What To Ask When Buying a Home Warranty (2023)
Purchasing a home warranty is a big decision. Many home warranty companies offer similar coverage plans, so picking the right provider isn’t easy. After conducting thorough research, the This Old House Reviews Team found answers to seven questions you should ask before purchasing a home warranty plan.
How Much Does a Plan Cost?
Most home warranty service contracts have an initial plan cost and a service call fee. According to Fant Camak, a Coldwell Banker-Caine real estate agent, home warranties typically cost anywhere from $250 to $600 per year. Monthly premiums range from $20 to $60, and service call fees usually fall between $60 and $125 per claim. Where a provider sources parts and labor contributes to its overall cost, according to Camak.
Another factor affecting home warranty cost is the type of coverage you select. For example, a basic home warranty coverage plan that only covers home appliances will cost less on average than a comprehensive plan that includes home systems and appliance coverage.
Providers offer additional coverage options for other home items to supplement your plan. Price varies per add-on. Pool coverage may cost more than an additional freezer. Ask a provider how the factors above contribute to your plan’s final cost.
What Are the Coverage Limits and Exclusions?
Every home warranty provider has different coverage limits and exclusions for its covered items. Generally, providers cover up to a set dollar amount outlined in its fine print. For example, if your air conditioning stops blowing cold air, your provider will pay up to the coverage limit for a repair or replacement. You are responsible for the additional cost if the repair or replacement exceeds the coverage limit.
Providers establish conditions that a breakdown must meet before it can be covered. For instance, most providers cover the repair costs of a system or appliance breakdown caused by normal wear and tear. However, providers won’t cover breakdowns caused by improperly installed home items.
Providers list coverage exclusions. For example, many home warranty companies exclude covering major appliances or systems with preexisting conditions. In addition, companies won’t cover nonessential components, such as your washer or dryer’s door handle. You can avoid an unpleasant surprise by knowing your provider’s coverage terms.
How Does the Claims Process Work?
Before signing up for a coverage plan, the claims process deserves equal attention. Mike Qiu, the owner of Good as Sold Home Buyers, recommends asking a provider what documentation you must present before filing a claim, how long it takes to process, and what are the steps needed to file it. Doing so “will help you better understand what to expect in the event of a claim,” says Qiu.
Ask the provider how its customer service department handles claims processing. Some providers have a dedicated claims department available 24/7, while others don’t. Ask how the provider prefers to receive claims. Many accept claims via an online portal, email address, or phone. Uncover as much information as possible from the provider to help you decide if it fits your needs.
How Much Coverage Do I Need?
The amount of coverage you need depends on the systems and appliances you own, your budget, and any external factors that may affect your coverage needs. For example, if you own an older home with new appliances under a manufacturer’s warranty, you probably don’t need an appliance or combination plan. Instead, ask yourself the following questions:
- What systems and appliances do I own?
- How old are my systems and appliances?
- Which systems or appliances do I use most often?
- Are any of my systems or appliances under a manufacturer’s warranty?
- How much am I willing to pay for a home warranty contract?
Answering these questions can give you a better idea of the type of coverage you need.
Who Are the Contractors the Provider Uses?
Another factor to consider before signing up for a home warranty provider is the service technicians it contracts. Most providers have an established network of service providers they use to address the home repairs you need. Ask the provider how they source their contractors. Determine whether the provider has a vetting process before it sends work to a contractor.
If you live in a rural area, ask the provider if it works with contractors who are local to you. In some instances, providers don’t have an established service provider in rural locations, leading to delays in service.
What Do Existing Customers Think?
Reading consumer reviews on third-party review websites can tell you how well a provider handles customer service requests. If a company has consistently positive reviews, you’ll likely have a good experience. You can check the Better Business Bureau, Best Company, Consumer Affairs, Google Reviews, and Trustpilot for your provider’s consumer reviews.
Your local real estate agent is another source who can suggest home warranties worth considering. Real estate agents are typically exposed to many companies. They can offer recommendations based on how well a provider protects homes under its warranty.
When Does Coverage Begin?
Unlike a homeowners insurance policy, home warranty coverage doesn’t start when you buy a plan. Most home warranty providers have a 30-day waiting period. The waiting period is the time that must pass before coverage begins. It’s in place to confirm your systems and appliances are in working order. If a covered item breaks down during the waiting period, your provider won’t cover it.
Whether you are an existing homeowner or new to homeownership, a home warranty protects your essential systems and appliances, giving you peace of mind. Armed with the answers to the questions above, you’ll know what to consider while researching providers.
To help your research, check out our list of the best home warranty companies available nationwide. We compared each provider against our in-depth review standards, which analyze coverage limits, customer service, and additional perks.
Additional FAQ About Home Warranties
Do I need a home inspection before purchasing a home warranty?
No, you don’t need a home inspection before purchasing a home warranty. Most providers grant coverage without one. However, some providers require a home inspection if you wish to purchase certain add-ons, such as pool coverage.
Is a home warranty required at closing?
No, a home warranty isn’t required while closing a home sale because it is a service contract, not home insurance. However, if you are selling your home, a home warranty can increase the home’s value and give peace of mind to the new homeowners.
How soon can I use a home warranty after purchase?
Generally, you can file a claim with your home warranty provider after the waiting period ends. The waiting period is 30 days for most providers. Read your provider’s sample contract to know when the waiting period ends.
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