How Do Home Warranty Plans Work?
The American dream has inspired you to be a homeowner, and now you're looking for information on new home warranty plans and how home warranties work. It's useful information to know because home warranties offer a lot of peace of mind.
As you shop for a new home, you'll probably notice that no two home purchases are alike. Even in the same neighborhood, some houses have been well-maintained while others need attention. How you handle the purchase of these different home scenarios can vary widely.
However, regardless if a home is newly built or in need of a little TLC, every purchase carries with it some degree of uncertainty in terms of what to expect before and after the sale. For example, what happens if the central air stops working after you move in? Can you afford to repair it? What if a pipe breaks? Will you be able to fix it and prevent catastrophic damage? That's precisely where a home warranty comes in.
How Does a Home Warranty Plan Work?
A home warranty plan works a little bit like insurance but is slightly different. Insurance protects a policyholder against accidental damage and loss through unforeseen events. A home warranty protects a homeowner against breakdown due to normal wear and tear.
Here's how home warranty plans work:
1. You choose and purchase a policy.
2. When a covered item stops working, you call the warranty company.
3. The warranty company reaches out to a contractor on your behalf.
4. The contractor calls you to arrange an appointment.
5. He or she comes to your home and repairs the issue.
6. The warranty company takes care of the charges.
Sometimes home buyers purchase their own home warranty plans, since this can add security and peace of mind to homeownership, but it is often the seller who buys the warranty. This increases buyer confidence because the buyer has the benefit of knowing that if something goes wrong after the sale, it will be covered. This can offset out of pocket costs for cash-strapped buyers.
What Do Home Warranties Cover?
In a nutshell, home warranties cover most appliances and system components inside your home. However, coverage is determined by the plan, and plans vary from company to company and from state to state. Unless you’re talking about a newly built home, one thing to keep in mind is that most warranties do not cover the roof or gutters which can be quite an expense if you have to replace them. So, in that situation, the best thing to do is make sure you have planned maintenance of your gutters and roofing so they will last a long time.
When purchasing your own home warranty plan, be sure to read the coverage details, so you are fully informed and aware of what items are included. Many times, there will be different levels of coverage.
There are more, but here are some commonly covered items in a home warranty plan:
- Garbage Disposal
- Built-in Microwave
- Garage Door Opener
- Electrical System
- Air Conditioning System
- Heating System
- Water Heater
How Much Do Home Warranties Cost?
Home warranties cost between $350 to $600 annually. If you’re purchasing a new home, a quality builder often offers home warranty plans to enhance the buying experience. In the case of a quality home builder like Pulte Homes, there are several tiers of coverage that protect for up to ten years on some items. There may be different plans for different states.
Overall, the cost is less than homeowners insurance and, broken down on a month-by-month basis, it amounts to a few dollars per week. It is not a significant expense and can pay for itself if just a few things break unexpectedly.
How is Liability Determined for Home Warranties?
Typically, a policy only covers an item if it breaks through normal wear and tear. The breakdown can't be due to a code violation or intentional breakage, of course. Also, if a problem is determined to have existed before the purchase of the policy, it may not be covered. It’s essential to read your policy to ensure you know what your coverage limitations are. Overall, though, home warranty plans provide peace of mind to the plan owner.
If a seller offers a warranty as part of a home purchase deal, that is probably the ideal scenario. But even if they don’t, in most cases getting a home warranty at the time you purchase your house is a good idea even if you have to pay for it. Each buyer needs to determine their own financial situation, the age of the home in question, and their ability to make repairs. Most home buyers are not handy enough to repair everything that could break, especially when it comes to repairing a furnace or air conditioning system.
This was an overview of how a home warranty plan works. In many cases, a warranty can provide enough peace of mind to make the American dream the reality it was intended to be.
To find out more about how Pulte’s stands behind their construction and protects their buyers, check out Pulte's 10-year warranty.
Contributed to Your Home blog by Carol Youmans
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