We have all seen ads or received flyers in the mail regarding Home Warranties. However, not everyone understands exactly what they cover and whether they are a worthwhile investment. Let's take a closer look at what home warranties offer to help you to decide if one is right for you.
First, it’s essential to distinguish between a home warranty and homeowner’s insurance. Many people mistakenly assume that a home warranty is a version of homeowner's insurance. It is significantly different from a homeowner's insurance policy. Homeowners insurance covers the structure of the home and your personal property against incidents of fire, water damage, theft, etc. In contrast, a home warranty is a type of service contract that covers the repair or replacement of major systems and appliances within the home to allow for their repair or replacement in case they break down.
The specifics of what a home warranty covers can vary depending on the particular home warranty plan you purchase. Generally, significant systems such as plumbing, electrical, and HVAC are covered. The policy functions like most standard warranties, allowing for repairs or replacements while it is active.
For example, if your water heater fails, a home warranty might cover the replacement of the water heater, while homeowners insurance might cover water damage repair if the heater leaks.
Now that we understand the basics, let's explore the options available with home warranties. Coverage can be quite flexible. As with any insurance, the more items covered, the higher the cost.
There may be add-ons that you can include with your warranty for an additional cost. These can include things like swimming pool equipment or the refrigerator in your garage, as well as expanded services such as HVAC maintenance system tune-ups. Some providers even use add-ons to create customizable warranty plans, offering up a basic program that you can expand by adding features according to your needs.
How long does a Home Warranty Plan last?
The term of a home warranty depends on the specific warranty policy you purchase. One of the most common warranty periods is one year, giving you a full year's worth of peace of mind. At the end of the year, renew it if you found value, or cancel it.
Do you need a Home Warranty Policy?
Deciding whether you need a home warranty depends on your individual needs. It can be a worthwhile investment, but it's crucial to evaluate the cost and coverage to ensure the plan meets your individual needs.
