Home Warranties: HotPads Home Buyers Guide


No home inspection will detect everything that could go wrong with your new home, and nothing will spoil the joy of your new digs like a major surprise repair right after you move in. A home warranty can be a low-cost way to have peace of mind on move-in day.


The Home Warranty


    What it is
    A home warranty (or home protection plan) is basically an insurance policy that covers home repairs that a standard home insurance policy does not. If your furnace breaks down or your garbage disposal goes ka-thunk, your home warranty company has your back. In a typical home warranty plan, you'll call the warranty company who will in turn contact a contractor to make the needed repairs. If the contractor can't repair it, the the home warranty company will pay to replace the appliance or system.

    The homeowner usually has some small out-of-pocket expense, similar to a deductible on any other insurance policy.

    What it covers
    In general, a home protection plan will provide for the repair or replacement of the following:
    • Heating systems
    • Plumbing systems
    • Electrical systems
    • Water heaters
    • Kitchen appliances
    • Air conditioning systems
    • Furnaces & heating systems
    • Doorbells
    • Sewage/septic systems

    • Do not take this list as gospel. Specifics on coverages can vary widely between home warranty companies and may even depend on the state where the property is located. If you are purchasing the policy, compare offers by cost and coverage.

      What it won't cover
      Certain appliances and motorized devices like refrigerators or washers and dryers might not be covered. The policy may also exclude issues beyond the foundation of the home, including lawn and plumbing problems that extend beyond your calls. Pre-existing problems won't be included and you may be denied a claim based on the contractor's assessment that the problem was caused by poor maintenance.

      Cost
      A typical plan will run you anywhere from $250 to $500. The good news is that you may not have to pay for the first year at all. Keep reading.

      Home warranties with home sales
      As the buyer of a home, you may be given one year of home warranty protection free of charge by the seller. This allows them to walk away after settlement without having to worry about you calling them and claiming undisclosed problems. Real estate agents and brokers even give new buyers warranties as gifts. (With the commissions and fees you pay, they can afford it.) However, this is not always the case. You can plan on having a warranty included in your closing costs by letting your buyer's agent and title company know.


      Other Buyers Guide Topics


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      Other Web Info


      A word of caution on home warranties from MSN Money.