Your in-depth Home Warranty Guide
Originally posted on https://www.hscwarranty.com/home-warranty-benefits
Owning your own home: It’s always been considered an essential part of the American dream. That’s because with home ownership comes freedom. No longer are you paying for the privilege to occupy someone else’s property; instead, you’re the master of your domain. And independence isn’t the only advantage. Feel like switching out a ceiling fan or knocking down a wall? It’s your property, so go right ahead. And that’s to say nothing of the improved privacy that comes from not sharing a building with a bunch of other tenants. But perhaps the most attractive aspect of homeownership is the financial advantage — as a homeowner you can deduct a portion of your interest expenses from your federal taxable income, and as the value of your property increases, your equity grows right along with it.
But there’s also a downside: responsibility.
What do you do if your air conditioning cuts out in mid July? What happens if your garage door stops working when you need to get to work? Who do you turn to if your dishwasher won’t drain, or you garbage disposal gets jammed? Renters can often turn to their property managers to deal with these kinds of problems. Homeowners, on the other hand, have only themselves. And it’s estimated that the average homeowner ends up spending thousands of dollars on repair and maintenance every year.
This is where a reliable, effective home warranty plan becomes essential.
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In this guide, we’ll walk you through the ins and outs of home warranties — what they cover, what they cost, what advantages they provide, and everything in between.
What Is a Home Warranty?
First, let’s start with the basics: What is a home warranty?
A home warranty is a service contract between a homeowner and a home warranty company. The contract covers repair and replacement costs on major home systems and appliances in the event of breakdowns associated with normal wear and tear. The contract generally lasts for a period of one year.
In other words, a home warranty acts as a homeowner’s safety net. When important components stop working properly or fail outright, the homeowner can simply contact their home warranty company, and the company will take care of the problem. It’s fast, simple, and effective.
But wait, covering repairs and maintenance — isn’t that what homeowners insurance and manufacturer warranties are for?
Not exactly. Although there are some similarities between home warranties, home insurance, and manufacturer warranties, the truth is that each is different, and each provides a unique form of home protection. Let’s take a moment to look at the key differences:
A home insurance policy is designed to cover accidental damage to your property and possessions, as a result of theft, fire, natural disasters, etc. Homeowners insurance is mandatory, meaning that banks won’t issue a mortgage or allow a buyer to close on a home unless he or she can provide proof of coverage. The four main areas of coverage are interior, exterior, personal property, and general liability, but homeowners insurance does not cover issues related to natural wear and tear. That means that if one of your essential home systems or appliances simply stops working, then your policy probably isn’t going to cover it.
Where homeowners insurance falls short, sometimes manufacturer warranties can pick up the slack. Manufacturer warranties offer maintenance, repair, and replacement services on specific home systems or appliances. The original equipment manufacturer will generally guarantee the use life of their products, and should the product or system fail, the manufacturer will take responsibility to fix or replace the item.
That said, manufacturer warranties do have some fairly serious limitations; these warranties usually only apply to the original purchase made by the original owner. So if you purchase a home and inherit used systems or appliances, and those system or appliances fail, don’t count on the manufacturer warranty to take care of the problem. Also, it’s worth noting that even if you buy a new house, manufacturer warranties seldom remain in effect longer than 12 months from the purchase date. Finally, a manufacturer warranty may cover the cost of the parts, but may not cover the labor involved.
Unlike homeowners insurance, a home warranty is not mandatory when purchasing a home. The main purpose of a home warranty is to offer coverage for the items that homeowners insurance overlooks — key items, appliances, and home systems that inevitably end up needing to be repaired or replaced over time. This is not limited to new items; which items or systems are covered depends upon the specific warranty plan.
How Do Home Warranties Work?
Alright. We’ve established what a home warranty is and what it is not, but how exactly does a home warranty work?
Well, traditionally, the process follows this pattern:
When a covered system or appliance fails, the homeowner contacts their home warranty company to request service.
The home warranty company contacts a professional repair expert in the homeowner’s local area.
The repair expert contacts the homeowner to set up an appointment with the homeowner.
The repair expert fixes the problem. If the covered item cannot be fixed, the home warranty company pays for the replacement and installation of a replacement item.
A small trade service call fee (agreed upon at the time of sign up) is charged to the homeowner.
The home warranty company follows up with the homeowner to ensure that they are satisfied with the service.
Some home warranty companies offer 24-hour assistance, so you can expect to be able to get your issue resolved within a matter of days, or even hours. This becomes especially important when the problem involves vital home systems. After all, you don’t want to have to wait overly long to get a water heater or central heating system fixed in the middle of winter.
Of course, that’s only just scratching the surface. There are a number of reasons to invest in a home warranty beyond just getting a fast resolution to issues with important appliances and home systems. Let’s take a look at some of these advantages.
