Two of the main reasons for purchasing a home warranty are to save time and to limit the high costs of paying for repairs or replacement of appliances and home systems.
Purchase of a warranty is often advised when a buyer purchases an older home and is not sure of the state of the appliances or systems. Home warranties are also useful for new homeowners who may not have experience in managing repairs and replacements.
What is a home warranty?
A home warranty is different from home owner’s insurance. Homeowner’s insurance covers structural damage to a home and its contents due to fire or other natural disasters. A home warranty is a residential service contract for a set period that covers the cost of repairs or replacement of household appliances or systems.
There are many different home warranty plans, some of which are cheaper and provide basic levels of protection and others which are more expensive and provide comprehensive coverage. The annual cost of coverage varies depending upon the provider and the level of coverage chosen.
House Method’s review pros offer unbiased reviews to help you select the best home warranty companies. The best plans cover all major appliances, such as refrigerators, stoves and water heaters. They usually also cover electrical, HVAC and plumbing systems.
How does it work?
Report a problem to the provider: When an appliance or home system covered by your home warranty provider needs repairs, all you need to do is to notify the home warranty provider. Most companies offer 24/7 customer service, either over the phone or online. Some of them promise next-day service for major issues.
Provider chooses a service provider to help: The home warranty provider usually works together with one or more home service providers, such as electrical or plumbing contractors. Once you notify the warranty company, it passes on your request to one of the local contractors it partners with in your area.
Assessment, report and authorization: The contractor will make an appointment with you to assess the damage and then provide a report to the company. The report will state the extent and potential causes of the damage.
The home warranty company will then confirm whether the contract covers the appliance or system repairs and authorize the repair if it does.
Service call fee: A service call fee will be charged for the visit and can range from about $50 to $100. You will pay the contractor for each feature or system that needs to be assessed.
For instance, if your stove and refrigerator are both faulty, you will pay two separate fees. You usually pay the service fee directly to the contractor, much as you would pay a co-pay at a doctor’s office.
Paying excesses: If repair or replacement costs more than the limits on the home warranty, you will have to cover any excess.
Reasons why cover may be denied
Some common reasons why claims are denied include:
- Lack of maintenance or improper installation.
- Unusual wear and tear.
- Known or unknown pre-existing conditions.
- Permits are not available or components of systems do not meet local building codes.
The best way to avoid having coverage denied is to make sure you carefully choose the right contract upfront. This is why it is so important to carefully analyze the contracts offered by home warranty companies. You need to understand all the limitations, exclusions and other terms and conditions. You should know how it works with your home needs and how much you will have to pay in out-of-pocket in event of a claim.