What to Look For in a Home Warranty

What to Look for in a Home Warranty | Spyglass RealtyHome warranties are an optional type of coverage to help offset major expenses that might occur in a house. Many new homeowners opt to purchase a home warranty to safeguard themselves against large expenses if a major repair is needed.

Homebuyers sometimes negotiate for the seller to cover the purchase of a home warranty, at least for the first year. Not quite sure about whether (or not) to get a home warranty? Here are the answers on what to look for in a home warranty.

What is a Home Warranty?

A home warranty is a coverage for homeowners that will help them save money in an event of a breakage of major home appliances and systems. It's one of the best ways to protect yourself from headaches when you get a broken heater or a burst pipe. It can get pretty scary when the air conditioning breaks in the middle of summer or plumbing issues begin to happen at once.

Home repair or replacement costs can be astronomical, especially if you don’t have the money to pay for them. That’s why it's so important to have a home warranty. It will cover certain repairs and maintenance on your house so that you don't have to worry about paying for them yourself.

Like any other warranty plan, it's a financial safeguard against unexpected major out-of-pocket expenses. Essentially, the home warranty covers issues that aren't protected by homeowners' insurance. Home warranty plans often have base coverage and consumers can choose to add on optional coverages.

What do Home Warranties Cover?

Home warranties typically cover service, repair, or replacement when appliances (major) break or the home experiences a significant systems failure. Usually, the policy is specific about what's covered and what's not. Before purchasing a home warranty, it's important to always read the fine print because most companies include exclusions many consumers would assume are covered.

Most warranties cover major home systems including HVAC, electrical, ductwork, interior plumbing, roofing leaks, and the water heater. Big-ticket appliances are also usually covered and typically include dishwashers, garbage disposals, ovens/ranges/cooktops, refrigerators, washers, dryers, garage door openers, and ceiling fans. This is not an exhaustive list but an example of what is typically covered. Usually, anything cosmetic in nature is not covered under these policies.

How Long do Home Warranties Last?

Generally, home warranties last for one year with options to renew. Other policies are structured month-to-month, while others offer two- to three-year long-term coverage options. Consumers who purchase a home warranty should review their coverage each year. This is to ensure it's still worth the cost or if items or system components have been replaced and are now under manufacturer warranties.


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What Should I Look For When Buying a Home Warranty?

When buying a home warranty, you’d want to take a look at a few factors. You have to know that your home warranty will only cover what’s written in the contract. Anything that is not stated will not be included in your coverage. When looking for a home warranty, you have to follow a few steps to get the most out of your warranty and cover all your needs.

Know the Coverage

One of the things you need to add to your list is to figure out your coverage needs. Begin by knowing what systems you have at homes such as your water heater, furnace, HVAC, pipes, roofing, and plumbing. List and answer the questions such as how old are your appliances and systems? How likely will these systems fail? How often are these systems and appliances used? You’ll need to determine exactly what you want your warranty to cover.

Finding a Home Warranty Company

Next is to gather quotes and coverages from reputable home warranty companies. Besides from Google search, it’s best to ask for home warranty company recommendations from your local real estate agent. Your agent may have a preferred home warranty provider that is experienced and trusted. Recommendations and online reviews can also be helpful sources to find the best home warranty provider in your area.

Home Warranty Cost

Know the cost of your home warranty. There are different providers offering different prices depending on your coverage. You’d want to get the best deal possible when shopping for a home warranty.

Read the Fine Print

Lastly, don’t commit the biggest mistake when buying a home warranty. Never forget to read the fine print. Take the time to go through the entire coverage and read each page of the contract carefully. Ensure that your warranty will cover all your required needs and excludes sections or systems in your coverage where you don’t require a warranty.

What Questions Should I Ask a Home Warranty Company?

When choosing a home warranty provider, you want to ensure that you get the most out of your money. While the specifics of your policy will vary depending on the provider and your need, there are some basic things that you should look for when comparing providers. 

This includes asking a set of questions that will help you determine whether your potential home warranty provider is an ideal fit for your current needs. Ask your warranty provider the following questions:

  • What’s the coverage of your home warranty?

  • How much does the home warranty cost?

  • What are the exclusions and limitations of the home warranty?

  • Do you cover preexisting conditions of the systems and appliances?

  • Who are your partner contractors?

  • Where can I find your reviews?

  • What’s your cancellation policy?

  • Do you offer additional services or benefits?

There are home warranty providers have a wide coverage against various types of repairs. If you’re considering buying a home warranty plan, it is important to understand what it covers, what it does not cover, and how to make the most of your policy.

What is the Difference Between a Home Warranty and Home Insurance?

Home insurance and a home warranty are two different things. Home insurance provides financial protection for a home in case of damage from natural disasters such as storms, earthquakes, floods, and wildfires. Home warranty plans provide protection for certain parts of a home, such as the appliances, plumbing, or electrical systems. These two policies have different functions and coverages to protect your home.

There are homeowners that would mistake their home insurance to cover the expenses of any unforeseen events associated to homeownership. It’s why it’s ideal to get both a home warranty and home insurance to ensure your property’s protection and provides you a peace of mind when events beyond your control happen in your home.

How Much do Home Warranties Cost?

How much a policy costs will largely depend upon several factors. On average, in the U.S. a home warranty costs roughly between $400 and $800 per year. If utilized, some policies also require the policyholder to pay a deductible, along with any fees associated with service calls which indirectly increases the cost of the warranty; usually, this ranges from $100–$200 per visit, depending upon the type of contract purchased.

This sounds like a lot of money—and it can be—but considering the thousands of dollars that may be spent to repair a problem with the HVAC or another major system, for some homeowners, this is worth the cost. Whether the cost of a warranty is worth it will involve weighing the pros and cons of home warranties.

Should I Get a Home Warranty?

Many consumers opt to obtain a home warranty when manufacturers' warranties have expired. This can help offset the costs associated with breakages or provide peace of mind. 

For example, sellers will often buy one either to protect themselves against last-minute major expenses or to offer as an enticement to buyers. New homeowners may take a policy out to safeguard themselves against unforeseen problems with the home or its appliances.

Learn More With Miriam Hinson of Home Warranty of America

Home warranties are confusing, so how do you know which company is the best option for you? We've gone LIVE with Miriam Hinson of Home Warranty of America to go over how to choose a home warranty company and plan when purchasing a home.

Before purchasing a home warranty, it's important to do one's homework and conduct a cost comparison. Not all home warranties are created equal. Some plans have cost limits in place to fix or replace items or system components. Others may only cover parts of a repair. 

For instance, the refrigerator might be covered under the warranty, but not the ice maker. Knowing what's covered will help decide on the right plan or whether to buy one at all. Also, important to consider are deductibles and annual costs. Be sure to thoroughly understand any policy before signing on the dotted line and making a payment.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Protect your home and investment by determining what to look for in a home warranty. It's inevitable that you might experience your system or appliance break. However, being prepared with a home warranty will save you from headaches and expensive repair costs. If you're considering buying a home in Austin, contact us today! Our real estate agents keep abreast of the latest data in the Austin real estate market and can guide you in finding the best home warranty providers in the area.

Posted by Ryan Rodenbeck on
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