What are Home Warranties, Should I get one?

What are home warranties? When you buy a brand new home it comes with a warranty, this warranty covers anything that might break in the new home for a length of time. But when you buy a older home most of the time there is no warranty, so if something breaks, the costs of fixing or replacing the items come out of your pocket. There is help out there for buyers of older homes. Buyers of pre-owned homes can protect themselves against the risk of expensive repairs by purchasing a home warranty. 

Home warranties are not homeowners insurance. Homeowner's insurance generally protects the structure of your home and your possessions inside your home, while warranties cover appliances and systems. For example, some things covered by a warranty would be repairs to your furnace, hot water heater or electrical system. Homeowner’s insurance, on the other hand, typically covers repairs of damage to the home from theft, fire and some weather-related incidents; it also covers injuries that are caused by these types of incidents. Although warranties usually include HVAC, plumbing and electrical, they do not include everything you might personally consider a “system” or “appliance.” It depends on the specific policy. For example, some basic policies cover septic systems; others don’t. Talk with your warranty issuer to make sure you're getting the coverage you want and need.

     Any existing issues with your systems and appliances should have been found during your home inspection and addressed prior to you taking ownership of the home, if you negotiated repairs and replacements. Warranty companies consider problems identified during a home inspection as “known conditions,” and often don’t cover them. Home warranties generally cover “unknown conditions,” issues that would not have been revealed through a normal home inspection or ones that develop after you move in.

     Prices for home warranties range from about $350 to $500 per year. Often, it’s up to you to purchase a policy. Other times, sellers may include a policy as added incentive during negotiation of the home sale. Some real estate agents give homebuyers a home warranty as a gift after the home purchase is settled. There are a number of companies that offer home warranties. Ask your agent for guidance on where to turn. And be sure to read the entire policy to confirm exactly what’s covered, to what extent and the steps you’ll take if you ever need to file a claim. Home warranties can be especially helpful in providing peace of mind for first-time homebuyers who are unfamiliar with home maintenance and repairs – as well as buyers of high-mileage homes – especially during the first year.

If you are a first time home buyer or have any questions about home warranties please contact me at UlinskiChris@gmail.com


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