A home warranty is a service contract made with a third party company, typically for one year. The purpose of the home warranty is to help so you don’t have unexpected repairs or system failures during the policy timeframe. It’s extremely important that you read the terms as not everything is essentially covered with each component.
A home warranty covers major systems of a home, basically providing insurance against repairs or failures of electrical, plumbing, water heater, appliances, garbage disposal, furnace, air conditioning and sometimes they include roof, pool/spa etc (plan dependent). The price corresponds with the level of coverage and policies can run about $500-700/year. They typically also have a deductible (around $100) for the first claim.
When can you buy a home warranty? When buying a home, you can ask the seller in your offer to provide a home warranty and specify the company, plan and price not to exceed. This would generally go into effect at closing. However, as sellers, most companies offer seller coverage that could go into effect when it’s on the market or under contract and then transfer to the buyer.
If there is a problem with a covered system, you will contact the home warranty company and start a claim. They will then send a repair person that works with them to your home to assess and correct the problem, so don’t just call any technician. It’s important you call the home warranty company.
I’ve had clients have good and bad experiences with home warranty companies. There are a few things to keep in mind: there’s a lot of fine print on coverage and they will always repair before replacing.
A home warranty ensures you’re never caught with an expensive repair bill. It’s a very small price to pay for the peace of mind that a home warranty provides.