What is a home warranty

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The last thing a home buyer wants to worry about is what could possibly break or malfunction right after they move into their new home. For peace of mind, it's a good idea to get a home warranty.

Who Pays for the Home Warranty?

The buyer or the seller can pay for the home warranty and it will still cover the buyer for 1 year after the sale.

How Much does a Home Warranty Cost?

Typically, they range from $250 to $400, depending on coverage.  They can easily cost more if you want additional items covered.  For example, most home warranties only cover 1 furnace.  If there are two furnaces in the home and both malfunction, then the standard warranty would only cover 1 furnace.  You would want to upgrade your policy to cover 2 furnaces if that's what's in the home.

How Do They Work?

They cover buyers for the 1st year after the sale.

Although specific plans provide for specific types of coverage, most operate the same way.

  • If a home system or appliance breaks or stops working, the home owner calls the home warranty company.
  • The home warranty company calls a repair company with which it has a business arrangement.
  • The repair company calls the home owner to make an appointment.
  • The repair company fixes the problem. If an appliance is malfunctioning and cannot be repaired, depending on contract coverage, the home warranty company will pay to replace and install the appliance.
  • The home owner pays a small trade service fee (less than $75) to the repair company or directly to the home warranty company.

What Does a Home Warranty Cover?

Because all plans differ, you will want to ask specifically what is covered. Pay close attention to whether the home warranty company will pay for repairs to make certain types of systems or appliances compliant with new regulations.

What If I Disagree With the Diagnosis?

Sometimes a service provider will deny a claim. (See below.) If that happens or if you are unhappy with the service provided, call your real estate agent and complain. Your real estate agent, if she has a good working relationship with the representative from the home warranty company that is covering your home, well, she can seek resolution for you. Agents all over the country are going to be very upset at this suggestion, but it works. If my client calls me with a problem, I call my rep, and she eventually finds a way to work out a solution acceptable to all the parties involved.

In short, don't take "no" for an answer! Call your real estate agent.

What is Not Covered?

  • Outdoor items such as sprinklers
  • Faucet repairs are not covered under all plans
  • Not all plans pay for refrigerators, washers & dryers or garage door openers
  • Spa or pools, unless specific coverage requested
  • Permit fees
  • Haul aways

What Can Cause Denial of Payment?

  • Improper maintenance
  • Code violations
  • Unusual wear and tear
  • Improper installation

General Coverage

  • Air conditioning
  • Dishwashers
  • Doorbells
  • Furnace / heating
  • Water heater
  • Ductwork
  • Garbage disposal
  • Inside plumbing stoppages
  • Ceiling fans
  • Electrical systems
  • Range and oven
  • Telephone wiring

Because coverages vary from state to state and from policy to policy, ask to see a sample copy of a policy before you commit.

Source:   http://homebuying.about.com/od/buyingahome/qt/HomeWarranty.htm