Whether you are already a homeowner or buying your first home, you just never know when you’ll face unexpected and costly repairs. A home warranty can sound like a great solution to this dilemma, but is it really worth it? Home warranties have gotten a bad rap in the past, but like any warranty or insurance policy, the upfront cost could be worth it in the end – especially if a seller is willing to include one in the deal. 

Through personal experience I have seen the awesome convenience these services can provide. I have also experienced how frustrating they can be when it comes to needing a replacement unit, etc. Read on to learn more about the pros and cons of home warranties and whether it’s something that will fit your particular needs and budget. Like anything, it’s important to read the fine print and understand any of the terms and conditions!

What is a home warranty?

A home warranty is a policy where your home’s main systems or appliances will be covered for repair work. It’s usually purchased through a home warranty company. Popular home warranty companies in Kansas City include places like AB May and American Home Shield.

It’s important to understand that a home warranty is different from your homeowner’s insurance or a manufacturer’s warranty on a product. For example:

• It may cover the labor to fix a failed part on a product that your manufacturer’s warranty doesn’t
  or
• It may pay for a plumber to fix a broken pipe but not the damage to your home, which your insurance policy should cover

Therefore, it can work hand-in-hand with other home policies when something goes wrong.

Keep in mind that a home warranty is different than home insurance. Similar to how car insurance and a car warranty cover different items – home insurance, like car insurance, covers unforeseen damage and catastrophes. Whereas a warranty fixes things that break earlier than they should have.

What are the typical home systems covered and yearly cost?

Policies typically include air conditioning and heating systems, water heater, furnace, plumbing, any built-in appliances such as refrigerator or dish washer, and for an additional fee, you can add “extras” such as a swimming pool systems, etc.

One year of coverage typically costs $400-500 with an approximately $100 deductible when you make a service call. These fees differ per service provider and should be reviewed when picking the one best for your home.

Who can purchase a home warranty? 

Some warranty companies will allow a homeowner that has been in their home for a long time to buy a warranty. This is a great improvement since previously home warranties could only be purchased by new homebuyers at the time of settlement.

What do consumers need to know before they buy?

It’s very important to read over the fine print of your contract and understand what is covered and what is excluded. Here are some typical actions to be aware of for standard packages:

• Will cover repairs on large systems (heating or air conditioning) but does not always cover replacements. Typically, it will help keep appliances functioning and in working order.
• Won’t cover if breakage is due to poor maintenance by the homeowner; typically covers “normal wear and tear” of an item.
• Excludes certain items – i.e., may cover refrigerator repairs but not the ice maker.
• Doesn’t cover items once they reach a certain time period or beyond its serviceable life (i.e., 20+ years old).
• Doesn’t cover pre-existing conditions. Items need to be properly installed, maintained, and in good working condition when you apply for coverage.
• Doesn’t typically cover roofs and exterior items.

What happens when I need to have something repaired?

A home warranty company requires you to contact them first when something breaks. They will then contact their service providers to send to your home. They will pay the service provider once the claim is approved.

If you call a service provider without contacting the warranty provider first, the company may not cover the repair.

You do not control who can come to your home to repair an appliance or major system. That can be a major downside to some homeowners, especially if they have to wait a long time for a repair.

If your furnace breaks down during a cold spell, you may have to wait for the home warranty company to deal with their subcontractor. This is something to consider when picking a provider as some have their own in-house technicians and guarantee service within 24 hours.

What if something is not covered when I thought it was?

Like any warranty for any other type of purchase, there are times the warranty company can choose not to cover something. That’s why it’s essential to read the fine print carefully, so you’re not caught off guard if that happens!

What do I look for in a home warranty company?

It’s important to find a reputable company that has been highly recommended by others.

• Investigate its long-term history and Better Business Bureau information.
• Compare coverage levels and upgrades to standard packages along with deductibles and service fees.
• Read the fine print in the contract to understand any co-pays and exclusions.
• Understand how you can cancel a contract.
• Do they have quick response times?
• If an item it going to take a long time to repair or replace will they provide a temporary portable unit?
• Are they local to to Kansas or Missouri? Do they have information to provide on the technicians who will be entering your home?

When buying a home I often encourage buyers to ask that the seller pay for the first year of a home warranty. This is a small cost for the seller and provides the buyer an extra layer of protection and peace of mind – especially if the home’s systems are older or the age is unknown. Let me know if you have any questions about getting a home warranty whether you’re a current homeowner or new homebuyer.  Simply email me at Mitch@Kansascityrealty.net and I would be happy to help or provide any recommendations or companies I have worked with in the past!