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February 24th, 2020
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Guest Post by Adam Sherman Buying a first home is an exciting milestone in one’s life, but the significant costs involved put tremendous strain on the average person’s budget. After the down payment, moving costs, inspection fees, and other expenses, some new homeowners feel financially constrained. A broken home system or appliance is always a financial setback, but something failing within a year of a home’s sale is a new homeowner’s worst nightmare. Fortunately, purchasing a home warranty when buying a home is an effective way to protect both one’s home and wallet. Let’s explore a first-year home warranty and its benefits. What is a first-year home warranty? A first-year home warranty is a service agreement that covers a home’s systems and appliances for a full year after the closing date. It ensures that items covered by the contract will be repaired or replaced should they break down due to normal wear and tear. Homeowners typically pay a monthly or annual premium and a service fee whenever they need to submit a claim, but they are protected from paying out of pocket for costly repairs. What do home warranties cover? Home warranties are not the same as homeowner’s insurance policies. A standard insurance policy will protect a home in the event of disaster, accident, or theft. Insurance will not cover individual systems and appliances that fail after years of general use. A home warranty can fill those gaps in coverage. Every home warranty policy is different. Some agreements are narrow in scope, covering only a few appliances or systems in the home. Other agreements are broader and will cover virtually anything. Here are some of the home appliances and systems that a basic first-year warranty plan will cover: Refrigerators Dishwashers Ovens, ranges, and cooktops Garbage disposals Exhaust fans Built-in microwaves Washers and dryers Electrical wiring Plumbing Heating, ventilation, and air conditioning (HVAC) Homeowners can usually upgrade their home warranty plans to include coverage for additional appliances and systems. Common additions include septic systems, sprinkler systems, pools, wells, sump pumps, and more. Provided that the appliance or system is not already faulty, the homeowner can likely negotiate with the warranty company to receive coverage. Some warranty providers even provide home services, such as gutter cleaning, roof repair, and pest control. The breadth and flexibility of coverage make a home warranty a worthwhile resource for people of all means and lifestyles. Who pays for a home warranty? There are different categories of home warranties. In some cases, homeowners preparing to sell their home will purchase a warranty plan to entice buyers. Once the home is sold, the warranty is transferred to the new homeowners. This is typically referred to as a seller’s home warranty. Depending on the agreement between homeowners, the sellers may cover all expenses until the warranty expires, or the buyers may take over the premium and/or service fees after the closing date. A home buyer’s warranty is another kind of plan. Homeowners purchase this type of warranty for themselves to receive coverage on systems and appliances after moving into a new home. The homeowners are usually responsible for all costs associated with a buyer’s warranty. Sometimes, however, it’s the realtor who pays for home warranty buyer or seller plans. A realtor may purchase a plan as a gift for a client or to facilitate a home sale. Someone who is interested in a first-year home warranty for a new home will likely purchase a new home buyer’s warranty, but it’s important to communicate with the realtor and sellers to confirm that no one has already purchased a warranty for the home. Benefits of buying a home warranty For most people, a comprehensive first-year home warranty plan that is tailored to the homeowner’s needs is an invaluable asset. Here are some of the most important benefits. Savings — Home warranties are surprisingly affordable. Inexpensive plans go for a few hundred dollars per year. Service fees can range from around $75 to $150, but these are only required when a claim is submitted. The price tag on a new refrigerator dwarfs the annual cost of the average home warranty. If something in the home needs to be repaired or replaced, the home warranty can effectively pay for itself. A home warranty can even boost a home’s value. Convenience — Warranty providers maintain networks of qualified and insured technicians. When something in the home requires servicing, the warranty company can handle the logistics of sending a repair person to the home. Peace of mind — A faulty appliance can be a significant source of stress. It can make a home less comfortable, and the high price tag of fixing or replacing an important machine can generate a great deal of financial anxiety. A home warranty relieves homeowners of these worries. What to look for when buying a first-year home warranty So, is a home warranty worth it? For most people, yes. There are some things to consider as you look for a plan, however. Here are some important tips to keep in mind: Purchase only the coverage you need — A primary benefit of a home warranty is savings. Purchasing a plan that includes coverage for systems and appliances that you don’t own defeats that purpose. You should also confirm there are no active manufacturers’ warranties on appliances in your home. Find reputable companies — Unfortunately, warranty scamming is a real problem to look out for. Thoroughly research your warranty company before agreeing to a plan. Use respected sites and organizations, such as the Better Business Bureau, to find trustworthy companies. Ask questions — Have a list of questions at the ready as you shop around for the right plan. Make sure you understand what is and is not covered. Ask if there are limitations to how much the plan will pay out. Confirm there are no hidden costs or fees. A first-year home warranty is an excellent investment for new homeowners. Just make sure you do your due diligence to find the optimal plan. Adam Sherman has over a decade of experience when it comes to all things related to home service contracts.
We have almost 16,000 reviews in our Home Warranty category, but nearly a third of those are 1 star. While this may seem like a staggering amount, it’s not — most of our site’s categories have about a third of their reviews as 1 star. Home Warranty is right with the rest of the pack, or perhaps even a bit lower. But the home warranty industry has its own unique challenges, and these leave some customers wondering if this coverage is worth the cost and the purported “peace of mind.” We’ve compiled our data in an infographic below to give you an idea of what these customer complaints entail; click on the icons in our directory if you’d like to see an in-depth commentary on what this complaint means and how you could avoid your own 1-star home warranty experience. Slow Response Times Claim Denials Customer Service Bad Techs, Cancellation, and Fees *Because we will be reviewing general complaints, all specific company and reviewer names are removed. To better understand a specific company’s feedback, read their reviews. 56% of reviewers complained of slow repair times Your AC breaks on Friday evening in the middle of summer, and you breathe a sigh of relief that your home warranty company has 24/7 customer service. You call in for help. But unfortunately, none of the techs that work through your provider are available on the weekends — you can count on at least a two-day wait. This scenario frustrates over half of 1-star home warranty reviewers. Sometimes miscommunications occur between the warranty provider and the technicians they employ. This could mean the technicians come at a later time than you expected, or not at all. Home warranty companies using contracted technicians can have the drawback of a slow repair time. While warranty providers create policies addressing contractor professionalism and pricing, these policies can be difficult to enforce from a distance. Additionally, some technicians that perform quality work don’t operate through warranty providers. Home warranty companies want to keep costs down, and so a few technicians complain that they use contractors offering the cheapest services. However, this isn't always the case, and it depends on which provider you choose. Here’s what you can do to ensure you’re working with a home warranty company that will give you prompt technicians who provide quality service: Research the companies you're interested in. If you're reading articles like this, you're on the right track. "Do your research," Courtney Keene, the Director of Operations of MyRoofingPal, affirms. "You'll want to read plenty of reviews. Check all of the 2- and 3-star reviews where available. People who leave those ratings tend to be a little more level-headed and analytical rather than emotional in their review." As you've probably guessed from our research, Keene is right; 1-star reviews can sometimes be exaggerated. Consider a home warranty company that lets you choose your own contractor. If timeliness is your biggest priority, you might be able to find a technician that’s on-call 24/7, or a servicer that specializes in the appliances or systems your warranty covers. However, keep in mind that choosing your own contractor will require more responsibility on your end, and home warranty companies that let you pick your own aren’t always able to negotiate rates like they can with in-network servicers. And be careful: some home warranty providers will void your warranty if you use a technician out of their network. You'll want to know if this is an option before you go with a provider. Find a home warranty company with a rigorous pre-screening process for contractors. Get to know what your prospective company looks for in a technician. How many techs are in your area? It’s better to know this before you choose a company; everything about a home warranty is better to know before you need it. Find a warranty provider with an expansive reach. A home warranty company with millions of customers nationwide needs thousands of service technicians. This improves your likelihood of available technicians that specialize in your equipment and are available when you need them. As a bonus, a large customer base indicates a trusted company. Back to Menu 55% of reviewers complained of claim denials The freezer in your garage breaks. While you’re in the process of dumping spoiled food, you call your home warranty company and ask to file a claim. But unfortunately, you didn’t buy coverage for an extra freezer and they can’t approve your request. This isn’t the only scenario where a claim can be denied. Home warranty companies want to ensure they’re only fixing and replacing appliances that truly need it. If an item was defective prior to coverage, or if your item is past a particular threshold of age, these could be grounds to deny your claim. And as this review suggests, your coverage is typically detailed in a long contract. In fact, you can void your warranty by not following building codes, failing to document prior purchases, or causing “unusual wear and tear” to an appliance. That’s why it’s important to mind your contract. You want your to put your home warranty