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Buying a Home? Here’s How to Make the Home Warranty Work for You

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Buying a new home is exciting, but it can also be nerve-wracking, especially if you’re buying an older home. Many prospective and new homeowners find themselves dealing with anxiety over whether a home’s structural components or internal systems, such as plumbing and electrical systems, will remain in good working condition. If not, will the homeowner be able to afford repairs?

Home warranties provide some level of protection for homeowners worried about the lifespan of their home’s systems, structural elements and large appliances. But what is a home warranty? What does it cover? How much does it cost? Is it worth it? A home warranty can be worth the cost, as long as buyers know what they’re getting in advance. Here’s how you can get your money’s worth from your home warranty.

Know What a Home Warranty Is and What It Covers

A home warranty is a type of service contract in which you pay a yearly premium to a home warranty company, and in return, they agree to cover the costs of repairing certain major home systems, such as plumbing, electrical and HVAC. The warranty company may also agree to repair structural or other problems with the home or to repair or replace large appliances, such as a refrigerator, range or dishwasher. Additional protection for systems such as hot tubs or pools may be available.

When you have a home warranty, you can’t just call any service provider you want. When something breaks in your home, you call the warranty company, and they send out a local contractor with whom they already have a relationship. You’ll pay this contractor a service fee – usually somewhere in the neighborhood of $35 to $75 – and the home warranty company will cover the rest of the repair cost. How much does a home warranty cost in terms of yearly premiums? Most plans cost $350 to $500 a year, depending on what systems and appliances are included.

Typically, a home warranty plan covers your plumbing and hot water heater, electrical system components, heating, kitchen appliances, ceiling, and exhaust fans, and basement sump pump, if you have one. Some plans may cover pools and hot tubs, septic systems, air conditioning, washers and dryers, and garage door openers.

Get Your Money’s Worth From a Home Warranty

If you’re buying a newly-constructed home, you may not need a home warranty because most states require contractors to guarantee newly-built homes for two to 10 years. Furthermore, your new appliances are also under a manufacturer’s warranty for at least a year.

However, if you’re buying an older home, a home warranty may make sense, especially for the peace of mind it can bring. Buying a home warranty means you won’t have to worry about finding a contractor for repairs or coming up with hundreds, or thousands, of dollars to cover the cost of those repairs should they be necessary.

However, getting the most out of your home warranty means you should shop around to find not only the best deal on premiums but also a company that will be easy to work with. Pay attention to online reviews from sites like Consumer Affairs, but don’t disregard negative reviews just because there are a lot of positive ones. Some unscrupulous companies will pay for fake positive reviews to trick unwary shoppers. Learn how to spot fake online reviews.

You want to work with a home warranty company that will provide speedy service and cover the costs of most repairs. Find out what local contractors they use and research the reputations of those contractors, so you’ll know whether or not they can be trusted to do a good job. You should know that most home warranty companies will try to repair, rather than replace, home systems and appliances, and you may not be able to get appliances or home systems replaced at all under your warranty, especially if they have reached the end of their natural lifespan. Your home warranty company will also expect you to follow accepted maintenance practices to take care of your home, its systems and its appliances; they may not pay to repair a system, appliance or structural element that has not been properly maintained.

A home warranty can allow a homeowner to rest easier at night knowing that, if something breaks, he or she will have an easier time finding a contractor and covering the cost or repairs. Know how to make the most of your home warranty, so you, too, can enjoy the peace of mind that protection brings.