Best Home Warranty Companies

A home warranty plan is an agreement that covers parts of the home and some appliances during the first year after you purchase the home. It can be renewed annually. Each policy is different, so it’s important to read carefully to find out exactly what is covered and how long that coverage lasts. Most commonly, home warranties cover the HVAC, plumbing and electrical systems. They also often cover many appliances.

You pay the company a set sum of money to cover your home for one year at a time. During that time period, if you have any issues with the home, you contact the warranty company to file a claim. At the end of the year, you usually have the option to renew the policy.

Homeowner’s insurance is important because it covers issues that arise from fires, tornadoes, theft and other types of adverse events. It does not, however, cover malfunctioning appliances and home systems that are failing due to age or wear and tear. That is where the home warranty comes in. It covers appliances and systems that simply stop working well because they are wearing out or are nearing the end of their lifespan.

Your home warranty’s cost will vary depending on the size, location and age of your home. Most policies cost between $100 and $600 per year. You can also buy additional coverage for things like ceiling fans, swimming pools and an extra freezer, which would add several hundred dollars to the annual cost of the warranty. It’s important to speak to your agent to find out about different policies and their prices.

A home warranty is not required by the mortgage company the way homeowner’s insurance is. It might be in your best interest to purchase one, however. While some homebuyers feel they are spending too much money on various closing costs and inspections and don’t wish to spend several hundred more on a home warranty, it’s important to remember that you will save money overall if you have costly repairs covered by the warranty. It’s not uncommon to have to replace an appliance or repair a home system during the first year of homeownership, and this can add a few hundred dollars to your expenses.

A home warranty won’t cover claims that are handled by the homeowner’s insurance company. For example, if wind causes damage to your roof, your home insurance will pay for that, not the home warranty. Also, if a fire destroys your washing machine and dryer, that would be the responsibility of the homeowner’s insurance. If the washing machine begins malfunctioning as a result of wear and tear, however, that is something that the warranty would cover.

You are responsible for paying your premiums and also your deductible. Your policy will usually include a deductible that must be paid at the time of the service call for your damaged or malfunctioning system or appliance. The cost of your premiums and your deductible are determined by the warranty company and vary depending on the plan you choose.

• Shop around. Unless the seller has already chosen a home warranty company and is offering to pay for it for the first year, you can choose the business you want.
• Talk to your real estate agents. They work with a lot of homebuyers and will know which home warranty companies are popular in your area. You can also ask friends who have bought homes recently if they are happy with their home warranty companies.
• Make a list of the appliances you’d like covered. You might find that one company’s basic plan covers some of the appliances on another company’s upgraded plan. Be sure to take this into consideration as you evaluate prices and options.

• Look carefully at what is covered in each tiered plan. While you might like to cover your swimming pool and your garage refrigerator, the cost for an upgraded warranty might be substantially more expensive than the basic version. Consider sticking with the basic plan if funds are tight.
• Be sure you are covering enough of your appliances and systems. While you should be judicious about not having too much covered (and paying for that extra coverage), you should also make sure that your warranty covers the appliances that you need the most. If money is tight, you won’t want to pay for dishwasher repairs, for example. This can be a balancing act, but try to get the most coverage you can afford.
• Ask the seller to pay for the first year of the home warranty plan. Many times, sellers will offer to cover this protection in an effort to entice a buyer to make an offer. If you are interested in a home on which the seller has not provided a year’s worth of home warranty protection, ask your real estate agent to include that stipulation in the offer. This will get you a one-year warranty for free.