Home warranties can provide a peace of mind for homeowners and buyers. However, it is important to be aware of the potential pitfalls of these agreements. Knowing what your home warranty covers is important so you do not make mistakes on what is covered. Most home warranty plans have a contract term and a deductible that must be paid when making a claim. They also typically have coverage limits and may be aggregate or per-item. It is important to review these limits before purchasing a plan to ensure you are protected against over-paying for a repair or replacement.
Depending on the plan, some home warranties also include add-ons like roof leak coverage or well pumps. These are great benefits for people who live in older homes or areas with frequent storms. Home warranties offer a level of protection from unforeseen repair bills that can quickly drain savings. Some plans even include add-ons like roof leak coverage or well pumps for homes that rely on ground water.
Many homebuilders and sellers offer a one-year home warranty as an incentive for buyers, but it is important for homeowners to carefully evaluate the cost of a warranty before purchasing one. It is also crucial to consider if a home warranty would provide protection against unforeseen costs and whether or not it could be rolled into mortgage payments.
To make the most of your home warranty, identify your needs and narrow down providers by requesting quotes and reading sample contracts. This way, you can avoid costly mistakes.
1. Not Shopping Around
A home warranty is often less expensive than paying for repairs out of pocket. However, not all providers are created equal. Before choosing a provider, you should shop around and get quotes for the exact services and systems that you want covered. It’s also important to consider customer service. Look for a company with a BBB rating and positive reviews.
It’s possible that you may be better off skipping the home warranty and instead putting the money into an emergency fund for appliance and system repair or replacement expenses. This way, you can make sure that you are able to cover the costs of unexpected breakdowns.
Many home warranties include a fee for submitting a claim and a deductible, so you should always weigh these factors when considering the cost of a home warranty. In addition, some plans have coverage caps that limit what the provider will pay to fix or replace a specific item.
2. Not Reading the Fine Print
Home warranties offer peace of mind that you won’t have to drain your emergency fund for unexpected repairs, but they also come with annual premiums, deductibles and hidden-in-plain-sight costs. To avoid paying more than a warranty is worth, do your research and read the fine print carefully.
It’s also a good idea to check whether the provider offers sample contracts for review. While they won’t fully reflect the terms of a final contract, they will give you an idea of how extensive the coverage is and what to expect if something breaks down.
For instance, a plan may exclude pre-existing damage and upgrades to appliances or systems unless you register those changes with the company. Additionally, some companies don’t cover luxury items like swimming pools or awnings. Finally, if the home warranty company is owned by a real estate company, that can impact how much of a claim you’ll receive. The home warranty industry is highly competitive, so you’ll need to research companies to find one with a track record of success and satisfied customers.
3. Not Getting Multiple Quotes
If you’re a homebuyer who is stretching your budget to purchase your dream home, you may decide that a home warranty is worth it. Before making a final decision, however, you should seek multiple quotes from reputable providers. This allows you to closely compare the cost of premiums, service call fees and coverage terms.
Start by comparing online reviews and researching companies. When you’re ready to make a final decision, choose a provider with transparent contracts and clear details about costs and coverage. Additionally, it’s important to consider a company’s history. A warranty provider with a long track record is likely to be around when you need them. This is in contrast to newer companies who might have a harder time keeping their promises in the long run.