Home Warranty’s

If you’ve bought a home, you probably had the opportunity to purchase a home warranty. But are they worth it?

What is a Home Warranty? It’s a service contract that pays for repairs due to common maintenance issues, and replacement of appliances if they cannot be repaired. Most of these service contracts will not cover every repair you may have. Most consumer complaints show that most of these companies avoid paying claims citing homeowner negligence or claiming it was a pre-existing problem.

Most policies will include home appliances, heating, cooling, plumbing, and electrical systems. Structural systems are usually covered by a traditional homeowners insurance policy.

Remember, always read the fine print. Companies will promise you the world, but most contracts are filled with exclusions and denial provisions. Most policies include plumbing, but not if the pipes freeze. Parts that break the most are usually not covered at all, and usually “plumbing” only means the actual pipes inside the wall.

How much do they cost? It will depend on the type of policy you buy most companies will have both basic and premium policies. Most people never fully utilize the service.

Whether you purchase a home warranty or not, is a personal decision. Some investors will purchase warranty for the first one or two years, after that they have a better understanding of the home and its appliances. After that you can make a decision to self insure or continue with the home warranty.

Some of the considerations to consider are:

  • New homes may not need a warranty because the appliances may have a manufacturing warranty in place. If the home is 10 plus years or older some of the appliances may start to fail.
  • What are the condition of the appliances?
  • What kind of emergency/maintenance fund do you have in place? Good rule is to put aside $100 per month, and have a two or three year balance.
  • Live local? Can you meet and coordinate with the repair tech and your tenants at the property.

When purchasing your home warranty understand what to expect from your contract.



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