Home warranties are often purchased by home sellers and buyers as a way to protect the newly purchased property from issues that could occur. Sellers will purchase a warranty for the buyer to provide them peace of mind when the purchase is complete. If the seller doesn’t include a home warranty in the home’s purchase, the buyer can opt to get it on their own. Typically, the home warranty will last around a year. At that point, the buyer can decide to extend the coverage for another year.

The Cost of a Warranty

Compared to how much money homeowners can save if anything goes wrong in the home, the home warranty cost is low. Warranties can be as low as $20 per month or around $240 per year, depending on the coverage included. Homeowners can increase what is covered by the home warranty, but they should expect to pay a little bit more. If a major appliance such as a refrigerator breaks down, the cost of the home warranty will be well worth it, as $240 is far less than the amount needed to replace a refrigerator and the contents.

What the Warranty Covers

Each home warranty’s coverage options will differ. Most home warranties will cover major appliances such as the refrigerator inside the home. They’ll also cover the water heater, the electrical and plumbing systems, and the heating and air conditioning system within the home. If one of these items breaks down, the home warranty covers the cost of repair. If the item cannot be repaired, it is possible that the warranty will cover some or all of the replacement cost. In some cases, such as when a new build home is purchased, the home warranty may also cover structural defects and workmanship on the home like adding mirrors to your living room or fitting cameras around the backyard for elevated security.

Adding Additional Coverage

It is possible to add extra coverage on top of what is included in the basic home warranty package. Add-ons may include the washer and dryer, the septic system, the pool, an additional refrigerator, a well pump, or a stand-alone freezer. Homeowners who have any of these items and want to make sure they’re protected in case anything stops working may want to consider adding on the coverage. This way, if anything does happen to these items, the homeowner doesn’t have to pay the full cost of repair or replacement out of pocket.

What Happens When Something Breaks?

If the refrigerator stops working, an outlet in the home doesn’t work, or the plumbing starts to leak, the homeowner will want to open a claim with their home warranty company. Typically, the next step is for an inspection to be done to determine the problem, then the item will be repaired. In most cases, this will solve the problem completely. If the homeowner continues to have issues, however, it could mean the item needs to be replaced. In this instance, the home warranty company may cover part or all of the cost to replace it. The homeowner can track the claim with the home warranty company to stay on top of the process and make sure they understand what the next steps might be.

Is This Different from Homeowner Insurance?

Home warranties and homeowner insurance are two different ways to provide coverage and protection for a home. Homeowners are often required to have insurance in case anything happens, but they will not be required to have a home warranty. Still, the two can work together, so it is recommended for first time homebuyers to request a home warranty from the seller or purchase one themselves. This will cover things the insurance policy will not, so the homeowner can rest assured they’re covered no matter what might happen.

Using Insurance and a Warranty Together

In the event there is a disaster in the home, the homeowner may be able to get benefits from both the home warranty and their insurance policy since the two-offer different coverage. Using a plumbing leak as an example, the homeowner insurance will cover water damage from a burst pipe. If there is any damage to the walls, flooring, electrical, or other components in the home, the insurance company will cover it. What they won’t cover is the burst pipe itself.

The home warranty, on the other hand, does not cover any water damage to the home. It does cover the cost to have the burst pipe repaired. Because of this, homeowners who have insurance and a home warranty can use the warranty to cover the pipe and the insurance to cover any water damage that might have occurred. Using both together minimizes the out-of-pocket expenses for the homeowner and allows them to make sure the house is back in shape as soon as possible.

Should Buyers Get a Home Warranty?

When someone buys a home, they are already spending a ton of money on the home itself as well as any incidentals they might need as they get settled into the home. Chances are, if a major appliance breaks down, they won’t have the funds to cover a replacement or they won’t want to. A home warranty protects the homeowner from issues like this, so they don’t have to worry about replacing a major appliance like the refrigerator while they’re still getting settled into the home. Though it does provide coverage for things that break, it is different from a homeowner insurance policy, so it is recommended that homeowners purchase both when they buy a new home.

If you’re planning on purchasing a home, it’s a good idea to talk to the seller or your real estate agent to find out if a home warranty will be included in the sale of the home. If it’s not, request it. A home warranty will cover the major appliances in the home and can bring you peace of mind that you won’t have anything to worry about if something breaks down during the time the warranty is active. Look into home warranties more today to learn why you want to have one when buying a home.