Lots of things you buy come with a warranty in case they break down, from cars to smartphones. But what about homes? It turns out you can get a home warranty, too.
So what is a home warranty? In a nutshell, it’s a policy you pay for that covers the cost of repairing many of your home appliances if they break down.
“Home warranties provide financial protection for homeowners who might be faced with unexpected problems with their appliances,” explains Shawna Bell of Landmark Home Warranty.
Many people buy a home warranty right when they close on a home, since such protections can provide some much-needed peace of mind that you won’t get hit with unexpected expenses soon after moving in. A home warranty can lessen those worries, which for many is worth every penny.
What does a home warranty cover?
Don’t mistake a home warranty for homeowners insurance. A home warranty, will cover repairs and replacements on systems and appliances due to normal wear and tear—no calamities required.
A home warranty generally covers these items:
- Electrical systems
- Plumbing systems
- Heating and cooling systems
- Washer and dryer
- Kitchen appliances such as the oven, range, and garbage disposal
How much does a home warranty cost?
While home buyers are often required to get homeowners insurance along with their mortgage, home warranties are a fully optional purchase. Basic coverage starts at about $300 and goes up to $600 for more comprehensive plans. A homeowner can add extras, such as coverage for a swimming pool or an external well.
Although many companies offer home warranties to homeowners at any point, the best deals can often be snagged if purchased at the same time you buy the home.
“The warranty plans offered at the time of the real estate transaction typically offer the most comprehensive coverage and price points, so that’s why it’s the ideal time to lock it in,” Bell says. At the end of the first year, you usually have the option to renew your plan or bail.
Benefits for home buyers and sellers
A home warranty benefits home buyers by providing reassurance that they can move in without worrying about shelling out even more for surprise repairs.
A home warranty can also benefit home sellers, since it can cover these elements during the listing period. Some companies even offer free seller’s coverage during this time with the hopes that the buyer will decide to continue the coverage. Oftentimes, home sellers will offer to pay for the first year of a buyer’s home warranty to entice buyers to bite.
But not everyone thinks home warranties are worth the cost. Typically they aren’t necessary with new homes. But in general, the older your home, the greater the odds are that something’s bound to break. Thus it’s wiser to get a home warranty. Best of all? Many companies don’t differentiate between newer and older homes in terms of cost. This makes a warranty an especially cost-effective option if you are purchasing an older home.
What to do if something breaks
If something covered under your home warranty breaks, call your provider and they will connect you with a qualified contractor in your area. Remember: A home warranty does not mean you’re off scot-free; typically you’ll have to pay for a service call or a certain amount of the bill up to your deductible first.
While not everyone will think a home warranty is worth it, it is a good idea for people who lean toward the “better safe than sorry” approach when buying a home.