What, exactly, is covered in a home warranty?
Mechanical systems, appliances typically repaired, replaced
Q: I viewed your YouTube video on home warranties. We live in a 10-year-old home in the country. We have a well with a submersible pump and we need to know if in addition to taking care of appliances, would a home warranty also take care of the pump and other assorted plumbing problems if something goes wrong? And can you recommend a good company?
A: Thanks for your question and thank you for watching Ilyce’s YouTube channel, ExpertRealEstateTips.
First, there are two kinds of home warranties: existing home warranties (which is what you’re talking about) and new home warranties, which are provided by either the builder or the manufacturer of products used to build new homes, like roofing materials.
There are several home warranty companies that sell existing home warranties. Many of Sam’s real estate clients have purchased (or received) home warranties for properties and most of the companies offer similar plans.
Home warranties are contracts that cover the repair or replacement of a home’s mechanical systems and appliances. The basic plan typically covers, at a minimum, the electrical, plumbing and heating and cooling systems in a home, along with many appliances. All of these companies add and subtract items from the list of things they cover so you’d need to make sure that you buy the right coverage for your circumstances. However, most home warranty companies
also allow you to add coverage for additional items.
Some warranties will give you a “workmanship guarantee” of a specific period of days, so if the refrigerator stops working and you pay for a service call, and then it stops working 30 days later, you won’t have to pay another service fee to fix the same problem.
For example, if you pick a plan, the optional coverages may include additional refrigerators, wine refrigerators or freezers, pools and spas, septic systems, well pumps, and other appliances and home systems. The optional coverages will have specific costs for each additional item that gets added to the plan. You may also encounter several levels of coverage (i.e., platinum, gold or silver) that will bundle coverages
together. Be sure to read the fine print so you know what’s covered specifically under each plan.
Keep in mind that home warranties generally last for one year and you’ll pay around $500 to $650 for a home warranty plan. But the home warranty will only cover items that are in working order on the date of closing (or a date that has been agreed to). They won’t fix something that’s broken (or nearly broken) at closing. So, if you buy a home and the washing machine is on its very last legs or is already broken, you can’t buy a home warranty plan and then expect them to replace the machine the week after closing.
These plans have a service fee or deductible for any service call you make. Depending on the plan
you pick, expect to pay a deductible or service call charge that typically runs between $75 and $125 per call.
Let’s say you decide to buy a home warranty with a cost of $600 and a $100 deductible. On your first call, you’d already be out $700, but you’d have peace of mind knowing there is someone to call for help, which many homeowners welcome. (Home warranties started as a service to make homebuyers feel more comfortable that their home purchase wouldn’t be a money pit, but often continue to extend their warranties as the years ago on.)
Interestingly, for those buying a home, some home warranty plans now cover the cost of having a locksmith out to rekey locks.
With this rekey benefit at least you’ll know that your new home will have new keys and have a benefit from the home warranty from day one.
Although we frequently get asked, we don’t recommend individual companies or service providers. But you can ask your real estate agent for the names of companies that operate in your area, price out their offerings, compare deductibles, read the fine print and then decide which plan is right for you.
Before you whip out your credit card, be sure to read some reviews about these companies, look up the complaints about them online, check out their service records and find out how long they have been in business. All home warranty companies that do business in your state should be registered and, at a minimum, their registrations and any licenses that are required should be current. When we research a company, we always pay close attention to negative reviews and try to see if there’s a pattern indicating potential trouble.
If you’re looking for the names of companies, you can use your favorite internet search engine and simply type “home warranty companies.” You’ll be able to find information and comparisons of various companies and their product offerings.