What is a home warranty and why do you need it

What is a home warranty and why do you need it

Maintaining a household takes a lot of effort. There are some planned and unplanned costs involved in maintaining household appliances. If they are new appliances that you purchase, you would have an idea about the device’s condition to some extent. There are times when you move to a new home without any idea about the condition of the house’s existing appliances and systems. These are situations where home warranties come into the picture.

What is a home warranty?
A home warranty is a temporary contract that easily allows homeowners to handle the repair and maintenance costs of their home appliances. This contract provides the homeowner discounts on any expense incurred in repairing the appliance. For repairs and replacements of the products that are covered, the homeowner would pay only a part of the actual cost involved. The type of home warranty determines the appliances and systems covered.

Difference between a home warranty and home insurance
These are two terms that are often confused by many new home buyers. Here are some of the differences between the two policies:

  • A home warranty is a short-term contract, and the discounts lapse post the period. Homeowners’ insurance is long-term coverage.
  • A home warranty covers appliances and systems in a house. The homeowner’s insurance policy covers the property, belongings, and liability costs, depending on the insurance type.
  • Home warranty only takes care of the repair costs when the device breaks down or starts malfunctioning. Homeowners insurance offers coverage for damage, breakdown, theft, and loss of assets as well.

Claiming a homeowner’s insurance only because the HVAC system at home is not working is not possible. In such a case, you can opt for a home warranty. This is a low-budget coverage for the relatively low-cost repairs of products and systems in your property.

Benefits of home warranties
A home warranty is an effective way to reduce the costs of unforeseen problems. Some homeowners are skeptical about spending their money on house warranties. But here are some compelling reasons why you should consider picking a suitable one.

  • Buying a new home is a huge step. After spending all your savings, you might not want any surprise expenses to bother you. Home renovation and repairs might already make your budget heavy. A home warranty would ensure that you can save a little money if any of the appliances you use suddenly starts giving trouble.
  • Home warranty would give you a single point of contact for all your appliance troubleshooting concerns. Instead of hunting for the right electricians, plumbers, and other services, you can directly approach your home warranty company to get the best service whenever required.
  • Prompt response is one of the major perks of choosing home warranties. Timely repairs would ensure that your household chores continue without any difficulty. For busy households, this can be a huge benefit.
  • There are home warranties for all types of households and appliances. Whether you have a modern system or a traditional one, you can find a suitable warranty. After using up your budget for the house, you can find some economic plans that you can easily afford.
  • Different families use similar household setups differently. So, when you move to a new place, you may use the existing systems differently. During this period, the device might fail. In such cases, a home warranty would be useful. It can help with costs if appliances or major home systems fail in some way. Also, it will give you peace of mind knowing your unforeseen expenses are covered.
  • For home buyers, moving into a new locality, hunting for the best contractors in the area might be a tough job. Even if you do not know whom to approach, your home warranty will take care of things for you. There are home warranties that also offer coverage over plumbing, electrical, HVAC, and other such entire systems in the house.

Major types of home warranties
The classification of home warranties mainly depends on what is covered. The other factor that might vary from one type to another is the cost involved. The money you spend on any repair would also depend on the warranty you choose.

System plans
This is an extensive plan preferred by most homeowners. Individual appliances can be evaluated easily. But evaluating the whole system might not be possible. So, many home buyers consider the major costs of repairing plumbing and electrical systems and picking a system-based plan for home warranty. The air conditioning system in the house or the HVAC system, on the whole, electrical system, plumbing set up, smoke detector, water heating system, and other main systems are covered under this plan. These systems might also make living conditions uncomfortable when they break down. The consequences might also be bigger as most of these are interrelated. For example, when the electrical system fails, even the best HVAC system might not be able to work. If your HVAC system fails during the winter, the whole family would have to suffer the consequences. System plans are chosen in several cases, considering such implications.

