Buying a house is undoubtedly one of the biggest financial commitments you’ll make in your life, if not the biggest.
So, of course you’ll want to do whatever you can to protect your investment and give yourself peace of mind. That might mean considering a home warranty – a service agreement typically lasting one year that will cover the cost of the repair or replacement of some of your home’s systems and appliances.
However, not all home warranties are created equal, and they don’t always cover everything home buyers think they will.
Read on to learn more about home warranties, how they work, and whether purchasing one is right for you and your family.
What is a home warranty, and what does it cover?
A home warranty isn’t the same as a home insurance policy – it’s simply a policy that will cover the repair or replacement of certain items inside your home. And according to the Office of the Attorney General for the District of Columbia, it may not cover as many items as you might think.
For example, a home warranty could very well exclude your plumbing systems or major appliances.
Most won’t cover items like water heaters, well pumps, or septic systems. A home warranty also probably won’t cover costly repairs such as leaky windows or roofs.
Depending on the home warranty, it might also only cover repair of items, not total replacements. Some contracts even limit repairs or replacements to a specific contractor, too, the OAG says. You’ll also have to read the fine print. There might be exclusions for problems caused by natural disasters, manufacturing defects, or not following recommended steps for maintenance of the item.
Another thing to watch out for are claim caps. The warranty may only cover a fraction of the cost of the item. You’ll need to carefully review any home warranty to see how much your coverage will be capped at, as well as what is actually covered.
The OAG also recommends that homeowners check to see if your appliances might already be covered under a manufacturer’s warranty or your builder’s warranty, or even your credit card.
How do I choose a home warranty?
If you decide that purchasing a home warranty is right for you, it’s important to go with a reputable company. The Seattle Times reported earlier this year that home warranty companies ranked 10th on the list of industries who had the most consumer complaints filed with the Better Business Bureau in 2018. (However, a BBB spokeswoman told Consumer Reports that many of those complaints are from homeowners who didn’t understand what their home warranty actually covered.)
Always look up the company through your local BBB or your state’s Attorney General’s office. Also, even though homeowners insurance and home warranties are very different, some states may still require home warranties to be registered with your state’s insurance regulator. You can find the one in your state by looking it up through the National Association of Insurance Commissioners.
Talking to your friends about whether they have home warranties, and what they recommend, is also always a good idea.
And remember, if you have a plumbing emergency that you need help with that isn’t covered by a home warranty, reach out to your local Benjamin Franklin Plumbing. Contact us online or call us at 1-888-BEN-1776.