to work when you need it, so here’s what you need to know about filing claims: Get professional help filing a claim. You have to be careful with your words when filing a claim. "Without the help of an experienced, trained professional, a claimant is likely to stick their proverbial foot in their mouth by using language that voids the warranty," says R. J. D'Angelo, a project manager for JWE Remodling and Roofing. D'Angelo explains that 70 percent of his company's work addresses home warranty and homeowners insurance claims, and he recommends legal counsel or a licensed public insurance adjuster to comb over your claim. As an example of accidentally voiding your warranty, he mentions, "Most warranties and insurance policies have exclusions for floods, but most water damage to homes are caused not by floods but by things like burst pipes or storm-damaged roof leaks, which are covered perils. But if the homeowner files a claim and says, 'Water was flooding into my house,' then it’s a clear 'gotcha' for the warranty provider or insurer." Leave a paper trail. If you have coverage questions before signing up for a home warranty company, call and ask. But don’t take a verbal confirmation at face value — ask the customer service rep where you can find that information in your contract. Your agreements should be documented in writing. Use a home inspection. Some home warranty companies advertise no home inspection as an incentive to select them. While this means less hassle initially, a home warranty company then has difficulty verifying if your damaged item was damaged before your contract. A home inspection can solve this, and several good home warranty companies will look at your home inspection report to determine which of your systems are eligible for full coverage based on their age and damage when you signed the contract. "Usually the warranty company will say that something is pre-existing so they don’t have to repair or replace whatever went wrong," says Mary Burak, a real estate professional with over 30 years of experience. "That’s when the home inspection report becomes extremely valuable. At that point, I usually have the homeowner, or myself, take the issue up with one of the heads of the warranty company . . . a decision maker. Problem solved . . . usually!" Get extra coverage. Your AC may be new and you don’t think it will break, but if it does and it isn’t covered by your plan, you’ll wish you’d opted for that additional coverage. Know what a home warranty company will and won’t cover under a basic plan. Sometimes providers will be finicky about their services; you may only receive coverage for a part of a system, but not the whole item. If you have the extras, get coverage for the extras; there are home warranty companies that will cover everything from your trash compactor to your doorbell. Read also: What Can Void Your Home Warranty? Back to Menu 36% of reviewers complained of poor customer service The complaint of poor customer service is a timeless classic. Check out some of our other review analyses and you’ll see that 1-star reviewers are fed up with customer support across the board. Here’s what poor customer service means for home warranty: If you request help by phone, like many other insurance and finance companies, you might expect long wait times, a complicated phone tree, or frustrating automated responses. But this doesn’t have to be your experience. You can avoid a headache from customer support with these tips: Test a call before choosing a company. See how long it takes you to get through to someone at your prospective company. Ask them questions. Do they seem knowledgeable? Are they helpful? If you’re already confused by a warranty provider’s customer service phone tree, imagine how much more frustrating it will be when your washing machine is flooding your laundry room. Choose a company that offers an online claims process. Maybe you don’t want to make a phone call at all. Some home warranty companies give you the option to file online. This might lead to a delay in scheduling a technician, but it can also mean less stress and time wasted on your part. Don't give up. "I speak with the warranty companies about customer service," explains Bruce, a realtor in Atlanta. "Like most insurance companies, I think they want to make it so difficult you just give up." He describes a time when his double oven went out before Thanksgiving. While his warranty provider delivered a Thanksgiving dinner and a gas grill to make up for delayed repairs, a new oven wasn't approved until January after a couple attempts to repair his old one. Bruce's persistence was what got a new oven for his home. Back to Menu 26% cited technician issues; 10% cited cancellation issues; 8% complained of added fees A minority of 1-star reviews complained about issues with a technician, cancellation problems, or hidden fees. Technician issues included technicians that weren’t knowledgeable, acted unprofessionally, or made the problem worse. This could, in part, be due to the fact that they’re independent contractors, and they can sometimes be newbies who accept the low compensation that some home warranty companies offer. It's important to get to know your local technicians and contractors in conjunction with your prospective home warranty provider before you make a selection. Warranty providers typically include the duration of coverage in their contract. If you want to cancel before your contract is complete, that will probably land you a cancellation fee. But it’s also important to give an advance warning that you’d like to cancel before a contract’s renewal date. Like an insurance company, a home warranty company won’t be too flexible about cancellation and renewal. You may also have to issue a physical letter to request termination. This could seem like a hassle, but having a copy of this for your own records and a mailing certificate could protect you from cancellation issues. Then, some home warranties companies may give you a physical letter acknowledging the cancellation of your policy. While all this paper in an increasingly paperless world might seem wasteful, it could keep you from being in the 10 percent of 1-star reviewers who aren’t pleased with their cancellation process. Eight percent of 1-star reviews complained of added fees. Some claim they were charged a service fee when no technician arrived, others were not aware a service fee would be charged. And others still were surprised by the cancellation fees mentioned above. For most of these hiccups, reading your contract is again the solution. Back to Menu The takeaway Online reviews are a helpful tool in gauging customer perspectives, and anyone researching a company should be sure to check out what its clients are saying. Reviews keep companies accountable if they've been irresponsible with consumers' time and money. "The best answer . . . is to check reviews from unbiased review sites," Benjamin Joseph, the founder of Liberty Home Guard, explains. "Customers want to see genuine feedback from like users." But also remember that it's up to you to do your research on your potential contract, coverage, and the competition of your prospective company. Some 1-star reviewers didn't do their part, and that's why they're unhappy. Check our home warranty company reviews to find out more information about which service may be right for you.
You've finally found the perfect home for you and your family. Now all that's left is to put your house on the market. You're probably eager to get your old home off your hands as soon as possible. But with so many homes for sale, how can you expect to stand out from the crowd? Listing your home at a competitive price and having a quality real estate agent are great ways to make your home stand out from the rest. But what else can you do to make your home the best option in relation to the competition? If you're getting ready to sell your home, consider offering a home warranty. It can be a great tool to appeal to potential buyers and to set you apart from the competition. We've compiled the information below to help you decide if getting a home warranty is the right choice for you and your situation. What is a home warranty? A home warranty covers systems and appliances when they need repairs or replacement. When you get a home warranty, certain appliances in your home are covered for restoration or replacement. This is for those who don't have the funds to make expensive repairs to systems and appliances in the home. It's not uncommon for home warranty companies to offer customized home warranty coverage. You'll be able to choose which systems and appliances you want to be covered. This is a great opportunity to cover only older and/or costly systems. And if you choose to take certain appliances with you, such as a microwave or washer and dryer, you can omit it from your home warranty coverage. Will a home warranty affect my sale? Offering a home warranty can positively affect your sale. Home warranties are appealing to buyers, so it could help you sell your house faster. This is especially the case if the homes in your area stay on the market a little longer than you'd like. If anything, a home warranty can help motivate buyers to seal the deal. Harry Keifer, a co-founder of Achosa Home Warranty, LLC (“ACHOSA”) agrees that "a home warranty can often be a tipping point that assists both the buyer and seller to come to agreeable terms for the sale of a home as home warranties give buyers peace of mind. The history of a property and maintenance of its systems are not always available for a client, so the home warranty can protect against the high costs associated with unexpected home repairs." Carol Gee, an experienced home warranty customer tells us that when her sellers offered her and her husband a home warranty with the home, it made all the difference. "The sellers that we bought our lovely, older home from gave us the home warranty for one year and we continue to use a home warranty to this day. If I ever sell my home, I will definitely provide a home warranty." "As new, first-time homeowners (my husband and I are both retired military veterans) who had lived in military homes almost our entire 20 years in service, we were not aware of home warranties and their value. Warranties are really beneficial, especially when you have older appliances." Gee notes that even if you have newer appliances, a home warranty is still worth it. "Most folks think a home warranty isn't needed when their home and appliances are new. However, unless you have several thousand dollars to repair systems and appliances such as your AC, water heater, and oven (all the items I've used my home warranty for), a home warranty will save you a lot of money, even if you have newer appliances. Home warranties to me are much like health and car insurance. You hope you never have to use them but are happy when you do." How much do home warranties cost? If you're considering getting a home warranty for the house you're selling, there are a few things to keep in mind. Depending on the coverage you choose, a home warranty can cost anywhere from $300 to $700 a year. Typically, home warranties last for a year after the closing date on the new home. And depending on the company, service fees per repair can cost between $60 and $100. What are the benefits of offering a home warranty? It's an incentive for buyers Offering a