By Pierre Mouchette | Real Property Experts LLC
Do you need home warranty insurance?
If your home is brand new and your appliances and systems are new and just installed, you probably do not need home warranty insurance. Your home systems will likely have a warranty from the contractor for a specified time, and your appliances will have warranty coverage from the manufacturer. For those purchasing older homes with existing systems and appliances, obtaining coverage will help keep the cost of repairs or replacements at an affordable monthly or yearly fee. A home warranty insurance plan will protect you from unwelcome surprises if something happens further down the line.
The best option for your circumstances
In deciding to purchase a home warranty service, it is advisable to find the one that fits your budget and needs. Picking the cheapest home warranty might not be the best choice, so do your research, and you will find a company that offers value for money that meets your needs.
Remember to find a warranty company that services your home's area. Granted that there are large companies that cover all 50 states, but it might be a good idea to check out local companies as they might ‘offer a more personalized service.’ The best way to compare the plans offered is to request quotes and download the terms and conditions for each company.
What needs to be covered?
Take the time to list all the appliances you have in your home. The oldest and most likely to break down should be your priority. Should you have lived in your home for a while, you can look through your owners' manuals to determine the age of each appliance or system. If you are buying a new property, you can ask your realtor to get you a detailed list of all existing items in the home. It may be that some of the appliances are new and still covered by a manufacturers’ warranty, in which case you will not need to ‘double insure.’
Once you have determined which appliances and services you need to cover, you must verify that the items were maintained and serviced. Some warranty companies could refuse to pay for repairs if they prove that the appliance was misused. At the warranty commencement, all items covered must be in good working order and properly maintained because the warranty companies will not pay for pre-existing conditions.
After accomplishing the above, the next course of action is to look at sample contracts from each company so that you can compare the terms and conditions as well as the company’s requirements. For example, you might find a company that does not cover all the parts of a certain item, or they may have a low yearly cap that does not satisfy your criteria in the event of failure. This is where you need to prioritize which items you need to cover and at what price!
Exclusions and Limitations
All warranty companies will have exclusions and caps on the amount they pay on each item and the total you can claim for the year your contract is in force. You will find there is a big difference in what each company offers. Additionally, some warranty companies could provide you with a cash settlement for items they cannot repair, and others will replace the appliance with one having a similar service.
Some warranty companies have too many limitations! This usually results in a cheaper premium which will not give you the coverage you need. Overall limits are the norm with all warranty companies, and they tend to have a dollar amount on the maximum you can claim per year. You can choose to insure just appliances or home services or both. Another consideration is how flexible the coverage is and how quickly the company responds to claims.
Ideally, you need to find a warranty company with a good balance between price, limitations, and exclusions. Major appliances and systems should be covered with reasonable restrictions. You will have these items repaired or replaced by the warranty company you choose in your time of need.
Most warranty companies will give you a choice of coverage that you can customize for your needs. Study this option carefully to streamline what you want to be covered. Obviously, the more you add, the higher the cost, so be sure to prioritize what you need.
Service and Call Out Fees
Each time you have a claim and a technician or contractor is dispatched, you will be liable to pay the service fee. Some warranty companies will let you choose how much this service fee is, but the lower the service fee, the higher the cost of your warranty. It is essential that you know most companies will only pay for claims 30 – 90 days after commencement of the contract.