Buying a Home? Here’s the Lowdown on Home Warranties
As a homebuyer, you’re probably familiar with the excitement and uncertainty that comes with purchasing a new place. One way to alleviate some of that uncertainty is by understanding home warranties. These warranties can provide peace of mind and financial protection against unexpected repairs and replacements. But what exactly are home warranties, and how do they work?
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Let’s break it down.
What is a Home Warranty?
A home warranty is a contract between a homeowner and a warranty provider that covers repairs and replacements for certain home systems and appliances. These warranties are usually optional and can be purchased by the buyer or seller.
Think of a home warranty like an insurance policy for your home. Just as you’d want to protect your car with car insurance, a home warranty protects your home against costly repairs and replacements.
How Do Home Warranties Work?
When you purchase a home warranty, you’ll pay a premium upfront (usually around $300-$1,000) and a service fee (around $50-$100) each time you request service.
Here’s an example:
- You buy a home with a one-year home warranty that covers your HVAC system.
- Six months into the policy, your air conditioning unit breaks down.
- You call the warranty provider, and they send a contractor to diagnose the issue.
- The contractor determines that the AC unit needs to be replaced.
- The warranty provider covers the full cost of replacing the AC unit, minus the service fee.
What’s Covered Under a Home Warranty?
Typically, home warranties cover major home systems and appliances, such as:
- HVAC systems (heating, ventilation, and air conditioning)
- Plumbing systems
- Electrical systems
- Kitchen appliances (dishwasher, refrigerator, oven)
- Water heaters
- Garbage disposals
- Swimming pools (optional)
However, home warranties usually exclude:
- Cosmetic issues (cracked tile, etc.)