home warranty can be a good incentive for potential buyers. New and experienced buyers alike appreciate the safety net that a home warranty provides. The last thing they'll want to do is get trapped with unexpected expenses on their new home. Especially if the home's appliances are a few years old, a home warranty can save them money. It gives buyers peace of mind Any home that might be considered hard-to-sell will greatly benefit from a home warranty. For example, if you're selling an older home, providing a warranty is a no-brainer. For buyers who are drawn to the visual charm of an older home but who balk at the thought of out-of-date or worn-down appliances, a warranty gives added peace-of-mind. More buyers will take interest in your sale If your home has been sitting on the market for a while, a home warranty can help drum up some interest. It could be the tipping point for potential buyers who weren't previously interested in your home or who are choosing between multiple options. Companies provide reliable technicians Robert Taylor, a home rehabber/flipper in the Sacramento region, tells us that buyers can have peace of mind "knowing a reputable repair person will be doing the repair. They won't need to spend time looking for a qualified person or wondering if the technicians are going to rip them off trying to sell something they don't need. The last thing you need when you have an appliance failure is a salesperson trying to sell you a brand new system when all you need is a thirty dollar part." It covers current building standards Taylor also explains that home warranties cover current building standards in your area, which could save you a great deal of money. "A premium home warranty plan is coverage for repairs that may involve additional costs to bring repairs up to current building standards. For instance, what if a previous homeowner's installation, repair or modification was not done according to local building codes? A premium home warranty plan will provide funds toward any expenses you may encounter in meeting current building standards. "In some cases, appliances that fail may also require upgrading other components. For example, in California, if you replace your HVAC unit, you'll be required to upgrade your ducting to be energy efficient (Title 24). If you buy only a budget home warranty [or no home warranty at all], you could end up paying several thousand dollars for the upgrades out of your own pocket." It saves buyers money Benjamin Ross, Realtor and Landlord, notes that, "Home warranties are very affordable and offer the new homeowner, who is still a stranger to his new house, a little peace of mind that everything will be okay. I would say from my experience that the most sought after benefit a home warranty has to offer is the ability for the homeowner to have the HVAC system repaired or replaced affordably." Repairs like this can be extremely costly, especially for a new homeowner. Knowing these types of repairs will be covered under a home warranty could put potential buyers at ease. Clara Nicolosi, Owner and Broker of RE/MAX in Hot Springs, Arkansas, agrees with Ross that home warranties are a great benefit, especially for new homeowners. "I am a big fan of Home Warranties, especially for first time home buyers. The advantage of having the home warranty is that many of the mechanical and electrical items in the home will be repaired at a much-reduced cost. The cost is typically a "trade fee" and this amount can vary by home warranty company, but it is typically around $75." That is a small price to pay for a repair or replacement of a big system or appliance that would otherwise cost hundreds or thousands of dollars. For a new homeowner, that could do wonders for your budget. "Having a heat pump go out in the winter and only paying a trade fee to get it repaired, or in some cases replaced, can make or break a new home buyer's budget. I would shop around and find the best home warranty company for your situation, and I am a big fan of having the name and phone number of a representative (a warm body)." Taylor knows that not all buyers will think they need a home warranty, but it's important to explain to buyers that the peace of mind and added protection is worth it. "Buyers may be tempted to avoid a home warranty to save on costs, but it's always a good idea to obtain one, even if your home is brand new. You should think of a home warranty like an insurance policy. You wouldn't think of buying a house without fire insurance. It's just as prudent to make sure you include a home warranty when you buy a home. "After purchasing a home, you may not have the financial ability to handle any significant repairs or equipment failures. Appliances, HVAC systems, and hot water heaters can all fail without notice, even when they look brand new. It's hard to predict if or when an appliance will fail, just like trying to predict if you'll have a house fire." When is a home warranty unnecessary? When your home will sell quickly without one As hard as it is to believe, there might be some situations in which offering a home warranty isn't necessary. If other homes in your area are selling quickly, then it's not worth spending your money on a home warranty. Buyers are clearly already looking for homes in your general area, so you probably don't have to worry about your house sitting on the market for too long. When the home you're selling is a foreclosure Ross also explains that a home warranty likely isn't necessary if it's a home that needs major repairs — a foreclosure, for example, that is being bought by investors looking to buy cheap and flip the home quickly would not be interested in a home warranty. "This is a good thing as many of these homes are not eligible for a full home warranty anyways. Other than that, I can see no reason why a buyer would not want a home warranty included in the sale of their new home." What are the downsides to a home warranty? There's no pre-existing condition coverage Warranty companies have a few specific requirements to keep in mind. Home warranties don't fix pre-existing conditions or appliances that are already broken. Also, your buyers must regularly check and maintain every system and appliance covered by the warranty. An appliance that breaks down due to a lack of maintenance probably isn't covered. The homeowners would have to arrange and pay for those repairs themselves. You can't receive coverage for damages incurred by a broken system or appliance A warranty covers any appliance or system that's broken, but it doesn't repair any damages that occur as a result of the broken appliance. For example, if a dishwasher malfunctions and overflows, the warranty fixes or replaces the dishwasher. But it doesn't repair water damage that occurs because of the broken dishwasher. Again, that'll be left to the homeowners to arrange and pay for those repairs on their own — or use their homeowner's insurance. They require hefty contracts Ross also tells us the downside to a home warranty is the hefty contract you have to sign. "Sometimes you need to be a lawyer to fully understand the home warranty contract. For the typical homeowner, there is a lot left to assumption. It takes a lot of effort to dig down and see what your home warranty is really all about. Also, home warranty companies will go to great measures to repair before they replace. You might have an outdated HVAC system that really should be replaced, but the home warranty company may be reluctant and opt to repair rather than replace it. Most home warranty companies will go to great lengths to band-aid it for as long as they can. This can be very frustrating for the homeowner." Certain companies may have slow repair times Nicolosi also notes another downside. "A downside is each home warranty company has its rules and response times, and sometimes these may not align with how fast we would like the repair completed." To make this as convenient as possible, Nicolosi suggests "Do your research and pick the home warranty that is right for you." Look at home warranty reviews and see which company has positive feedback from consumers and quick response times. This will ensure you are satisfied with your home warranty company because they are responsive and have a satisfied customer base. How can I find a good warranty? Do your research Before you take the plunge, do some research to ensure that you're buying the best warranty. When you get on the phone with a warranty company, there are a few questions you want to ask. With so many warranty companies out there, it's important to make sure you don't get scammed. You want to know what to look for in terms of reputable warranty companies. Read the fine print When you finally decide on a company, make sure to read the fine print. There might be some terms and conditions that cause some problems in the future. For example, keep an eye on how long the warranty contract lasts. If it's longer than a year, you may have reason to be suspicious. Keifer recommends "that you do your own initial research on the market and on real estate professionals in your area to get started. Clarity is important, so take the time to read the fine print and ask questions along the way. Partnering with a reputable real estate professional that has quality local market insights is the best way to ensure your success in promptly selling your home at a price that meets your expectations." What else should I consider when selling a home? Think about getting a home inspection Sure, a home warranty is a convenient service for new homeowners. But chances are, they'll prefer not having to use it at all. Get a pre-home inspection to make sure that all major appliances and systems are running smoothly. Getting a home inspection will cost extra, but it's well worth it. It'll also give you a good idea of what your net proceeds are. Repair appliances and make necessary upgrades If any of your appliances are a bit worn down, make any and all repairs necessary. Even consider making upgrades if an appliance or two are in bad shape. Any steps you can take that will make the move-in process easier for potential buyers are well worth it. Provide a warranty credit Ross also suggests giving the buyer a warranty credit. "Assuming you are selling a functional home, you should offer your prospective buyers a warranty credit. This tells them that you are comfortable with the home's operating systems. Is a home warranty worth it? That's the big question. Should a seller offer a home warranty? Offering a home warranty can increase prospective buyers' interest in your home. You can avoid a few major problems for your home buyers — and yourself — by making sure that you choose a trustworthy warranty company with an excellent reputation. Most buyers will appreciate a home warranty with their new home. If your home has been on the market for a while, it'll most likely help speed things along. Don't underestimate the power of free services. Post also contributed by Natalie Issa Natalie Issa is a content specialist for Credit.com. Her experience spans working with a variety of content, including blog posts and journalistic articles, as well as film and podcasts. She's applied her writing and editing expertise in the retail and digital industries at companies, such as Overstock.com and Deseret Digital Media, while applying her creativity to passion projects in her personal time.
