Learn 6 Common Questions and Answers About Home Warranties

Smart house buyers understand that purchasing a new home may result in unexpected concerns that must be repaired. Homebuyers may find their cash momentarily drained after purchasing a property, making costly repairs a strain.

A house warranty may be an effective solution to decrease the costs of unforeseen problems in certain circumstances. We go over the benefits of having a home warranty and why it can be the solution you’re searching for, but also why you should think about it carefully.

A home warranty and homeowners insurance are not the same thing.

While they may sound similar, a house warranty and homeowners’ insurance are not the same thing. The latter covers hazards such as fire, hail, property crime, and specific sorts of water or flood issues that harm the structure of the home or the homeowner’s valuables.

A home warranty, on the other hand, is an agreement between a homeowner and a home warranty provider that can provide reduced repair and replacement services for major components of the home, such as HVAC, plumbing, furnace, water heater, and electrical wiring. It could also include huge appliances like refrigerators, washers and dryers, and even swimming pools.

Homeowners’ insurance usually does not cover repairs or appliances. Or, if they do, the repair expenses are unlikely to exceed the deductible.

What is the purpose of a house warranty?

You pay a monthly payment for your house warranty coverage, similar to a homeowners insurance policy. If a covered household system, such as plumbing or heating, or a covered item, such as a dishwasher, fails, you would contact your home warranty provider to file a claim and have a professional service expert dispatched.

The technician can then evaluate if the system or appliance can be repaired or must be replaced. Unless certain equipment requires replacement, the service expert will most likely handle the repairs. If the system or appliance in need of repair is covered by the warranty and the repair or replacement isn’t excluded, you’d only have to pay the service fee—on top of the usual premiums, of course.

What is the cost of a house warranty?

According to a recent Consumer Affairs investigation, the cost of a standard home warranty service contract varies depending on where you reside and the level of coverage you require. Plans typically cost between $300 and $600 per year and are payable in monthly payments.

A trade service call fee will be added to the cost of the plan each time you file a claim that results in your warranty provider sending a contracted technician to your home.

A service call fee, similar to an insurance deductible, is paid to the service technician and typically ranges from $50 to $100 per visit. Many service call providers will not charge an extra cost if a single repair requires more than one visit. However, some service call providers will charge for further trips (or add a new service cost) if a repeat visit occurs beyond a certain period, such as 60 days after the first repair.

In addition to the prices listed above, you may be required to pay repair fees in excess of your coverage limit. You may also be required to pay for parts that are not covered by your policy, depending on your policy. For example, if your refrigerator breaks and needs to be replaced, a new unit with a bottom freezer can cost roughly $1,500.