The Ins and Outs of Home Warranties

Should I Buy a Home Warranty?

Whether you are house hunting or have just become a homeowner, someone’s probably tried selling you a home warranty. Unlike your homeowner’s insurance policy, which may cover premises liability claims, theft, or storm damage, home warranties cover parts of your home you rely on every day, from air conditioners to your stove. However, warranties have coverage limits, and in some cases may not be worth the money the cost. Let’s look at when it does and doesn’t make sense to buy a home warranty.

What is a Home Warranty?

It has become common in real estate transactions for sellers to include a home warranty to close the deal and give buyers peace of mind about how expensive home systems or appliance repairs will be handled in the future. However, mortgage lenders don’t require you to buy a home warranty or maintain a policy.

Home warranties operate under the same principal as extended car warranties. They cover some or all expenses related to certain items. A home warranty company will issue a policy to the home buyer for a set annual premium to repair or replace covered appliances and home systems needing repair or replacement. These are service contracts, not insurance policies, so unless you have a plan with covered technician visits you may have to pay a service fee in addition to your premiums to have someone visit your home and verify your claims.

What Does It Cover?

Most home warranty companies have varying coverage place at varying prices. Basic warranties usually cover:

  • Electrical systems
  • Heating and air conditioning systems
  • Washers and dryers
  • Plumbing
  • Kitchen appliances

Companies may also include alarm systems, exhaust fans, garage doors, and ceiling fans. For more money you may get coverage for your pool, septic tank, and sprinkler system among other things. Be certain of what’s covered – if it’s not in your warranty contract it’s probably not covered. Many policies also include a mandatory 30-day waiting period after buying a home before appliances are covered, have a deductible, and set a yearly coverage limit.

Do I Need A Home Warranty?

Depending on your situation, it may be wise to purchase a home warranty. If you aren’t mechanically inclined, have no financial reserves for major home repairs, or are buying an older home that has original or aging appliances and major systems, it may give you some reassurance that you can weather repairs and replacements without wrecking your budget. However, if you’re purchasing a new build, have funds for future repairs and replacements, or are being given credit towards these items by the seller as a result of having some closing costs covered, a home warranty may be unnecessary.

How to Find a Reputable Company for Your Home Warranty

Most complaints received by the Better Business Bureau about home warranties deal with plan coverage misunderstandings, so it’s important to understand what is covered by your home warranty and under what circumstances coverage applies.

It’s important to research home warranty companies online and read client reviews. Ask questions to verify the company is real, who will provide repair service (many national companies have local service providers), and whether you can get service 24/7 if something goes wrong.

Contact a Real Estate Attorney Today

If you’re a first-time house buyer, it’s always tempting to have a little extra coverage to protect against the unexpected. However, it can be difficult for other buyers to justify the costs and weigh the benefits against the disadvantages. The experienced real estate attorneys at Giorgi & Bonomo can analyze your options, advise on the best choice, and help your entire home buying process go smoothly. We’ve been providing personalized, comprehensive representation for buyers and sellers in the Chicago and Northwest Indiana area for years and look forward to giving you the peace of mind you deserve.  Contact us 24/7 at (800)-510-2685 or complete our online Contact Page to get your questions answered and get started today.