Benefits of Having a Home Warranty
No one wants to have to empty out their savings account or max out their credit cards just to pay for an unexpected home repair. Having a home warranty adds an extra layer of financial protection — a buffer — so that when vital systems and appliances inevitably break, you won’t have to break the bank to get them fixed. But home warranty benefits go further than that; they protect not only homebuyers and homeowners, but also provide a valuable service for sellers, listing agents, and buyer’s agents as well. Here’s how:
Home warranty benefits for homeowners
At its most basic, an effective home warranty provides peace of mind to homeowners. It helps protect limited budgets from unexpected repair costs, and gives homeowners a convenient and time saving way to locate qualified repair specialists. And, with 24/7 service and no limit to the number of service calls that can be made, the best home warranty plans are always available when you need them. Additionally, new homeowners who may not be as familiar with their home systems or maintenance history can enjoy the reassurance that comes from knowing that, should something fail, the home warranty company will fix the problem. And for those who have just spent a sizable amount of money on closing costs, it’s nice to not have to pay out of pocket for any repairts that might crop up.
Home warranty benefits for sellers
When you place a house on the market, it needs to be at its best. As such, when systems or appliances unexpectedly fail, your home’s market value can suffer. Sellers who invest in a home warranty plan during the listing period can ensure that their property is always in good working condition. Likewise, a home warranty helps prevent awkward and potentially costly situations where a sale has to be postponed or canceled due to a failed system or appliance. With the right home warranty plan, sellers can stand behind their properties with confidence, and can expect potential buyers to have the same confidence when the time comes to submit offers.
Home warranty benefits for listing agents
Home warranties aren’t just for buyers and sellers; listing agents can also benefit from purchasing a home warranty plan for a seller’s property. After all, the listing agent represents the current owner in the home-sale process, and is responsible for ensuring the best outcome for the seller. By investing in a home warranty, listing agents add an appealing selling point to the home’s listing — potentially leading to faster sales and better offers. And by offering home warranties as part of their standard listing package, listing agents demonstrate their commitment to their clients. Finally, most home warranty companies will provide free listing coverage when a real estate agent lists a home that is covered by a home warranty.
Home warranty benefits for buyer’s agents
Buyer’s agents are responsible for guiding home buyers through the complexities of the transaction process, answering any questions or concerns they might have along the way. Unfortunately, there are a lot of potential concerns associated with buying a home. Buyer’s agents can alleviate a lot of those concerns and increase buyer confidence by investing in a home warranty for the purchased property. A home warranty will reassure buyers that, should there be any system or appliance problems with their new home, the issues will be resolved quickly and inexpensively. This also helps avoid the legal minefield of post-sale liability; if something stops working, homeowners contact their home warranty company rather than having to get the sellers involved.
OK, so a home warranty offers some fairly significant benefits for buyers, sellers, and agents on both sides. Next, we’ll take a closer look at some of the expenses associated with home warranties.
Home Warranty Costs
How much does a home warranty cost? It’s an important question, and one that goes hand in hand with the big question “Are home warranties worth it?” After all, if you’re annually paying more for a home warranty than you would be paying for repairs, then what would be the point of investing in one?
Thankfully, home warranty coverage is not prohibitively expensive, especially when compared to repair and replacement costs. For example, repairing a broken HVAC system can cost over a thousand dollars, and replacing such a system can easily cost more than $10,000. Likewise, plumbing repairs can cost hundreds of dollars per hour in service and parts. A typical kitchen appliance repair costs between $1000 and $2000. And if you’re unlucky enough to need several such repairs in a short space of time, those costs can really add up fast.
$450 – $650 per year
Additional $100 – $500 per year
So, what does home warranty coverage cost? Usually, significantly less. Every home warranty company is different, of course, and will charge different rates for different warranty options. That said, the average cost of a basic one-year home warranty plan ranges from about $450 – $650 per year. Expanded coverage plans may add an additional $100 – $500 to that cost. Additionally, home warranty companies also charge a small service fee per repair job, usually $75 – $95.
Essentially, all it takes is one or two medium-level repair jobs, and the home warranty generally pays for itself.
That said, it’s important to know what components are eligible for coverage before you invest in a home warranty.
What Do Home Warranty Plans Cover?
Just as the cost of a home warranty can vary from plan to plan and provider to provider, the items and systems covered by these plans may not always be the same. This is why it’s always important to review your coverage before you commit to a specific home warranty. That said, most basic home warranties will cover a range of items, including built-in appliances, as well as plumbing and electrical systems.