Guest Post by Credit.comMany homeowners have a home warranty. Unfortunately, many homeowners don’t fully understand everything that can void their home warranty. This lack of knowledge can be expensive when the homeowner tries to make a warranty claim.This article will cover some of the things that can void your home warranty. Also, every warranty is a little different, so you should examine your contract to understand anything that could void your specific warranty. How a home warranty works A home warranty works like any other warranty. You purchase it through a third party, they do an inspection, and then you can begin the warranty process.When something covered by the warranty breaks, you call your warranty provider. The provider will then send an approved repair person to fix your issue.If you don’t call the warranty company when you have an issue, you most likely won’t receive any reimbursement for the product. This varies by company though, and you should fully understand your contract before inquiring about any warranty repairs. What is covered by a home warranty? A home warranty can cover many different things depending on the policy. The following is a list of some things that your home warranty might cover. Keep in mind, this varies depending on the policy and the level of service that you purchase. Air conditioning Heating Dishwasher Ductwork Electrical components in your home (fuses, fuse box, etc.) Oven Stove Plumbing Water heater Unauthorized repairs One common way that homeowners void their warranty is by performing unauthorized repairs. This could include using a licensed contractor that is not approved by your warranty provider. It also includes using an unlicensed contractor or attempting to do the repairs yourself.The contractors that home warranty providers use are manufacturer authorized contractors, and this means that they only use authorized parts for repairs and know the proper procedures. Jerry-rigging, or low-quality repairs, are rarely done by manufacturer authorized contractors.Furthermore, all manufacturer authorized contractors put the repair work into a database with the corresponding serial number for the parts. The next repairman will be able to access this database and quickly determine the repairs that have occurred on your home.If you feel tempted to do the repairs yourself because you think you can get away with it, then you should know that authorized service providers can easily determine if a repair has been done or attempted. They can usually tell because of the low-quality parts used or the insufficient repair work.In other words, it’s not worth it to do the repair yourself. It might save you money in the short term, but it will cost you money if the warranty provider discovers it and voids your warranty completely. Unauthorized installation Unauthorized installation is another common way that a warranty can be voided. This usually happens when a homeowner decides to do an installation themselves.Not only must you have an authorized contractor maintain your appliances and fixtures, but the authorized contractor must also install the fixtures. Again, it is done this way so that a proper paper trail manifests for the equipment. Not making prompt repairs Every warranty provider will want you to make prompt repairs. The exact definition of prompt varies by the warranty, so check your contract to see the exact terms. If you have a leaky roof and ignore it, then don’t expect much sympathy if you try to file a claim on your destroyed ceiling fan. It just doesn’t work that way.Prompt repair issues normally occur when you have a small problem that turns into a much bigger and much more expensive problem after being ignored. Plumbing stoppages are one example where this can happen.A homeowner may notice a slow draining faucet and ignore it for a year. The problem could have easily been fixed simply by calling a plumber to snake the pipe. However, the homeowner waited too long, and the plumbing system rusted, so the pipe developed a leak.The home warranty in that scenario might be void since the homeowners could have easily prevented the problem if they had taken the proper steps and ensured preventative maintenance.Overall, remember that pushing off a minor repair could void your warranty. You should always make repairs as soon as you notice them to ensure your warranty stays valid. Also, make sure that you use the proper channels to do any repairs. Unusual wear and tear Warranties do not generally cover the effects of normal wear and tear to equipment. They only cover replacements and damage when a product breaks due to a manufacturer defect or when it breaks during normal use. If you intentionally put your appliances under stress, then you will most likely void the warranty.Examples of unusual wear and tear might include bent ceiling fans from hanging something on the blades. Other issues could be a large amount of grease in your plumbing (improper disposal) or a frozen air conditioner from keeping the air too cold. However, this stipulation can be quite subjective. Generally, the warranty company will assume the wear and tear.A good way to avoid unusual wear and tear is to make sure that you constantly maintain your appliances and fixtures. Also, follow the usage guidelines outlined in the owner’s manual. If an appliance has clear instructions on how to use it, then do not deviate from those instructions. Lack of documentation Do you tend to misplace your receipts or user manuals? Don’t do that if you want to maintain your home warranty. The receipt, user manual, and other documentation that comes with new products and equipment often contain everything that you need to set up and secure your warranty. Your home warranty provider might also require this documentation before beginning any repairs.It can be difficult because a home warranty will often cover all kinds of different appliances and you might keep the documentation for your air conditioner, but not many homeowners keep documentation for their ceiling fan or garbage disposal.A good method to employ so that you don’t lose your documentation is to keep it in a place where it won’t get mixed up with other documents.Another good way to keep your documents safe is to keep a scanned copy on your computer. When doing this, make sure that you scan all the documentation and that it is easy to read. You don’t want a blurry copy. Additionally, ensure you have a backup copy available as well. A scanned copy might not always work for your home warranty, but it is better than nothing. The best thing you can do is to keep the physical copy. Not following building codes Do you keep your home up to code? Most homeowners don’t keep their home up to code, and this might sound surprising.Many municipalities will update building codes every year. The only reason homeowners have for making sure their building is up to code is when they want to do a renovation. A city home inspector will visit the property and only issue a permit if the building meets building code.Your warranty might become void if you fail to stay up to code, which is a good reason to stay up to code on your home. This might sound strict, but building codes are put in place to ensure the safety of your home. The types of violations that can void your warranty tend to be the ones relating to safety, which usually relate to plumbing and electric. Final thoughts A home warranty might be financially responsible, or it might not make financial sense. This will vary from person to person. If you do decide to go with a home warranty, then you certainly want to make sure you don’t accidentally void it. Following the steps listed above should help ensure that your warranty always stays valid.Make sure that you review your contract to find any other scenario that could possibly void your warranty and be sure to report any damages or issues immediately, so they can get repaired.
Guest post from Credit.comEvery day, millions of Americans are talking with banks, advisors, and finance industry leaders to see if buying home warranties is worth the effort. Many people hold a simplified view of warranties in general. The line of thinking is that if an item breaks, malfunctions, or needs basic work, a home warranty goes into effect to replace or fix the issue at hand. Generally, this is true. For example, according to bankrate.com, “When your 20-year-old refrigerator springs a leak, what do you do? Your first instinct may be to decide between a costly repair and an even costlier replacement.” With a home warranty, the refrigerator repair could potentially be free. Home warranties defined Many contemporary home purchases come with home warranty policies considered by buyers to be a significant perk built into the purchase. The warranty goes to work for the homebuyer when significant repairs on certain appliances, plumbing, heating, and cooling equipment are required. Thus, homebuyers have a boosted sense of confidence when making their home purchases, with the knowledge that even if costly repairs might eventually be required, they will be covered by the warranty. Issues associated with home warranties According to Tri-Region CEO Carl Knighten, “A home warranty contract promises to keep working items working for a certain time period, usually one year.” In today’s day and age, a year is nothing, especially when it comes to a long-term investment such as a home. One trend for homebuyers is to seek out a home they fall in love with and want to spend the rest of their lives in. Long gone are the days when the majority of the populace moved around from area to another. More people today are staying put, investing in their homes through remodeling and renovation and personalizing them to their heart’s content. For the person or family who loves their home and has no intention of moving soon, a one-year warranty is practically a joke.Major equipment will rarely fail, break, or need replacement within a year's time. It is only after many years of inclement weather, rust, corrosion, and other conditions such as age that homes often need significant repairs. Two types of home warranties Homebuilder warranties: Attached to newly built homes, these warranties are priced into the selling price of the home. A Home Builder warranty usually has coverage lasting six months for appliances and spans ten years for structural damage defects, a single year of coverage for paint, drywall, and stucco, and two years covering HVAC and electrical and plumbing defects. Home warranties via company policy: Home warranties are company policies put in place for the buyers of pre-existing homes. Typically, real estate agents or the seller of the home pay for the home warranty policy and build it into the price of the home. Costing around $200 to $300, home warranty policies will cover specific appliances, in addition to the furnace, plumbing, and air conditioning systems for a year. There is almost always a deductible involved of around $100 per repair that applies to each repair service rendered. Additional facts about home warranty policies Available to homeowners and homebuyers, particularly after the purchase of a foreclosed property Banks will not pay for home warranties on homes that are sold via short sale or foreclosure, so the cost of the warranty is the burden of the buyer Home warranty policies are thought to give homeowners and homebuyers peace of mind in potentially problematic situations, but many people who buy these warranties are unclear on what coverage entails Warranties exist to ensure important components in the home function properly and do not provide homeowners with new equipment or any kind of replacement What often happens is that the consumers get angry and confused, as inevitably the decision to purchase new equipment or pay the deductible for repair services becomes an issue. They also dislike the overall lack of control they have in any type of repair process, including the specific subcontractor sent to perform the work.People want home warranty policies to be clearer, but that also means that consumers need to realign their expectations for repairs and replacements and realize they are ultimately getting the services they are paying for. If you have a cheaper home warranty policy, you are likely going to have to pay a higher deductible, and you aren’t going to get as much coverage as you would for a more expensive plan.Consumer complaints typically arise because customers don't understand the terms of their home warranty contract and what's covered in their policy. Anyone interested in a home warranty should read through the fine print to ensure the policy is clear before signing a contract.Thankfully, home warranties have a variety of plan options for consumers so they can personalize their contract to best fit their needs. Home warranties can be beneficial if you make yourself familiar with the policy beforehand. Benefits of home warranties Undeniably, home warranty policies can provide a bevy of tangible benefits for some homeowners. Particularly with recent purchases of older homes, home warranties can save owners a significant amount of money, depending on the extent of repairs needed. However, this will not apply to every homeowner. Some homeowners will rarely, if ever, have to contact their home warranty company for a repair, thus having spent the money on an unneeded policy.However, homeowners can not always accurately predict if they will need a home warranty or the potential extent of repairs their property will need over time. As a result, homeowners need to set realistic expectations to make the policy worthwhile. Making your home warranty policy optimal for your situation largely depends on the property you bought. After doing a self-inspection, hire a professional to do a comprehensive inspection of the home. Factoring in the age of the home and the overall condition, you can then research to compare the coverage levels available and their associated deductibles to decide what is right for your particular situation. Plenty of homeowners will insist on buying a home warranty for the peace of mind it affords, despite the condition and age of the home. Purchasing a home warranty is not so much a guessing game as it is a compilation of information and your set of expectations attached to the home warranty. An older house with a few obvious issues is a great candidate for a home warranty, while a house built two years ago that exhibits no issues through professional inspection might not benefit from a warranty. Taking care of your property is an important factor that comes into play as well. Keep up with regular maintenance, servicing, and cleaning of important equipment and systems. Doing so may save you from ever having to get in contact with your home warranty company. Even so, the company will come fix your equipment that has failed from normal wear and tear, but you will pay a deductible.Home warranties are vital resources for countless homeowners and can save them money. For many other homeowners, a home warranty is essentially a waste of money for a resource that never ends up getting utilized. To decide whether a home warranty is a good decision for you, take stock of the age, condition, and usage of appliances in the home. Read reviews of top-rated home warranty companies, such as Landmark Home Warranty (rated #1 on Best Company) and determine what home warranty company is right for you.
