Home Warranties Offer Peace of Mind

There’s little that’s more disheartening for a new homeowner than to walk into the garage only to find a large puddle under the water heater. Not only are you facing the hassle of getting anew water heater installed, but you are likely financially strapped after just buying a house.

Home warranty plans can help alleviate buyers’ and sellers’ fears that a failed major appliance or other item covered under the policy will come back to haunt them.

“The seller usually pays for the home warranty,” said Beverly Durham, a Realtor® in Camarillo, Calif. “It’s a small price to pay for the seller to not have the buyer call them a few months after they move in and demand they fix the dishwasher that just broke down. A home warranty relieves the seller of some liability.”

It also gives the buyer protection from some possible major expenses they aren’t prepared to take on. Home warranty plans generally cos tbetween $250 and $400 for the first year. The deductible, which the new homeowner pays for a service call, can be as much as $100, but usually is $45 to $60. After a year, the new homeowner will have the option of retaining the policy, although usually at a higher rate.

Avoiding Conflicts

As with most insurance, and basically that’s what a home warranty is,conflict between the policy holder and the issuing company is not uncommon.

The biggest area of conflict is caused when policy holders think their problem is, or should be, covered and the insurance company tells them it is not. Understanding what is and isn’t covered is important for the policy holder before they call the home warranty company to get something fixed.

The types and depth of coverage varies so much by area and company,it’s not possible to easily list everything that is or is not covered.This is why it’s important to really look over the plan you are receiving.

Common Coverage

Built-in appliances – dishwasher, stove, oven, microwave, garbage disposal, trash compacter – are covered; sometimes the refrigerator is included, but not always. It’s the same for washers and dryers. Air c onditioning and heating are also generally included, but for some policies they cost extra. Pools and spas can be covered but at an added expense. If you are purchasing a property that has these features included, make sure the extra coverage is provided.

Other areas that are covered are plumbing (including clogs, but not if caused by tree roots), interior electrical, interior telephone wiring,ceiling fans and door bells. Lighting fixtures are not covered and faucets may not be either. Many policies include pest control such as mice, roaches, silverfish, some ants (but not carpenter) and other pests. They won’t cover termites (which should be under your pest control guarantee) or rats.

Your policy should also cover garage a door opener, heat pumps, attic and exhaust fans, whirlpool bath motor and pump, instant hot water dispenser and central vacuum system.

Examples

As a consumer, if your dishwasher breaks down, you’re probably hoping to get a new one. You might if it can’t be fixed, but more likely the warranty company will keep it on life support. Remember, your deductible pays for service calls. If you call several times on a single appliance, you might have been better off buying a new one.

If an underground water pipe leaks, you should be covered for the repair of the pipe, but not the cost of getting to the broken pipe. A homeowner’s policy works the same way. Of course, the greatest cost in this case is having the yard dug up or worse, having to have your concrete floor jack hammered.

There are also caps. If the wiring short circuits or major plumbing problems occur, the policy will not cover costs beyond a certain amount. Generally, these are around $1,000, sometimes less.

Not all appliance parts are covered; usually only those that directly affect the running of the machine are included in your coverage. This means broken dishwasher racks, knobs, trim kits, rusted out pans or lining is not covered. Neither are counter top microwaves.

Getting the Right Plan

Because sellers pay for the majority of plans, it is usually their choice. But savvy buyers will make sure they get the best policy,especially if the property has features that aren’t covered in basic plans, such as a pool or spa. Also, because the buyer is the one who will use the plan, he should insist that the coverage come from a company with which his agent works with.

If you have a conflict with a home warranty company that you can’t resolve, the best option is to contact your Realtor. A good Realtor will have a relationship with a home warranty company because these are included in nearly every transaction. Often, the Realtor can get more accomplished than a frustrated homeowner.

“I work with a rep who has bent over backwards to satisfy my clients because we have a relationship,” says Durham. “I had one buyer that didn’t want to use that company for whatever reason and when something went wrong I had no leverage because I didn’t do business with them.”