Home Warranties
Home warranties are a recent phenomenon and have gained immense popularity over the last few years. Home warranties are helpful for both buyers and sellers. Sellers use them as a marketing tool to attract buyers and buyers find the idea of (potential) saving thousands of dollars very appealing. Always keep in mind that home warranties are not a substitute of emergency funds. You should always have an emergency savings fund to deal with health or other emergencies even if you have home warranties. Experts suggest that you should save one percent of your home value every year for home maintenance and repairs even if you have home warranties. Home warranties are an attractive option for new homeowners who do not have sufficient cash to finance home repairs and maintenance. Home warranties can substitute a home maintenance fund in such cases. Home warranties are increasingly used a marketing gimmick by sellers to entice buyers ensuring them peace of mind. You can also benefit from home warranties if your home’s systems are aging and you are ready to resolve for repairs if the home warranty company will not replace them.
As with all mortgage and insurance policies shop around for the best home warranty policy. Check home warranties from several buyers to see what is covered under each policy. If possible talk to loyal customers of the home warranty company to determine the percentage and limit of claims (in dollars) it has paid historically. Most buyers of home warranties are unsure of what their policy does and does not cover and keep on paying until they discover that the costs they paid outweigh the benefits multiple times! To avoid such mistakes make sure you read the fine print of your home warranty policy. Customers also confuse home insurance with home warranties. Most customers confuse home insurance with home warranties. Home insurance policies do not cover repairs and maintenance of your home and electrical appliances. Rather home insurance provides cover against theft, earthquakes and other mentioned disasters. On the contrary home warranties provide cover against damage to your home’s mechanical systems and appliances because of wear and tear under normal circumstances. This highlights the need for a home warranty policy even when you have home insurance. Following are some steps that can help you can make to ensure you are getting the worth of your home warranty policy:
- Check the home warranty company’s reliability report from Better Business Bureau. It is advisable to purchase your home warranty from a well-established national company that has a track record of paying legitimate claims without too much hassle.
- Another sound indicator of whether the home warranty company will pay your claims is the behavior of customer services representatives of the home warranty company. If customer service representatives are not courteous and helpful before your purchase the policy they will most likely not help you after you have purchased a home warranty policy.
- Before you set out to buy a home warranty policy it is advisable to determine what you would want to be included in the cover. Some companies charge extra for covering home appliances. Ascertain your needs and budget before visiting a home warranty company. This will save both time and effort on both your and the company’s part.
- Deductible is an important determinant of which home warranty policy is most suited to your needs. Most home warranty companies charge a deductible ranging from $50 to $100. However some companies may charge up to $150 per call. This again raises the question of whether it is a wise decision to buy home warranties.
- Make sure you know who will provide repair and maintenance services. Most home warranty companies have their own network of repair and maintenance services providers. On the contrary some companies allow you to choose the repair and maintenance service providers of your choice. Understandably they may charge extra in such cases.
- Get a detailed house inspection before purchasing a home warranty policy. This will highlight preexisting problems that may or may not be covered by the home warranty policy.
- Home warranty contracts come with certain loopholes. Read the policy document very carefully before signing it. Most home warranty policies do not cover plumbing beyond your home’s foundation. Also preexisting problems in your home will not be covered. Damages because of improper use or installation may also be excluded from your home warranty policy. Make sure you understand what you policy covers and what it does not cover.
- Home warranty companies are not properly regulated in all states leaving room for scamming customers. Many home warranty companies have been reported to wrap up operations without reimbursing their customer for premiums paid.
- If you have purchased your home warranty policy through a mortgage broker make sure you have all the relevant documents after the deal is closed. This will allow you to pay premiums and avail the cover offered by the home warranty policy.
- Home warranty companies usually prefer repairs to replacements even when they are not the best available option because of the price difference. You will not be able to fight for getting a replacement if the repair restores it to a workable condition. This is one of the major drawbacks if home warranties. If you want control over whether to choose replacements or repairs home warranties may not be the best available option for you.
- You will be required to call a toll free number to claim a repair or maintenance on your home warranty policy. After confirming that the said repair/replacement is covered under your home warranty policy the home warranty company will send an independent contractor to fix the problem. The claims process is free of complications and straightforward in most companies. In case of a problem you can always contact a supervisor to take personal interest in reimbursing your claim.