Like many homeowners, you've probably wondered if you should get a home warranty. You want protection for your home systems, but is it worth the cost? There are mixed opinions about whether purchasing a home warranty is the right choice, and it can be a difficult decision. With the information below, you can decide for yourself if a home warranty is right for you. What is a home warranty? A home warranty is a service agreement meant to cover the repair or replacement of systems and appliances in your home. If a covered system or appliance needs fixing or replacing, you make a claim to your home warranty company, and a service provider will come to your home to diagnose the problem and determine how to move forward with fixing or replacing the item. Why do I need a home warranty if I already have homeowners insurance? A home warranty is different than homeowners insurance. Although they both offer protection for the home, it is a different type of coverage. Homeowners insurance protects you if your house sustains damage from a fire, lightning strike, windstorm, theft, etc. What does a home warranty cover? A home warranty covers major systems and appliances in your home, such as cooling and heating systems, washers and dryers, electrical systems, plumbing systems, kitchen appliances, etc. Many home warranty companies allow you to customize your home warranty coverage by choosing which systems and appliances you would like coverage for. How much does a home warranty cost? The average home warranty costs between $350 - $600 per year, depending on the type of coverage you choose. Basic coverage is at the lower end of the range, while more extensive coverage is at the higher end of the range. If you can afford the upfront cost of the home warranty as well as the possible additional service fees, a home warranty is most likely worth it for you. Even though you have to pay a yearly cost for a home warranty as well as additional service fees, this is still likely to be significantly cheaper than fixing your systems and appliances out of pocket. How much do home warranty service fees cost? The average home warranty service fee ranges from $50 - $100. Do home warranties require a home inspection? Usually, home warranties do not require a home inspection. Many home warranty companies advertise no home inspection to make the process simpler for the customer. However, some home warranty contracts state that preexisting conditions for your systems and appliances aren’t covered. Without showing your home warranty company the condition of your systems and appliances at the time of the purchase agreement, your claims could go unapproved. Consider doing some kind of inspection with your home warranty company to ensure you both know the condition of your systems and appliances at the time of purchase. Is a home warranty worth it? The answer depends on numerous factors: What experienced home warranty customers have to say The reputation of home warranty companies in your area The age of your systems and appliances Your ability and inclination to do home repairs yourself Your desire for peace of mind Your budget What experienced home warranty customers have to say Ask for a home warranty when closing on a house Realtor Patricia Vosburgh advises all her clients to include a home warranty with the closing deal. She explains doing this helps with the sell and also ensures the homeowner has coverage in case anything breaks after purchase. Vosburgh mentions that costly repairs such as an air conditioning system can be upwards of $3,000, so the cost of a home warranty is worth the initial cost. If you’re in the process of buying a home, see if the seller can throw in a home warranty as part of the closing deal. Find a reputable company As a home inspector, Michael Marlow has significant experience with home warranties and has had a home warranty for every house he has owned since 2000. Unfortunately, Marlow found out the hard way that not all home warranty companies deserve your business:We purchased a new construction home in 2003, and about 18 months later (right after the builder’s warranty expired), we started having problems with the HVAC just quitting… Over the course of the next four years, we had the home warranty company send out a tech for the same problem, paying a service call each time, and they repaired it. Mind you it was a different company each time. When the system finally died in 2008, we called them again, and their service technician reported that the system had been so modified by previous technicians that the system could no longer be repaired. The solution the home warranty company provided me was to give me cash in lieu of repairs, so they gave me $700. It ended up costing me $7,000 to have the system replaced.Marlow also reports hearing from past clients that some home warranty companies have claimed preexisting conditions on claims when his inspection report clearly notes that the system was working at the time of the inspection.Fortunately, Marlow switched home warranty services and now has a more trustworthy home warranty company. If his home inspection says a system or appliance was working at the time of inspection, the home warranty company will not deem it a preexisting condition. He also doesn’t have to worry about the home warranty company refusing to service a system because of previous attempts. If you find the right home warranty company, you don’t have to worry about dishonest business practices and a company ripping you off. Read the fine print To avoid any miscommunication between you and your home warranty company, Marlow advises “Read the fine print. Don’t just go by the flyer or your realtor’s recommendation; Get a copy of the full policy and read what is covered and what is not covered.” Morgan St. James, an author and home warranty customer, notes that a home warranty can definitely be worth it, but there are some things to look out for — and reading the fine print is one of them. "In my opinion, a home warranty is worth it if you have researched what the particular company covers. I’ve maintained one on my home since it was new (18 years). The main advantage is that it is a hedge against unexpected expenses, but only if your particular warranty covers the item that has gone kaput. "My first company replaced a water heater (expensive repair), repaired my air conditioning compressors and thermostats, replaced a valve in the tub of one of my bathrooms, fixed my built-in microwave, worked on a refrigerator repair, and miscellaneous other items. Well worth it, right? However, after 12 years, they changed their exclusions and, of course, the previously covered item I called about was now excluded as well as several other items." To avoid this, "If your policy automatically renews, check any changes in exclusions for the coming year." Look at home warranty reviews Real estate expert, Benjamin Ross, notes a similar problem to Marlow. "Some home warranty companies will go to great lengths to repair before they replace a part or unit. They will repair even if the best option is to replace them. This can be very frustrating for the homeowner. Scheduling multiple appointments for the same problem with no end in sight can be very frustrating and inconvenient." Like any industry, not all home warranty companies are trustworthy. Reading online reviews can help you avoid situations like Marlow’s and Ross's. The common theme in customer reviews seems to be home warranties are worth it if you find a trustworthy company that will not take advantage of you. Make sure the company you choose has trustworthy sales tactics and that they don't try to cheat you out of replacements based on contractural issues or a claim of pre-existing conditions. Even having home warranty issues in the past, Ross still says that home warranties are worth it. "I have used them for years and saved thousands of dollars. Just be sure you understand the ins and outs of the agreement." James has similar thoughts to Ross. "Read what their customers have to say about [the home warranty company]. There will always be negatives on any company, but what is the percentage of good to bad and what was the experience of the customers with a low rating? Ask home warranty companies if they're licensed in your state David Moreno and Benjamin Joseph, founders of Liberty Home Guard, explain that an important part of vetting home warranty companies is to ask them if they're licensed. "It is of the utmost importance to homeowners that entities are licensed in the states in which they operate. Even if a consumer lives in an unregulated state (like Maryland), he/she should still ask the company if they service regulated states (like California, Arizona, and/or Texas). If the home warranty company says yes, then the consumer should do his/her due diligence to verify this information by asking for the company’s license number, or just by searching the particular state’s database. This is a great way to tell whether the company is being forthright with you or not." Look into the claims department Moreno and Joseph also note that the claim process can make or break a positive home warranty experience. "Consumers should call a company’s claims line to see how the people on the claims team (that is, the department actually servicing customers) interact with them. Are the claims personnel willing to talk and answer questions? Do they answer questions quickly and in a professional manner? Are they effective communicators and the type of people you would want behind you? "Of course, it's always important to read the contents of the policy, but frankly and unfortunately, there are too many providers out there who promise the world in a policy and then don't deliver. As an example, if an AC unit has a refrigerant leak, that's virtually always irreparable. However, many home warranty companies that promise the world in their policy opt for the very short-term and damaging repair job of pumping the system full of more refrigerant, which is bad for the system, bad for your home, and bad for the environment. "By opting for this quick-fix, these companies are potentially exposing your household to harmful chemicals. At Liberty Home Guard, for these types of breakdowns, it is standard procedure to replace the unit, and we don't shy away from such replacements. In other words, we don't apply short-term fixes to long-term problems, and we don't promise the world with no intention of delivering." Take into account the age of your systems and appliances Real estate agent and homeowner Ian Bush advises “when deciding if you are going to purchase a home warranty, I think you have to consider the age of the appliances in your home, their typical lifespan, and whether or not you can afford to fix or replace them when they fail.”Bush has lived in his home for 18 years, so many of his appliances are at the end of their life. He purchased a home warranty to reduce the cost of the repairs and replacements when they fail. Bush notes that because most home warranty policies include three tries to repair followed by a replacement, it is a relatively inexpensive way to protect your systems and appliances. Having older appliances makes a home warranty worth the investment, and Bush ended up saving significant money and time in the long run. Ben Mizes, a licensed realtor and CEO of Clever, agrees that you need to take into account the age of your appliances. "Home warranties are a great option for homeowners who might not be able to afford large and unpredictable repairs or homeowners who own old homes that will need many repairs. A typical home warranty costs between $300-$700 annually and will cover major appliances and systems, although warranties usually won't cover pre-existing conditions or problems that are caused by a lack of maintenance." We discuss his last point of lack of maintenance in the next section. However, if you have a newer home and your systems and appliances are in good shape, you may consider holding off on a home warranty. Melanie Hartmann, owner and CEO of Creo Home Solutions, has advice for those in this situation: "if you have time left before the bulk of your systems will need to be replaced, it may be more cost effective to set the money you'd pay for a home warranty aside in a high return savings account. This way, you have access to the funds when they are needed and can choose the company you want to fix or replace the system. Additionally, depending on the account that is set up, you'll also earn interest on the money that is set aside. Hartmann does note that "this will only work for those who can set the account up and only draw money