sale and before they attend the closing. They should ask as many questions about the condition of the home as possible. Buyers should also acquire a home warranty, which according to Realtor.com, is an insurance policy that homebuyers and homeowners can purchase. The insurance covers the expenses when home appliances and home systems need repair or replacement.
Why a home warranty is recommended
Even when a homebuyer has a professional home inspection and buys a home that meets building codes – the home may still have problems months or years after the purchase. Home warranties help give homeowners peace of mind that if that the electricity goes out, the toilets won’t flush, the stove doesn’t’ work, or the boiler fails – that there will be money to fix or replace these items.
If homeowners obtain a mortgage, often the mortgage company will require that the home buyer purchase home insurance.
Home warranties can be purchased at any time.
What’s covered under a home warranty?
Generally, home warranties cover the appliances. This includes stoves, refrigerators, washers and dryers
Home warranties also should cover:
• Plumbing fixtures and systems
• The electrical components in the home
• Any lighting fixtures
• The air conditioning and cooling systems
• The heating systems
• Any other home appliances
• Garage door opener
How much does a home warranty cost?
The price varies depending on exactly what parts of the home are covered, the amount of the deductible, the condition of the home, the neighborhood where the home is located, and other factors. Home additions can increase the price. Generally, basic coverage costs a few hundred dollars each year to start and can rise from there.
Home warranty insurance versus homeowner’s insurance
Home warranty insurance is not the same as homeowner’s insurance. Warranty insurance generally covers the inside of the home and just covers specific appliances.
Homeowner’s insurance should be purchased to protect your home against fire, theft, and other types of disasters. Homeowners insurance should include liability insurance in case somebody slips and falls on your property and suffers an injury. Homeowner’s insurance should also include the home itself, the furniture, and anything of value inside the home.
Speak with a Florida home attorney to learn more.
Why to buy home warranty insurance
Normally, the best time to buy home warranty insurance is when you buy your home. That’s when insurance companies offer the best options. Warranty insurance protects the buyer if the appliances need repair for most any reason such as wear and tear or accidental damage.
Home warranty insurance can even benefit the seller of the home
Sellers can be responsible for any damage to the home appliance, electrical and plumbing systems, and other covered items between the time of the agreement of sale and the time of the real estate closing. If anything happens to these home items while the sale is pending, then the seller is covered. Often, the seller will assign the benefits to the buyer in return for proper consideration.
Sellers may even offer their home warranty insurance to the buyer in order to entice the buyer to agree to the sales price and sales terms.
Some of the concerns about home warranty purchases
The disadvantage to buying home warranty insurance is the cost of the premium. On average, insurance companies place their bet on the risk that if anything goes wrong, the cost to make the repairs will be less than the cost of the premiums.
Home buyers and home owners should review how much it would cost to replace their appliances and home systems if something does go wrong. The insurance should cover the cost to replace the items not just to fix them. Home buyers and home owners should understand that the cost to replace items will be based on their condition at the time of the damages. So, you can’t replace a 10 year old refrigerator with a brand new one. Older homes are more at risk of something going wrong than brand new ones. So, there is a balance between new and old, good condition and poor condition.
What happens if an appliance or covered home item breaks
You should then call your insurance carrier who will arrange for a contractor to come to your house and make an estimate for the cost to fix the appliance. If the appliance is incapable of repair the contractor will indicate how much it will cost to replace the item.
Home warranty owners should understand most insurance companies require the owner of the insurance policy to pay a deductible