Like many, you probably think your homeowners insurance policy covers every mishap that can come your way…keep thinking…
Here are a few things to keep in mind when either purchasing home warranties or negotiating for their inclusion when buying a home. While a warranty provides some peace of mind for home owners against unforeseen problems, it’s important to be able to accurately assess their value to you.
Like many, you probably think your home warranties cover every mishap that can come your way…keep thinking.
So, what’s in and what’s out? The specific instances that are and are not covered by typical home warranties depend entirely on the details of your warranty—and each warranty is quite different. So here are some thoughts to keep in mind.
1. Replacement of Major Appliances and HVAC
When major appliances must be replaced or your HVAC system – which is often covered by your warranty – must be replaced, you may not have a lot to say about selecting the replacements. While your home warranty will often provide more than one choice for you in replacing those items, the selection will need to be within the parameters stated in the warranty. This may be just fine, but you should have some understanding of what choices you may have if the need arises.
2. Basement leaks and water intrusion
Damaged caused by slow leaks like seepage and leakage can be denied coverage. Pre existing foundation leaks are not likely covered and should have been disclosed in the sellers property disclosure statement.
3. Sewer and drain backups
If the sewer backs up and fills your house with raw sewage, the repairs may be included in the warranty but you might have to clean up the mess yourself and on your own dime. Again, not all warranties are the same.
4. Additional repairs necessitated by covered items
It’s important to understand your warranty and the specific items covered as they are quite specific. For instance, an item such as a plumbing leak may be coverd by your warranty. While the repair or replacement of the pipe may fall within the parameters of the warranty; the drywall, plaster, tile repair, and painting needed as a result of the repairs may not be covered. A good rule of thumb to keep in mind is: If the warranty doesn’t specifically include an item in question you can not assume that it will be covered.
5. You may not be able to choose the company providing services and repairs.
It most instances your home warranty company will not permit you to select the company that will be providing the services or repairs included in your warramty. The companies providing the services typically have a contractural agreement with the warranty company. If you have a trusted plumber or roofer that you prefer there is a good chance that you won’t be able to choose them to perform the work. You may also have little to say about the timing of the work to be performed. If your Airconditioning goes out in the middle of summer your wait may be at the mercy of your home warranty company assigned contractor. Also, be aware of what the warranty states regarding your responsibility to pay a minimum service call fee. In most warranties you will be responsible for a minimum fee for service calls.
If you’re buying a home, it’s important to have a reliable whole house inspection to assess its condition and the likelihood of future repairs. If there are existing warranties in place for appliances, HVAC or any recent work completed you should check to see if they are transferable to a new owner.
I hope these thoughts are helpful to you in understanding the ins and outs of home warranties. Again, I’m Dan Hendricks with Keller Williams Advisors. If you have any questions about this or any other real estate topic, don’t hesitate to reach out to me. I look forward to hearing from you soon!