Home Warranties | What do they cover and is it worth it?

2 03 2011

It’s interesting to me to see how Real Estate is so different from one market to another.  I find only about 5% or less of property that sells in Billings, Montana is there a home warranty even brought up.  Sometimes sellers offer it as an added incentive for buyers, other times, buyers request it.  Most of the time, I find the buyers who request it are not from here…I’m not sure why that is, but here is an explanation of what it is & some details on different companies.

Home warranty is an appliance service protection plan may cover the maintenance expenses associated with household items such as refrigerator, dishwasher, HVAC units, plumbing system and electrical wiring.  Your home owner’s insurance will insure against natural disasters such as fire and flood but it will NOT cover the maintenance and repair charges (most likely, but check with your agent to make sure). If you have a home warranty & your air conditioner or heater stops working, you will place a service request with a home warranty company who will send the technician out for repair. Home warrenty plan will also replace the equipment if it cannot be repaired.  Beware of which level of plan is purchased however, since not all coverage is equal.  If you have the most basic plan with AHS, for instance, refrigerators/washers & dryers are not covered.

For the most part, when calling to get a warranty, the following is all they need:

#1 The state the home is located (not all warranty companies cover all states)

#2 If it’s a single family residance

#3 If it’s under 5,000 Square Feet or over 5,000 Square Feet

The basic I found were the plans range from around $300-$600 depending on the company and the coverage.  Mostly, there is a $50-$75 service fee when a technician comes to your home & the warranty company covers the rest.  This is true for items actually covered by your warranty.  Each company handles it a bit different if the item the service call ended up being about isn’t covered.

One of the larger differences from company to company is some offer both seller & buyer coverage.  Some only offer buyer coverage.  For the ones that offer both, typically it’s about $50 more to add seller coverage & that means from the date of payment until the date of closing you’re covered.  From the closing on, the buyer is covered for one calendar year.  Most policies state you have 180 days from the effective date to get your home sold, and if you can’t, then it’s up for renewal at the discretion of the warranty company.  For those only covering buyers, it’s more cut and dry….the warranty gets paid for at closing & then is in effect for the buyer for one year.

It’s a bit confusing, but still worth looking into.  I found this website helpful, but not 100% accurate.  At least it will give you an idea of different companies in your state & you can see by the number of reviews how much business they probably do.

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