First and foremost, a home warranty is not the same, nor can it replace home owner’s insurance!
Now that that is out of the way, a home warranty is a contract put in place to protect the major functioning systems and appliances in your home for (generally) a period of 1 year from closing. This means that if the refrigerator you received with the home purchase stops working a month into your ownership term, the warranty will cover the cost of replacing it. Similarly, these contracts cover in varying degrees the sewer, furnace, and air conditioning systems, and many other household systems. The home warranty will not, however, cover external damages like water intrusion, roof damage, etc. Meanwhile, a homeowner’s insurance policy covers damages to the home, and the personal property of the homeowner’s in case of fire, hail, property crimes, and some water damage. It doesn’t cover replacement of systems unless they are stolen from the home. If your new home is new construction and has never been lived in before, you can expect a 1-year manufacturers warranty, and the home warranty will kick in after the first once has expired.
What does a home warranty usually cover?
Coverage will differ greatly based on the policy that is purchased. They range from $300-600 for the year and will have different tiers of coverage. It is important to read the details of each tier and decide based on the age of the home and the appliances and considering the current situation of listed systems. The warranty will pay for a technician to come out and try to fix the system before they’ll replace it, and that usually creates a $75 (approximately) service fee. If the problem cannot be fixed, they will replace the appliance or system with a similar model, but not often the same brand.
Who pays for the home warranty?
Sometimes the purchase can be negotiated into the sellers’ costs and will be added to the sellers closing costs. You will receive the details of this policy at closing. If you haven’t negotiated for the sellers to pay, you will need to decide for yourself if protecting the appliances and systems of the home is important enough to you to put the money into a warranty.
Where can I buy a home warranty? If the seller purchases the home warranty, they will choose the company to purchase it from, unless it is negotiated into the contract for a specific company and tier level. If you are purchasing for yourself, there are many companies that have good reputations and competitive pricing. Old Republic Home Warranty and HAS Home Warranty are examples of reputable companies. If you’d like more information, or to start researching ahead of time, please contact us at Abraham@askawalker.com for more information. You should have this sorted before closing, and ready to go into effect on the day of closing.
With adequate understanding and proper utilization of a home warranty, this is the most cost-efficient way to prepare for repairs and upgrade as you settle into your new home.
For further questions or advice, please call us at 703.539.2053 or email us at Abraham@AskAWalker.com