Homeowners looking to sell often purchase home warranties to help attract buyers. In other cases, homebuyers purchase home warranties a part of the real estate process, and may even receive a discount if done so within 30 days of closing on the home.
What Is a Home Warranty?
A home warranty is a protection plan that helps finance repairs or replacements on certain aspects of your home that occur after closing, were not apparent during a home inspection or are not covered by homeowner’s insurance. There are different types of home warranties, each of which is accessed when systems or appliances in your home are not longer in proper working order.
What Do Home Warranties Cover?
Home warranties can be purchased to cover:
• Home appliances (refrigerator, stove, dishwasher, etc.)
• HVAC system
• Electrical system
• Phone system (wiring)
• Water heater
• Smoke detectors
• Exhaust fans
How Long Do Home Warranties Last?
Home warranties are relatively inexpensive, and typically incur a cost between $250 and $500 for an annual premium. Dates of coverage and the time at which coverage begins vary depending on who is purchasing the policy (homebuyer, seller or existing homeowner). At the end of the 365-day term, the owner of the policy can then elect to renew or dissolve the home warranty coverage.
What to Consider When Buying a Home Warranty
Some aspects of your home may be covered under a builder’s warranty, depending on the construction age. If you decide to purchase a home warranty, just be certain that you fully understand the details of your policy, such as under what circumstances coverage kicks in, coverage limits and any additional expenses for which you might be responsible (such as service fees or deductibles). Home warranties only cover those systems and appliances specifically mentioned in your contract.