What is a Home Warranty?
A home warranty is a policy that you pay for, usually yearly, that will help cover the cost of home appliance repair. Technically, a home warranty is a service contract. Not unlike an extended warranty you might buy. While your homeowners insurance policy might cover damage due to fire, windstorm, or theft, they generally do not cover mechanical breakdown of appliances.
What does it cover?
Depending on where you live, a home warranty can cover different items. HVAC systems, refrigerator, stove/oven, dishwasher, etc. These appliances can be costly to repair or replace. Most home warrant companies will offer different levels of coverage at different prices. You can pick what suits your needs the best and then compare companies for price and reputation. It won’t cover general maintenance of items, such as replacing air conditioning filters. Additionally, you should read your policy carefully as some may exclude coverage if an appliance has not been maintained properly. Damage due to improper installation may also be excluded. A home warranty can be transferred if you sell the house, though the stipulations can vary from company to company.
How to select a home warranty company
As with anything else, due diligence on your part is needed. Research each company to see what their satisfaction ratings and customer comments are. You can use popular consumer websites to find this information. Each company will offer standard and upgraded plans. It may be helpful to review any existing warranties to see if there is coverage you could exclude to save money on the policy.
Here are four of the best home warranty providers, according to http://www.reviews.com/home-warranty/.
- The Home Service Club (Best Overall)
- American Home Shield (Best Reputation)
- America’s 1st Choice Home Club (Best Phone Quote Process)
- First American Home Buyers Protection (Most Well-Rounded)
How to use a home warranty company
Once you have the plan in effect, you are given a policy number and a toll free number to call to use your benefits. Home warranty companies partner with licensed contractors around the country to service their clients. There is generally a per visit charge which you are responsible for paying ($75 is about average). The good news is that labor is usually included, which many manufacturer warranties do not cover (see your policy for details).
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How a home warranty can help get your house sold fast
One concern of many buyers is the age and functionality of appliances in homes they are considering purchasing. “When was the A/C replaced” or “how old is the water heater” are common questions I hear from my buyers. As a seller, you can purchase a home warranty which can then be transferred to the buyers. This will offer peace of mind to potential purchasers, that they won’t have to worry that on older appliance will break down right after purchase, which they would then have to pay for. Additionally, should any issues with your appliances come up during an inspection, your coverage could help defray the costs of repair.