from it when needed." If you can't guarantee that money for home repairs, "it may be best to purchase a home warranty from a reputable company so that there is no temptation to spend those funds on something else." To help you determine the age of your systems and appliances, check out the infographic below that shows the average lifespan of systems and appliances and their average replacement costs. Infographic from Landmark Home Warranty, the #2 rated home warranty company on BestCompany.com as of December 2019. Practice proper maintenance on systems and appliances Andrew Helling, a Nebraska-licensed real estate agent and the owner of REthority.com, advises everyone who has a home warranty to complete proper maintence on covered systems and appliances or else home warranty companies can deny coverage. Helling explains why: "Home warranty companies exclude appliance or system failures due to improper installation or maintenance. For example, furnace filters should be changed at least every 6 months to avoid HVAC damage. If the filters are not changed and the system fails, the home warranty company will not cover the damage because the system was not properly maintained." If you opt for a home warranty and pay all of this money upfront, you don't want to be denied coverage just because you weren't properly installing or maintaining your systems or appliances. We suggest keeping a list of all necessary maintenece work and completing it regularly as well as ensuring the installation of all systems in your home is done correctly and efficiently. Use home warranties for your peace of mind When asked if her home warranty is worth it, homeowner Carol Gee didn’t hesitate to say “yes.” Gee first had a home warranty as part of a closing gift from the seller of her current home. At first, Gee and her husband did not use the home warranty, and they wondered if they really needed the $350 yearly expense. Two weeks before the end of her home warranty agreement, Gee walked into her laundry room only to be greeted by several feet of water — her water heater had died. Gee’s husband called the home warranty company to explain what happened and by the following day the technician had installed a new water heater and hauled the broken one away. Since then, the Gees have used their home warranty for their air conditioning system, furnace, oven, and garbage disposal.Now that they know how helpful a home warranty can be, the Gees don’t want to be without it, especially now that they are retired and don’t want to worry about unexpected repair costs. Gee happily recommends home warranties to everyone she knows. Gee sums up her home warranty experience by explaining that home warranties are like life insurance and car insurance: you hope you never have to use them but you are so glad you have them when something goes wrong. A home warranty gives you peace of mind that you won’t be left scrambling when a major system or appliance breaks. We also spoke with Becky Beach, designer and blogger for MomBeach.com, who told us that she's had a home warranty for years and it not only gives her peace of mind every year, but it also saves her a great deal of money. "The home warranty company that I have is American Home Shield and have had it for 5 years. It has saved us so much money! Our A/C went out during the Summer in both units, upstairs and downstairs, so our home warranty company covered most of the cost. I can't imagine what we would have to pay out of pocket. "The plan covers all of our appliances too like the fridge, washer and dryer, and dishwasher. We had a problem with our fridge's ice maker so called the home warranty to get a technician out there." However, Beach notes that even though a home warranty is great for saving your money on repairs, you often have to pay a small chunk in repair fees. "Every time a technician comes out, it costs us $70. That's a complaint I have because in the case of our A/C going out, they had two different technicians from two different companies service our top floor and bottom floor units. That was a big headache! I wished they would have had both units be serviced by the same company." So if you are interested in a home warranty, be prepared to pay the required service fee for every visit. And if you want the technician to be from the actual company, ensure the home warranty company you select doesn't outsource its work to third-party technicians. Use home warranties for systems and appliances you can’t or don’t want to fix yourself Like many homeowners, Debi Goldben is handy when it comes to minor home repairs. However, there are costly and difficult repairs that she does not want to do herself. With major systems and appliances that are difficult to fix, Goldben feels a home warranty is “worth its weight in gold.” Since having a home warranty, Goldben has had numerous major systems and appliances fixed and replaced, saving her at least $3,000.A home warranty is a great resource because it can take care of all the major fixes you can’t or don’t want to do yourself. Many home warranty companies even offer customizable coverage that allows you to choose the systems you want covered, which ensures you are only paying for the coverage you want. Ask for a home warranty when closing on a home Often times, you can receive a home warranty as a closing gift from the sellers of the home you're buying. Then, you don't have to pay the annual fee and you only have to worry about service fee costs. Connie Heintz, with the company DIYoffer, did just that and she's grateful that she did. "When I purchased my second home, I asked the seller to include a one-year warranty in the price of the house. I figured that by taking responsibility for the cost of the warranty, they’d be more incentivized to make repairs before I moved in. Luckily they were happy to oblige, as there was a major plumbing failure a few months after I bought the property. If I hadn’t done that, I would’ve been stuck with a hefty bill." Heintz makes a great point that if sellers include a home warranty as part of the transaction, they'll be more incentivized to make system and appliance repairs before you move in. And from the seller's point of view, incentiving a home warranty with the sell of your property will likely encourage someone to buy. Anything that makes your offer stand out above the rest is worth it. Be selective about the home warranty plan you select Many consumers opt for basic home warranty packages thinking it will cover most home repairs and are disappointed when they come across a more complex system or appliance issue and their home warranty doesn't cover it. Home warranty packages are not one size fits all, so you need to make sure the plan you're getting covers everything you need it to. To help with this, Melissa Zavala, a Broker of Broadpoint Properties, suggests the following: "It is important to take time to check what is covered and add additional coverages before purchasing. As an example, plumbing from the main to the home is often not covered unless you pay for the extra option. So, spending a few minutes looking that over and considering the benefits of the add-ons can be a good idea." Zavala notes that this is when home warranties can still be a valuable purchase. "When used properly, it can save you big bucks on roof issues, hot water heaters, dishwasher and oven issues among others. Most newer model ovens have a computer microchip that provides the digital display and wears over time and is very costly to fix. So having a home warranty just to address that single issue can save a person hundreds of dollars, maybe even thousands depending upon the type of oven." If you do your research and get the type of coverage your home needs, a home warranty definitely has its perks. Let’s recap. A home warranty is worth it if: You received a home warranty as a closing gift You can afford the yearly cost and the possible additional service fees You have found a trustworthy home warranty company with good reviews You read the fine print and understand exactly what your home warranty entails Your systems and appliances are likely to need a repair or replacement within the year You want peace of mind knowing your home’s systems and appliances are covered in case they break or need replacing You don’t want to or can’t fix certain systems and appliances on your own Let us know what you think — Take this poll Do you think a home warranty is worth it? Yes No Created with QuizMaker
It's easy to assume that most home warranty companies offer the same quality of services to be competitive in the industry. However, it comes down to the fine print in your contract and the company's history and reputation of delivering on its commitments. As you evaluate home warranties and home warranty companies, ask the following 10 questions: What does the home warranty cover? What are the exclusions and limitations? How does coverage compare to competitors? Has the company been sued for unethical business practices? What customer support does the company offer? How does the pricing compare to competitors? What do customer reviews say about the company? How long is the contract? What's the cancellation policy? What's the renewal process? 1. What does the home warranty cover? The first thing you need to understand is the coverage offered by the home warranty provider. You'll often find similarities in covered appliances and systems across companies, like heating and air conditioning systems, refrigerators, dishwashers, and more. Most home warranty providers also offer add-on coverage options like pool or spa coverage so clients can customize their plans to meet their needs. However, you'll want to review the coverage terms to understand what you're getting. To fully understand the coverage, you'll need to review a sample contract at minimum. Most home warranty companies only cover specific circumstances and certain parts or components. Some companies will offer additional service alongside their home warranty plans. These additional services can include annual tune-ups for heating and air conditioning systems or some pest control services. 2. What are the exclusions and limitations? Exclusions and limitations are included in most home warranty contracts. Specifics vary by company, so it's important to review yours before you make a purchase. Common exclusions include Pre-existing conditions Poor maintenance Certain parts and components Some companies offer coverage for unknowable pre-existing conditions or allow you to add coverage for pre-existing conditions at an additional cost. You should also note what the contract says about the company's obligations when it comes to replacing parts or appliances. Most companies focus on matching efficiency, so they won't match size, brand, or color. Look for information about a waiting period, too. Home warranty companies often have a 30-day waiting period before your coverage starts. Some home warranty companies may waive the waiting period if you can demonstrate consistent, prior coverage. 3. How does coverage compare to competitor offerings? As you look at companies, consider what kind of coverage you want. Some home warranty companies offer an appliance-only, a systems-only, or a full coverage plan. Other home warranty companies offer tiered plans that offer coverage for both home systems and appliances, though the number of included items varies. Some home warranty companies offer additional services, like pest control with their plans. Most home warranty plans are customizable, which means you can add coverage for more things to your plan. Pool or spa coverage is a common option. 4. Has the company been sued for unethical business practices? Some home warranty companies become involved in legal disputes as a result of bad business practice. While you can ask company representatives about current or past lawsuits, you'll have better luck if you do the research yourself. Consider any lawsuit involving the company carefully. If you see a large number of similar lawsuits, that's a definite red flag. 5. What customer support does the company offer? The most important aspect of customer support to review is the company's claims process. The cost-savings and ability to file claims is what you're paying for, so you need to know that the home warranty company will be there for you when you need it. Most home warranty companies have the same essential claims processes: You file a claim online or over the phone. The company responds to your claim within a certain timeframe, typically within one to two business days. There are usually expedited responses for emergency circumstances, as defined by the company. If your claim is accepted, you'll be assigned a contractor from the company's network who will then contact you to schedule an appointment. Coverage levels and timelines for replacements or larger repairs vary. For more details on these, you'll need to talk to a company representative and read customer reviews to understand more about the claims process, timing, and coverage levels. 