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Purchasing a home warranty is often recommended if you live in an older home. It’s also a good idea if you are purchasing an older home. The chances of a major system or appliance breaking down is higher in older homes. A home warranty can cover the costs of repairing or replacing these items. Even newer homes can benefit from having a home warranty, as owning a home has many hidden costs. Expansive home warranties can cover plumbing and electrical systems as well. This can save you money if there is an issue that isn’t covered by the builder’s warranty. One of the most important things to consider when shopping for a home warranty is: What is the duration of a home warranty’s coverage?
A home warranty is not the same thing as homeowner’s insurance. When you own a home, you must also pay homeowner’s insurance. You pay this either directly to the insurance company or through your mortgage lender. Homeowner’s insurance covers your home, its contents, and your family from loss, damage, and unfortunate accidents. For example, if your roof suffers hail damage and needs to be repaired or replaced.
A home warranty, on the other hand, is optional. It covers breakdowns and wear and tear of appliances and systems in your home. Just as with homeowner’s insurance, different home warranty companies will provide different types of coverage. Researching home warranties is extremely important so that you can choose the warranty that best suits your needs.
There’s a lot to read about when you first start researching home warranty companies. But one of the most important things you’ll want to be aware of is: What is the duration of a home warranty’s coverage?
Typically, a standard home warranty contract will provide coverage for one year. At the end of the year, you can opt to renew your contract. Some companies will automatically renew coverage if you don’t instruct them to cancel it. When you pay for a home warranty, you will make monthly, bi-annual, or annual payments, depending on the company.
It’s also important to be aware of any waiting periods a home warranty has. Knowing what is the duration of a home warranty’s coverage, including waiting periods and other terms, can make a big difference. That’s because the actual time your appliances and systems are covered can vary.
Almost all home warranty companies have a waiting period when you first sign up. Normally, there is a 30-day period before the coverage of your home warranty becomes active. That means that when you are determining what is the duration of a home warranty’s coverage, you must subtract the first month. So, you are really only getting 11 months of coverage, even though you are paying for 12.
The reason home warranty companies have a waiting period is simple. It’s so that you can’t sign up for a home warranty and receive coverage the next day for an item that was actually previously broken. Consider it similar to car insurance. You wouldn’t be able to purchase car insurance to provide coverage for an accident that happened before you actually had coverage. Home warranty companies want to ensure that the damage happened after the coverage begins and not before.
Unfortunately, this means that if your HVAC breaks two weeks after you purchase your home warranty policy, you are liable for the repairs. It should be noted that some home warranty companies do have shorter waiting periods. But don’t select one based on that fact alone. Some companies with a shorter waiting period may require you to pay a larger deductible for repairs. There could also be a higher service call fee. Or they might not offer as much comprehensive coverage. You really need to do your research.
There is one exception to the rule regarding the duration of a home warranty’s coverage and the waiting period. More of a loophole, actually. If you are purchasing a new home, you can get a contract for a home warranty before the closing. This way, the coverage period will begin close to the point that you actually move into the home.
Of course, this can also be a risk, since there is always a chance that you wind up not purchasing the home. However, if you purchase a home warranty as part of the real estate transaction, your coverage starts on the day of closing. To do this, you should talk to the seller or your real estate agent, who will have experience with this option. Otherwise, if you purchase the home warranty after closing, you’ll need to wait for the waiting period to end before making any claims.
A home inspection might reveal problems that make you reconsider purchasing the home. Or it might showcase items that you know will likely need repairs in the future due to normal wear and tear. In that case, you’ll know without a doubt that getting a home warranty is a good idea.
One thing that is also important to note is that during the coverage period of your home warranty, you are still responsible for proper maintenance and care of your appliances and systems. If you have an issue a technician will be sent to perform an inspection and possible diagnostics. If the technician determines that the problem is due to your negligence or lack of proper maintenance, then the repair might not be covered by the home warranty.
There are quite a few home warranty companies to choose from. Be sure to read all the terms and conditions so that you can make an informed decision. Several companies offer a variety of plans so that you can choose the one that best suits your needs and offers the duration you need. And be sure to ask what is the duration of the home warranty’s coverage.