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Purchasing a home warranty protection plan is one way to get some peace of mind after buying a home
Buying a home can be an exhilarating experience, but it's rarely inexpensive.
New homeowners often find that the costs don't stop after closing. Dishing out more money on appliances or systems that unexpectedly break or malfunction is part of the home buying game.
However, investing in a home warranty protection plan can be a smart way to save some money.
What does a home warranty protection plan cover?
Home warranty protection plans offer different levels of coverage. Most standard plans guarantee repair or replacement coverage for heating systems and ductwork, plumbing, and electrical systems. Coverage typically also includes major appliances like the dishwasher, stove and range, garbage disposal and water heater. For an additional cost, swimming pool equipment can be included in the policy.
If you anticipate appliances or systems breaking down sooner than later, consider increasing the deductible to make a guaranteed replacement provision more affordable. Increasing your deductible from $500 to $1,000 can reduce premiums.
Most plans do not require inspections of a home's systems or appliances. However, coverage plans vary from state to state, so remember to read the fine print before you commit.
How does a home warranty work?
The homeowner pays the annual premium, and when a repair is needed, the plan's service provider will send an authorized contractor to the site. A small service fee is required - usually between $35 and $50, and normally less than $100 - and the contractor either makes the repairs or determines that the appliance needs to be replaced.
Policies usually last for one year, costing an average of $295 per year for a moderate-size home.
Who pays for a home warranty plan?
Normally the buyer will pay for a warranty plan, but some sellers opt to pay for the coverage themselves because it makes the purchase more attractive to potential buyers. According to the National Home Warranty Association, homes with protection plans sell about 50 percent faster than unprotected homes. Many real estate agents will also give buyers a home warranty as a gift at closing.
What does a home warranty not cover?
Pre-existing conditions are typically not covered under a home warranty. For example, if the water heater hasn't worked properly for some time, don't count on it being covered in the buyer's home warranty plan. Some plans also place limitations on coverage. Items typically not covered include sprinklers, faucet repairs, and permit fees.
Where can I find a home protection plan?
You can find a number of companies that offer insurance for your home by searching online or asking your neighbors, friends or family members.
A few companies that I am familiar with that offer home protection plans are:
American Home Shield - http://www.ahswarranty.com
First American Buyers Protection Corporation - http://homewarranty.firstam.com
Old Republic Home Protection - http://www.orhp.com/homeowners
1 comment:
First American Home Buyers Protection is a total ripoff and a scam. I bought a 20 year old house and paid for a home warranty with them. Both of my furnaces were acting up so I placed a claim. They dispatched a rinky dink hvac company who said my furnace needed to be cleaned and maintenance wasn't covered but were more than willing to collect my $55. They also said First American only listed one furnace on the work order and they couldn't work on the 2nd one. I had another company come in and do the maintenance and they cleaned the unit and told me the CO levels indicated a cracked heat exchanger and should warrant a repair or replacement furnace. I had FAHBP re-dispatch to look at both furnaces and again the service company said only one furnace was listed. They agreed my furnace had high CO levels and would need to be replaced and they turned it off and left. Now first american claims that I will need to pay over $1000 to get a new furnace installed because ducting, plumbing and electrical upgrades are required. They say if I want a payout, they will pay me only $479! They want me to pay over $1000 and they're only kicking in $479! Total ripoff. They still haven't gotten someone to look at my second furnace! They are the pits! Biggest Scam I've ever seen! Do not use FAHBP.
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