6. How does the pricing compare to competitors? Sometimes, companies provide you more value at a slightly higher price than if you go with the cheapest option. Try not to default to the cheapest option without first comparing the prices with the options of other home warranty plans. Typical monthly prices vary depending on what home systems and appliances are covered by your plan. For plans that only cover appliances, prices can range between $230 and $600 annually, though it will vary depending on your home size and coverage specifics. Plans that cover only systems, generally fall between $240 and $720. Again, these vary depending on your home size and the contract's specific coverage. Some of the cheaper plans may not cover as many things as the more expensive ones do. If your plan combines coverage for systems and appliances, rates can fall between $375 and $1,500 depending on your plan's specific coverage and the size of your home. Some home warranty companies offer tiered plans that offer coverage for a different number of systems and appliances, so some of these plans are on the cheaper end. More comprehensive plans will be more expensive. Service fees typically range between $60 and $125 per visit, with most companies charging around $75 per visit. Some companies allow you to choose your service fee, though this typically affects your contract fee. The lower your service fee, the higher your contract fee and vice versa. Note the differences in the contract fees with each service fee amount. If there are huge differences, you may want to choose another company. 7. What do customer reviews say about the company? No company is perfect. You need to find out what customers are saying about each company — this should be your number one resource for choosing a company. Try reading as many home warranty reviews as possible. Think of your search for home warranty coverage as an interview. Make each company sell their service to you. You need to make them work for it. Companies that admit deficiency are more likely to be honest than ones who claim to be the best in every aspect of their business; every company has a flaw. The trick is to find which one suits you best. 8. How long is the contract? You need to understand the length of the contract you're buying. Most sample contracts last 12 months. Sometimes this 12 months includes a 30-day waiting period, which means you'll have 11 months of coverage. Some companies address this concern by offering 13-month contracts at the same rate, so you don't have to pay for the waiting period. You can also find companies that offer contracts as long as five years at lower monthly or annual rates. This contract length is nice if you're getting the service you need. However, if you need to get out of the contract, a longer contract can be trickier to manage. However long your contract, you need to understand how long you'll be paying a contract fee to ensure that it fits your budget. 9. What's the cancellation policy? Even though you probably don't plan to cancel a subscription when you buy it, it's smart to understand the process and terms of cancellation. Most home warranty companies offer a full refund if you cancel within the first 30 days and have not made a claim. Generally speaking, you'll receive a prorated refund of your contract fees if you cancel after 30 days or have made a claim. Home warranty companies will subtract the costs of services rendered and a cancellation fee from your refund. In some cases, this process means that you'll need to pay the home warranty company to cancel. Other home warranty companies just take the lesser of the combined cancellation fee and services rendered or the rest of the contract fee for the term. 10. What's the renewal process? Along with understanding how cancellation works, note whether or not your home warranty plan automatically renews. Many home warranty companies will automatically renew your contract at their option. You should receive notice of any new terms and rates before the plan renews. If you don't want to renew, you need to understand the process for opting out. These processes vary by company. You may need to give the company a certain amount of advance notice or provide written notice of your plan not to renew.
It’s no secret home warranties do not have a good reputation. However, that reputation does not change the fact that there are reliable, reputable home warranty companies out there; you just have to know what to look for. Not all companies are attempting home warranty scams. There are many details to take into consideration before deciding if a home warranty company is worthy of your business, but don’t worry; we’ve created a comprehensive guide for you to follow and help you find the right home warranty company for you, all the while avoiding the scams. Look for top-rated home warranty companies in your area Before you spend a great deal of time researching home warranty companies, you want to make sure they 1) service your area 2) are top-rated in the home warranty industry. You don't want to waste your time researching a company that doesn't service your area and/or is low-rated with an overwhelming amount of bad reviews. How do I find top-rated home warranty companies? Go to a trusted consumer review site like BestCompany.com and see which home warranty companies in your area have the best rankings. Best Company makes it simple by having state filtering already set up without you having to do anything. When you visit the home warranty page, BestCompany’s website will automatically know from your browser where you are located and will immediately filter the top home warranty companies to reflect ones that are near you. Or, if you want a list of home warranty companies in a different state, you can filter it manually. You can also choose if you want the results filtered by Top Ranked companies or by a company's Star Rating. On BestCompany.com, we rank home warranty companies on a variety of different data points. User reviews make up 75% of the company's score, and company details, such as fees, contract length, and time in business make up 25% of their score. Here's the exact breakdown: 1. User Review Index Score (75% of Overall Score): Star Rating of Reviews (52.5%) – The average 1-5 star score of a company’s published consumer reviews. Number of Reviews (17.5%) – The total number of reviews that have been published about a company. Responsiveness to Reviews (5%) – A company’s responsiveness rate to its consumer’s reviews that have a star rating score of 3 or lower. 2. Market Index Score (25% of Overall Score): Recurring Fees (5%) – The affordability of any fee a company charges its customers on a recurring basis. One-Time Fees (5%) – The affordability of a company's up-front or onetime fees it charges its customers. Contract or Warranty Length (5%) – The length or term of the contract/warranty to which a company requires/offers its customers to consent upon purchase of the company's product and/or service. Brand Search Volume (2.5%) – The number of online search queries made by consumers that contain the company's brand name. Time in Business (2.5%) – The number of years that a company has provided its products and/or services to consumers. Verification of Data (5%) – If the company has "claimed" its profile on Best Company.com and verified that the information regarding the company is factually accurate. As you can see, consumer reviews make up the majority of the score because we believe consumer satisfaction is the best way to determine a company's credibility. This is also one of the quickest way to see if a home warranty company is a scam or not. Read through the company's consumer reviews Consumer reviews are the most important thing to look into when considering a company, especially a home warranty company. Because home warranty companies are known for scamming and being untrustworthy, you need to find companies that have positive reviews that verify the home warranty is not a scam. Experienced Home Inspector, Michael Marlow, gives us this advice when looking into reviews: “Be forewarned that many people only write a review to complain, so when reading reviews, look for the story behind what is written. Most review complaints are from homeowners that were denied claims for uncovered issues, or from preexisting condition exclusions.” Try to gather the facts in reviews, rather than just focusing on the emotion intertwined in them. You also need to ensure the consumer reviews you are reading are legitimate. Many companies, regardless of the industry they’re in, will fake their consumer reviews to make it look like they are a good company when in reality, they really aren’t. To avoid this, only visit consumer review sites with verified reviews and unbiased data. Here at BestCompany, all reviews are verified to ensure authenticity and that they are not forged from the company itself. Look at a company's overall rating in the industry as well as their star rating from consumer reviews. You can also compare a home warranty company against the top-ranked home warranty company on BestCompany. This will allow you to show the company highlights side by side and determine which business you are most interested in researching further. For example, this is TotalProtect compared side by side to our top-ranking company, Landmark Home Warranty. Research contracts in-depth before committing People are quick to label anything as a home warranty scam when it comes to tricky wording in contracts. You should be wary of companies that hide loopholes within their contracts. However, homeowners need to understand that home warranty plans can’t cover everything—this would quickly put any warranty company (not just home warranty companies) out of business. A common disappointment with home warranties is the “pre-existing condition” loophole that is laid out in the terms and conditions. Some companies tend to cover themselves in cases of large expenses by claiming that the appliance or system in question had a pre-existing condition—this defeats the purpose of home warranties. To avoid this, make it a point to ask potential home warranty providers in which specific cases the pre-existing condition applies. You should also be analyzing the terms and conditions for such loopholes. This is extremely tedious but will save you heartache and money in the end. Also, Identify and list the most vital home systems and appliances you would like covered in your home warranty plan. Use this list when you deal with home warranty companies and ask company representatives to show you where in the contract these items are discussed. This will allow you to understand exactly what the terms are in regards to each of those systems and appliances. Be extremely meticulous when it comes to reading the contract and talking to representatives so as not to miss a crucial detail. Check if any cases have been made against the home warranty company It’s important to look into a company’s legal history to see if any cases have been made against the company. Marlow explains that “All home warranty companies are supposed to register with the states they do business in. Normally this is with the department that regulates insurance, but it may be different in some states.” Check if the home warranty is registered in your state and then go further by researching its legal history. Look for any lawsuits and other red flags that would indicate the home warranty company has a negative legal history. Determine replacement times and quality of customer service Many bad quality home warranty companies delay repairs as long as possible to lengthen the process and save money. Even if you desperately need a replacement, they may only “repair” the system or appliance and then it’ll break again soon after. You want to make sure they don’t try to do everything they can to get out of replacing something, especially larger systems, such as an air conditioner. To avoid this common home warranty scam, check with past customers, either through word of mouth or through consumer reviews, and determine what the company’s reputation is for customer service and repair time. If it’s lengthy and the company doesn’t have a guaranteed response time, they could likely be a scam. Look for available online claims With nearly everything being online nowadays, online claims may be something you need in a home warranty provider. Home warranty companies that have online claims guarantee a level of convenience because you don’t have to spend time talking to customer service and waiting in a long phone line. However, just because a company has an online claims process, that does not mean their response time is quick. Still make sure to check their repair time and their customer service reputation. The better the claim process, the more likely the warranty company is not a scam. Pay attention to customer service hours In addition to having quality customer service, having customer service available 24/7 is also a sign of a quality home warranty company. 