It is a service contract designed to have your clients covered home appliances reach its life expediencies. Should premature failures occur. They benefit the policy holder by alleviating the unexpected costs needed to get the failed appliance or system back to working order. They also provide an alternate solution should repairing the item not be an option to help the policy holder restore order to their newly purchased home. With AFC Home Club, we take the guesswork out of finding qualified licensed technicians to service your clients needs and guarantee their work for the life of the plan.
What Is a Home Warranty? Peace of Mind for Home Buyers
By Cathie Ericson | Feb 10, 2017
What is a home warranty? In a nutshell, it’s a policy you pay for that covers the cost of repairing many home appliances if they break down.
After all, lots of things you buy come with a warranty in case they break down, from cars to smartphones. But what about homes? It turns out you can get a home warranty, too.
“Home warranties provide financial protection for homeowners who might be faced with unexpected problems with their appliances,” explains Shawna Bell of Landmark Home Warranty.
What does a home warranty cover?
Don’t mistake a home warranty for homeowners insurance, which covers your home’s structure and belongings in the event of a fire, storm, flood, or other accident. A home warranty, in comparison, will cover repairs and replacements on systems and appliances due to normal wear and tear—no calamities required.
How much does a home warranty cost?
While home buyers are often required to get homeowners insurance along with their mortgage, home warranties are a fully optional purchase. Basic coverage starts at about $300 and goes up to $600 for more comprehensive plans, says Bell. A homeowner can add extras if needed, such as coverage for a swimming pool or an external well.
Although many companies offer home warranties to homeowners at any point, the best deals can often be snagged if purchased at the same time you buy the home.
“The warranty plans offered at the time of the real estate transaction typically offer the most comprehensive coverage and price points, so that’s why it’s the ideal time to lock it in,” Bell says. At the end of the first year, you usually have the option to renew your plan or bail.
Benefits of home warranties for home buyers and sellers
A home warranty benefits home buyers by providing reassurance that they can move in without worrying about shelling out even more for surprise repairs.
A home warranty can also benefit home sellers (if they don’t have it already), since it can cover these elements during the listing period; some companies even offer free seller’s coverage during this time with the hopes that the buyer will decide to continue the coverage. Oftentimes, home sellers will offer to pay for the first year of a buyer’s home warranty to entice buyers to bite.
But not everyone thinks home warranties are worth the cost. Typically they aren’t necessary with new homes, since most of the appliances are already covered under manufacturers’ warranties. But in general, the older your home, the greater the odds are that something’s bound to break, and the wiser it is to get a home warranty. Best of all? Many companies don’t differentiate between newer and older homes in terms of cost, making a warranty an especially cost-effective option if you are purchasing an older home.
What to do if something breaks
If something covered under your home warranty breaks, you just call your provider and it will connect you with a qualified contractor in your area. One thing to remember is that a home warranty does not mean you’re off scot-free; typically you’ll have to pay for a service call or a certain amount of the bill up to your deductible first.
While not everyone will think a home warranty is worth it, it is a good idea for people who lean toward the “better safe than sorry” approach when buying a home.
Cathie Ericson is a journalist who writes about real estate, finance, and health. She lives in Portland, OR. Follow @CathieEricson
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