Do I need a Home Warranty?

Dated: 08/29/2019

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Do I need a home warranty?

Home warranties are often tied into a home purchase. At times sellers will offer to pay for a warranty to provide buyers with peace of mind, or buyers may request that sellers purchase a warranty. Even if a home warranty is not a part of your purchase agreement, you will likely be contacted by warranty companies soon after a home purchase. Read on to learn exactly what a home warranty is and some questions to ask before you decide to get one.

What is a home warranty?

A home warranty is actually a service contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home’s major components, such as the furnace, air conditioning, plumbing, and electrical systems. A home warranty may also cover major appliances, such as washers and dryers, refrigerators, and swimming pools. Consequently, a home warranty can give a homeowner peace of mind that he will not have to pay the full price for an unexpected and expensive home repairs.

What are the limitations of a home warranty?

The protection of a home warranty may sound like a slam dunk, but there are limitations. These plans generally don’t cover nonmechanical items such as windows or the structure of your home, for instance. In addition, providers of these plans build in wiggle room that can make it easier for them to deny payouts for items that are covered. A home warranty will not cover items that have not been properly maintained. If you are not the first owner of the house, you may not know if the items will qualify as properly maintained.

Questions to ask before getting a home warranty

1. Do I already have protection? As noted above, new-home appliances may already be covered. Even if your appliances aren't new, they may still be under warranty if you made the purchase with a credit card. That's because some credit cards extend warranty length.

2. How much will this warranty cost? The answer depends on the kind of plan you buy and the provider you choose. You can generally purchase one of three kinds of home warranty: a plan for a particular appliance, a plan for all your appliances, or a plan for your appliances and your plumbing and electrical systems. The cost will usually be several hundred dollars a year - but you must also realize there is usually a fee of $75-$125 every time you request a service provider to come out to the home.

3. Am I clear about what the warranty covers? Most of the complaints about home warranties stem from the fact that consumers don't understand the coverage their plans provide. Be sure to read the terms and conditions carefully. For example, some policies will cover your refrigerator but not the icemaker that comes with it. Other policies may cover your hot-water heater but not the water tank itself.

4. Will this plan repair or replace a broken item? Most home warranties explain that if a repair is considered too expensive, the provider might offer to replace the broken item instead. But in a situation like this, the home warranty company may give you only the depreciated value, requiring you to pay the difference out of pocket to get the same model you had before.

5. Are there limits on how much this plan will pay out? There are, but they depend on the kind of plan you purchase and the provider.

Once you have answered these five questions, you will be in a better position to determine whether or not a home warranty makes sense in your situation. With this information you can also determine whether or not you want a home warranty to be a part of your purchase agreement.

Have questions? Feel free to contact us today! 

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Tricia McCullough

From farming in Warden, WA, to living in Australia and then back to Wenatchee, I’ve always been profoundly aware of the fundamental need to help others. Whether through their financial picture or he....

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