As a new homeowner, you have a lot on your plate to figure out. From mortgages to insurance and property taxes, there’s a lot of money being taken out of your account, legal jargon being spewed at you, and paperwork to sign. Now you have a new term being thrown at you — home warranty. What is it, and do you need it? Let’s take a look.
What is a home warranty?
Put simply, a home warranty is a one-year service contract that covers the repair of home system components and appliances.
How is a home warranty different than home insurance?
Home warranties cover the repair of home systems like kitchen appliances, A/C, and plumbing from normal wear-and-tear damage. Home warranties are also optional, while home insurance is usually required to secure financing for your mortgage. Home insurance generally covers damages caused by fires, theft, storms, and natural disasters.
Does having a home warranty ensure I will not have to pay for repairs?
NO! Many homeowners believe that a home warranty is a flat fee for unlimited repairs and no out of pocket costs, but that’s not the case. Every time you make a claim with your warranty provider and a technician is sent out, you will be charged a deductible that usually costs anywhere from $50 – $125. You will be charged that deductible for every appliance that needs to be repaired.
Also, home warranties often include escape clauses to deny coverage. For example, some repairs will not be covered if they can be chalked up to a “pre-existing condition” or if the cost of repairs is more than the set amount laid out in your contract. Many warranties give the issuer the right to deny the customer repairs if they can’t show proof that they’ve maintained the appliance or system on a regular basis. Be sure to read the fine print!
What if I have a manufacturer’s warranty?
Items that are covered under a manufacturer’s warranty are usually not covered under a home warranty. If you’re buying a new construction home or new appliances, you’ll likely have a manufacturer’s warranty, so if you purchase a home warranty, you’ll be doubling up on coverage and spending money you may not need to.
If you’re considering getting a home warranty, be sure to read the terms and conditions closely and ask questions. Compare rates and coverage and make the right decision for you. If you decide not to purchase a home warranty, we recommend setting aside a few hundred dollars a month for any unexpected costs and repairs that spring up.
As a first-time homeowner, it’s crucial to have an idea of what to expect and how to handle the responsibility of owning your own home. The David Morris Group is always happy to show you the ins and outs of owning a home and help you make the transition from renter to homeowner seamlessly. Give us a call at 775-828-3292.