Appliances plans
Appliances plans are slightly less expensive mainly because they only cover devices like refrigerators, washers, dishwashers, etc. This plan can be customized. For families that focus on frequent expenses like appliance repairs, spending too much on the existing system-related repairs might not be feasible. For the people who want to upgrade the current system, choosing an appliance plan is a better option. If you can have someone evaluate the entire electrical and plumbing system in the house before you close the deal, you would also better understand the condition. This would let you plan any expected repairs in the future. If the systems are robust and not many repairs are anticipated shortly, an appliance plan might be a more practical decision.

Combined plans
As the name suggests, this type of home warranty covers both appliances and systems in the house. Suppose you have no idea about what you have gotten yourself into, or you do not have the time or resources to conduct a detailed evaluation of the condition, you might find a comprehensive combination plan to be a safer choice.

What is not part of the home warranty?
When you approach a company for a home warranty, you should clearly understand the terms and conditions. Before you know what is covered, you should know about what is not covered. The following are some of the common items that most home warranties do not offer.

  • Regular maintenance or season-based maintenance
    There are some devices or systems that involve occasional maintenance and cleaning. These charges are not part of the claim available for a home warranty plan.
  • Solar panel-related repairs
    The contractor who sets up your solar panel might give you the details about the installation warranties and other details. This might not be part of the home warranty.
  • Aesthetic adjustments to the existing systems
    If you have to change some existing sanitaryware or switch some old taps and pick some fancy ones, your home warranty will not cover these expenses.
  • Some premium products
    Some premium products might incur enormous expenses for repairs. There are also some imported appliances servicing, which might not be easy. In such cases, finding the spare parts might also be challenging. Home warranties might not cover a few such premium products.
  • Adding appliances to an existing system
    If you add more devices, there might be expenses involved in adding some upgrades. Your home warranty might not save you money on such upgrades.
  • Repairs from improper maintenance
    Home warranties for products and systems are more or less similar to product warranties offered by manufacturers. The warranty would solve any defect in the device. But if the repair is due to improper maintenance, the expenses might not be covered.
  • Damages and repairs related to disasters
    If thunderstorms cause the house’s electrical systems to malfunction, or fire damages a few or more of your appliances, the warranty would not handle the replacement process. These are times where you would have to shell out money from your pocket. If you choose the suitable type of home insurance covering the property and your belongings, it would be really useful during such disasters.

Things to look for when you choose a home warranty

  • The kind of items you should add to your warranty

Ensure that all the essential items for a safe and comfortable stay of the family are taken care of. Items that are indispensable in everyday life should be ideally covered in the warranty. A wholesome plan covering all essential appliances and systems might suite a household with kids and the elderly. With kids and elders at home, you cannot risk uncomfortable temperature and ventilation settings.

  • Purpose of choosing the warranty
    Home warranties are not just purchased by home buyers. People who are looking to sell the property might also opt for a home warranty. If you are looking to sell the property soon, the home warranty would come as a plus in a competitive market. This would help in increasing the home value. A home buyer would be more confident in buying a property, knowing that the repairs in the systems and devices would be taken care of for a specific period. The choice of a home warranty plan can easily differ based on the purpose for which it is bought.
  • How is customer support?

You should work with companies that offer you round-the-clock customer support. The main difference between getting repairs done by yourself and choosing a home warranty is that you save the hassle and the time involved in finding the right parties for the right job. Unless there is a responsive customer care team to resolve your problems quickly, the warranty would be of no use. Timely resolution of repairs is as important as better discounts on the repair costs.

  • Limited vs unlimited plans

Each plan has a different structure when it comes to the repair cost quotations. There might be charges levied for the technician visit. Deductibles are present in most of the home warranty plans. You only get a discounted rate for the repair and not an exemption of the entire cost. You need to know about limits like the maximum number of repairs permitted. There might often be an annual limit set within the contract period. Within the expiry of the contract, you would only be able to call the technician a fixed number of times. These limited plans are slightly less expensive than unlimited ones. Unlimited plans do not have an upper cap on the number of service requests covered in a year.

Not all companies offer similar rates for your home warranty. You might end up getting better rates for the same systems and appliances when you negotiate with the most trustworthy companies. Ask around for recommendations, pick a credible home warranty option, and save a great deal of money on repairs.

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