What is a home warranty?
A home warranty is a contract that protects a homeowner from unexpected repairs needed on appliance or home systems. Home warranty companies charge a yearly fee as well as a service fee whenever an item needs to be repair or replaced. If you have an item that needs to be replaced or repaired in your home, the home warranty company will cover the cost of the item. The limit of times you can request service depends on the home warranty company. First American Home Warranty does not have a limit on the number of service calls a customer makes. First American Home Warranty also requires that the new homeowner be in the home 30 days before making a service call.
The item that needs repair or replacement must be an item listed within your contract with the home warranty company. The idea behind having a home warranty is that the cost of a home warranty can be cheaper than replacing such items as a HVAC or kitchen appliances in your home. When you have a home warranty, you have peace of mind knowing you are protected from unexpected repairs needed in your home.
Often, when a contract is written for the purchase of a home, the seller will be requested to purchase a one year home warranty for the buyer. The home warranty covers the seller as well up until the time he/she closes on the home.
Home insurance is different from home warranties. Home insurance is required by mortgage institutions in order to obtain a mortgage loan. Home insurance covers such issues as weather damage to the home, damage caused by theft, and injuries that occur at the home.
Home warranties can typically be renewed on a yearly basis. Prices of home warranties vary depending on the home warranty company and the coverage you choose. On average, home warranty contracts can cost $200-$600 a year. Service fees range from $50 to $100, depending on your home warranty provider.
What does a home warranty cover?
There are various packages you can choose from when you purchase a home warranty. The most basic package primarily includes water heaters, plumbing, heating systems, electrical, and kitchen appliances. You can purchase add-on coverage for such items as washer/dryer, air conditioning, swimming pool, etc. Typically, a home warranty will not cover items that were already broken before having coverage. However, some home warranties do cover pre-existing conditions if they were unknown by the buyer. Usually these pre-existing conditions must be conditions that are unnoticeable by the homebuyer and others.