by Dan Krell
The most expensive purchase you may make in your life may be a home. After spending so much money on a home, the last thing you would want to think about is, “what if the appliances or systems break down?”
If the home that you purchased is newly built, your home has a number of manufacturer and builder warranties that cover various structure components, systems, and appliances. If you are unaware of your warranties, you should contact the builder, builder representative, or your real estate agent to determine what items are warranted as well as the length of those warranties.
However, if the home you purchased is not newly built, then chances are that all or most of the original manufacturer and or builder warranties have expired. The good news is that a home warranty can be purchased at settlement. Home sellers sometimes offer home warranties as an incentive for home buyers, while some real estate agents buy a home warranty for their clients as a closing gift. Home owners sometimes purchase a home warranty plan years after they move in to their home.
A common misconception is that a home warranty will unconditionally cover any problem and replace non-working systems and appliances without cost to the home owner. The truth is that home warranties have limitations to the scope of their coverage and services as well as conditions under which a home owner may make a claim. A home warranty is a service contract and in some cases the warranty acts like an insurance policy; home warranty plans vary depending on the company offering the plan and level of coverage. If you are deciding on a home warranty company, compare companies by reviewing differences in coverage, deductibles and service fees. Typical plans last a year and are renewable, however some companies offer multi year plans. Typical coverage may include appliances such as dishwashers, clothes washer and dryer. Some companies may offer coverage for furnaces, air conditioning, plumbing fixtures (such as hot water heater), and some electrical fixtures. Expanded coverage may cover hot tubs and pools (at an expanded price of course).
Home warranty companies want you to call them when you need service, so they can send an affiliated service provider. If you call someone other than the home warranty company to repair the broken item, the warranty may not cover the expense of repairs. If the home warranty company’s service technician can repair the broken item, then there is usually no further cost other than to pay for the service call. However, if the item is not repairable then the home warranty company may replace it. The home warranty company may deny the claim to replace an appliance or system for various reasons (such as, improper instillation, improper maintenance, unusual usage, and code violations). Additionally, if the appliance or system is beyond the average life expectancy, the home warranty company may pro-rate the replacement cost to the item’s age.
If you have a home warranty or anticipate receiving a plan at settlement, you should become familiar with the plan coverage. If you are confused about your coverage, you can call the home warranty company to get an explanation of your plan.
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of January 28, 2008. Copyright © 2008 Dan Krell.