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Buyers: Should You Consider a Home Warranty?
To purchase a warranty, or not to purchase a warranty? It is a question that everyone who buys Minneapolis homes for sale asks themselves before signing the contract. Sometimes it makes sense to buy the warranty, while at other times there may be a better option. With National Home Warranty Day scheduled for February 10th, it is a question you might want to take some time to discuss with our real estate agents.
What Your Home Warranty Does
Your home warranty provides discounted repair and replacement services on the appliances and fixtures within your home. It provides coverage for your furnace, air conditioner, plumbing systems, and electrical components. In some cases, coverage extends to include the washer and dryer, oven, refrigerator, fans, dishwasher, bathtubs, hot tub, or swimming pool.
At between $300-600 per year, a home warranty isn't an expensive purchase when you consider the coverage it can provide. Even with deductibles and co-pays for service calls, the cost of the home warranty often pays for itself after just one hiccup with the home.
Always Read the Fine Print
It's vital to read the fine print of your home warranty contract because coverage varies significantly between different policies. No two policies are the same, and it's a mistake to assume the warranty will provide coverage without first verifying it in the fine print. Some plans offer warranty coverage for appliances only, some cover appliances and systems, and others offer numerous add-ons.
You will want to identify what service calls are covered, the policy deductibles, and the claims process. It would be best if you also asked about the network of contractors they use and whether there is a waiting period.
Not the Same as Homeowners Insurance
Your home warranty is not the same as your homeowners insurance policy. Your homeowners insurance policy will exclude coverage for normal wear and tear of air conditioners, furnaces, etc. Conversely, your home warranty will cover these items. However, and this is important, the underwriter may exclude coverage if you fail to maintain the covered item properly.
Many home buyers choose to purchase an endorsement alongside their homeowners insurance policy. This can be a good idea because it helps streamline the process and can reduce the overall cost of both the warranty and insurance policy.
Alternative to a Home Warranty
If you purchase a new home, it may not be necessary to buy a home warranty. Many builders include a warranty on new construction. Further, if the house has new appliances, furnaces, air conditioners, etc., these are likely covered by the manufacturer's warranty. In such instances, purchasing a home warranty is redundant.
When you don't need a home warranty, it's still advisable to save for potential problems. Your appliances, etc. will age and require repairs down the road. Setting up a slush fund for repairs can help ensure you have resources available to cover deductibles, replacements, repairs when they arise. As a general rule of thumb, you will want to deposit 1-2% of the home's purchase price into this fund every year. This should provide sufficient coverage for anything that comes up, breaks down, or falls apart.
Call today to learn more about home warranties. Our team is happy to answer your questions and help you make the right decision for your home and family.