24/7 customer service also gives you peace of mind that you never have to be left without help, even if it’s 3:00 AM in the dead of Winter. Home warranty providers that are recognized and reputable companies often have customer service available at all times so as to always have people available to help customers. See if a company has quality contractors—or opt for a company that gives you the option to appoint your own A large part of a home warranty is the contractor that comes to your home to fix or replace any damaged systems or appliances. Whether or not it is a quality contractor will likely determine your satisfaction with your home warranty. Check consumer reviews and talk to home warranty companies about their contractors. Ensure they are quality servicemen. There are also home warranty companies that allow you to select your own contractors and the company will reimburse you for the charge. This is convenient for people who already have contractors they trust and want to do business with. If this is the case, look for companies that allow this. Marlow says home warranty companies that allow homeowners to select their service contractors are the best to do business with. “One of the biggest complaints we hear is about the incompetent contractor that was sent by the warranty company or the long wait to get someone out. The best companies give you the option of picking your own contractor and being reimbursed for the covered expenses. This allows you to get your regular service provider out and have them out on your schedule.” Consider a company's time in business Although time in business isn’t the main determiner of whether or not a home warranty is a scam or not, it is definitely something to consider. If a home warranty company is fairly new and doesn’t have a large number of reviews and customer testimonials, you won’t know if you can trust that company or not. You also don’t know how experienced that company is in the home warranty business. They may have previous experience or they may not know much at all. Talk to your home warranty company about their history and check out their “About Us” page on their website. This will tell you a little bit about their experience will likely help you determine if you trust them with your business. Determine if the company has customizable coverage—and if that’s something you’re interested in This isn’t always the case, but customizable coverage is typically a sign that a home warranty company is not a scam. It demonstrates to consumers that the company is flexible and is interested in best serving individual customers’ needs. Talk to home warranty providers and see if they have warranty plan options that work for you. If the company doesn’t cover what you need and they are not willing to budge to accommodate you, they’re likely not the company for you. Beware of prices that are too good to be true This isn’t just advice for avoiding home warranty scams; It’s advice for avoiding all scams. Always be cautious when a company or individual tries to get you to “act fast” or offers you a price that is too good to be true. In many cases, a company will advertise cheap prices for their most basic home warranty plan that likely will not cover everything you would like it too. Purchasing without the proper research could leave you with a bill and a hefty long-term contract and the improper coverage for your systems and appliances. Look through all home warranty packages to ensure you are selecting the one that works best for you. Also note, many home warranty companies upsell their premium packages. Only consider paying for extra protection if your circumstance meets two requirements: 1) you have costly home appliances or systems, and 2) you are absolutely certain that the company is not overselling its premium warranty plan. How much should a home warranty cost? This will vary based on your specific needs. The average home warranty cost ranges between $350 and $600. Basic coverage should be on the lower end and more extensive coverage should be on the higher end. The average trade service fee for a home warranty is between $50 and $100. Most often, home warranty companies will allow you to select a cheaper service fee if you pay a larger annual fee and vice versa. Make sure the home warranty company has a reasonable service fee and it’s a bonus if it’s flexible with a variety of warranty plans. What is the home warranty contract length? Most home warranty contracts last the duration of one year. If a home warranty company requires a great deal more than that, it could be possible it is a home warranty scam. You don’t want to be locked into a contract longer than 12 months in case something goes wrong or you don’t end up liking the company. Is there a cancellation fee? Most home warranty companies don’t require you to pay a cancellation fee in the case that you terminate coverage. If a company notes an expensive cancellation fee, this is a sign of a home warranty scam. Make sure to research the cancellation terms and if it is legitimate or if the company is attempting to lock customers in a deceiving way. Is a home inspection required? Quite often, no home inspection is advertised as a positive for a home warranty company. However, this is how you would know if there was a pre-existing condition on any of your home’s systems and appliances. Without knowing, appliances and systems may not be covered if they are a certain age. A home warranty company could refuse to repair or replace it because it wasn’t properly documented beforehand. Consider getting a home inspection to avoid this difficulty. It will ensure more transparency within your policy and less likeliness that you’ll get scammed. Marlow goes further in depth of why a home inspection is important. You should look for a company that will cover the appliances that you have, regardless of age. You should also ask what their policy is on preexisting conditions. Some of the better companies will take your home inspection report and use that to determine if a system was operational at the time you purchased the house. This is what you should look for to avoid the company being able to duck paying out any claims. Don't skip regular system and appliance maintenance Having a home warranty doesn’t mean you can skip your home appliance and system maintenance. Not properly taking care of your appliances and systems could show misuse to your home warranty company and they could opt out of fixing or replacing such items. Make sure you regularly check all systems and appliances and do any necessary maintenance to ensure no lapse in your home warranty coverage. Real home warranty experiences Homeowner, Carol Gee, explains her experience with a home warranty and how to avoid the scams. When we purchased our first home 27 years ago (prior to that my military spouse and I had lived 17 of our 20 years in service in base housing), we bought this lovely older home. At the closing, the sellers gave us American Home Shield for 1 year. We didn't know what this was until they told us it was because the cooktop and other appliances, while in good condition, were old. After the first couple of years, we were determining whether we really needed this as it was kind of expensive. About a month before we were to renew it for the following year, I went into my laundry room and thought I needed a boat. The hot water heater had died. I immediately called the company and they told my husband how to cut off the water to it, then took down my info. The next day a repairman came out, replaced it, and hauled the old one away. However, before writing a check to renew [the home warranty], I called several friends to see if they had a warranty and who with. Those who did had AHS. They had always had good things to say about them. I already knew the company had been in business since the early 70s which I liked. We had used them a couple times prior, so hurriedly I wrote my check to renew. In order to avoid [bad home warranty companies], I try to use services based off of references from folks I know. In turn, I happily refer good companies to those I know. "A good company to me is one you can depend on to offer continued good service. Others who take your money and fail to provide the services they offer are scams." Experienced Home Inspector, Michael Marlow, has some last advice for us. Look for a company that will cover the majority of the house systems without charging extra for every little thing that most houses have. Some of the common things to charge extra for are multiple HVAC systems, water heaters, or kitchen appliances, washer/dryer, underground sewer lines, Icemakers in the refrigerator, and termite treatments. "Make sure that big-ticket items like roof leaks are covered in the basic policy." With 27 years of full-time experience as a real estate broker, Jerry Grodesky has some advice for anyone looking into home warranty coverage. In the past, the biggest problem with warranty companies was that they prorated problems based on age. Hence, one could have a leaking hot water heater the day after closing, and because it was 12 years old, the buyer would get $1.00 from the warranty. It made many people upset. While many warranties now have better ways to fix or replace problems, there still may be a cost like $70 to have a contractor inspect the problem first. "I would caution every [home] warranty buyer to fully review what is covered and the additional costs for adding areas of interest beyond the general warranty." Is a home warranty worth it? If you’ve budgeted really well to cover home emergencies and improvements, a home warranty may not be necessary for you. However, if you haven’t budgeted for extensive home emergencies, then a home warranty could save you money and you likely wouldn’t be asking yourself “is a home warranty worth it?” It would be clear in your money saved that it most certainly is. Also, if you have an older home, your appliances are likely older and will need more repairs and replacements. Paying the yearly cost and service fee is going to cost you a great deal less than having to pay full price for a repair or replacement. Here is the average cost of replacement for common household appliances and systems. The data is from landmarkhw.com. As you can see, replacements are costly, and those numbers are based on the lower end of estimated replacement costs. To know how often they need to be replaced, here is the average lifespan of each of the above household systems and appliances. The data is from landmarkhw.com. The majority of these household systems and appliances last nearly 10 years. However, unless you have a brand new home, most of them are likely aged and will need replacing soon enough. This is where a home warranty could save you ample amounts of money. The Bottom Line If you have a quality home warranty company you can count on, you can have peace of mind knowing the systems and appliances in your home are covered and you won’t have to be scrambling if something breaks or malfunctions at an inopportune time. Home warranties are there to ease the stress on you and your wallet. No matter where you look, you will always encounter home warranty companies that will try to make money off of other people’s oversight and attempt to practice home warranty scams. Rest assured that there are many legitimate home warranty companies that are ready to help you when you’re in need and won’t take advantage of you. You have the right and obligation to be irritatingly inquisitive when dealing with home warranty providers and now you know everything you need to ask and look for when researching companies. If you’re properly researching home warranty companies, home warranty plans, and asking the right questions, you’re sure to avoid home warranty scams and find the best home warranty company that fits your circumstances.