The average cost to repair or replace a water heater is
$235 – $98
The average cost to repair or replace a home air conditioner is
$437 – $4,233
The average cost to repair or replace a refrigerator is
$412 – $1,151
The average cost to repair or replace a home heating system is
$482 – $3,029
The average cost to repair or replace a washing machine is
$282 – $544
The average cost to repair or replace a dishwasher is
$148 – $440
The average cost to repair a plumbing stoppage is
$395 – $750
The average cost to repair or replace a garbage disposal is
$85 – $236
Ovens Ranges Cooktops
The average cost to repair or replace an oven, range, or cooktop is
$195 – $779
The average cost to repair or replace a water heater is
$235 – $98
The average cost to repair or replace a home air conditioner is
$437 – $4,233
When the days get longer and the temperatures start to climb, home air conditioning becomes more than a luxury. Without the ability to stay cool when it gets hot, a home can start to feel like an oven. Unfortunately, when these systems break down, they can really turn up the heat on your finances. Air conditioning is a necessity, and having a dependable air conditioner warranty is absolutely vital.
The Home Service Club offers extensive air conditioner coverage for repair or replacement of most AC components, including:
Don’t suffer through the heat. The Home Service Club will pay for covered diagnosis, repair, or replacement of your air conditioner when the cool air stops coming.
The Home Service Club covers up to 50 different systems and appliances to ensure that you get the coverage your home needs. We’ve got you covered. It’s as simple as that.
With basic home warranty plans, covered appliances and systems often include:
Extended plans will take coverage further, possibly including:
Home Warranty Limitations
Home warranties that cover most home systems and appliances are available, but there are some limitations that you should be aware of. Home warranties focus on providing appliance and internal system coverage, and usually are not designed to cover structural damage to your home. They also don’t generally cover windows, doors, or walls. Sprinklers and other outdoor systems also generally do not fall under the coverage of a home warranty. Home warranties will also usually not cover pre existing conditions (so don’t bother purchasing a home warranty to cover that big repair job you’ve been putting off). It’s also worth noting that home warranties cover natural wear and tear on appliances and systems, but do not cover issues that result from improper maintenance.
Home warranty companies also have coverage limits. Coverage limits are basically caps on the amount per year that a home warranty company will pay for the repair or replacement of an item. For example, if you’re looking at a $3000 repair, and your home warranty coverage limit is $2000, you’ll be expected to pay the $1000 difference. The higher the coverage limit, the better you’ll be protected against having to cover these costs yourself, so be sure to take this factor into account. What are good coverage limit amounts? Look for a home warranty company that sets it coverage limits above $5000, and you should be protected against most appliance or system repairs. At the very least, you’ll end up paying significantly less on a costly repair than you otherwise would.
Choosing the Right Home Warranty Plan
The right home warranty plan can give you the peace of mind that comes from knowing that when — not if — your systems or appliances break down, you won’t have to cover the repair costs yourself. But not every home warranty company is created equal. Finding the right option to fit your situation can be a daunting task. If you’re interested in investing in a home warranty and want to know how to find the right one for you, here are six steps to set you on the right path:
1. Figure out what you want covered
Every appliance and system in your home has its own average lifespan. For example, a garage-door opener will usually last about 15 years before it needs to be replaced, while a dishwasher will likely only last for about 10 years. Knowing what appliances and systems you need covered, as well as their respective ages, will help you determine what kind of coverage plan is best for you.
2. Ask around
Do you know anyone who has a home warranty? Friends, family, co workers, and aquantenances who currently have a home warranty plan will be able to give you the inside scoop on how well it’s working for them. Have they had any problems with it? Is it cost effective? Are they planning on renewing their coverage when it expires? An objective opinion from an actual customer can be invaluable in helping you determine which home warranty company to go with. Similarly, expanding your search to include online reviews will give you a much wider pool to draw from. If a company has mostly positive reviews, then there’s a good chance that it will be able to meet your needs.
3. Review available plans and options
Most home warranty companies offer more than one plan option. In many cases, this means you’ll have the choice between purchasing a basic plan or an extended one, but what is covered in these plans isn’t always the same. As you compare potential providers, review the plans to see what they cover, what they don’t cover, and what you can expect to pay for that coverage. Also, be aware that the best home warranty companies offer customization in their coverage through optional add ons.
4. Take availability into account
What happens if one of your home’s vital systems stops working in the middle of the night? Or during the weekend? Or on a holiday? There are some repairs that just won’t wait for regular business hours. An effective home warranty provider will be available to help at anytime, 24 hours a day, seven days a week. Also, take into account what contact options are available to you.
5. Check out sample contracts
Home warranty coverage plans can be very complex, and it’s important to know exactly what’s covered, what isn’t, what coverage limits to expect, and what you’ll be expected to pay. All of this information will be detailed in your home warranty contract, but before you get to that point, check around to see if there is a sample contract you can look at first. The top home warranty companies provide sample contracts, easily accessible through their websites. These contracts will give you a clear idea of what you can expect in your own contract if you decide to buy a home warranty plan.
6. Get a free quote
Getting a home warranty isn’t like ordering off a menu; there are a lot of factors that go into determining cost and coverage limits. So, if you can’t find specific prices listed on a home warranty company’s site, don’t feel discouraged. Many home warranty providers offer free quotes. Just fill out an online form, and you’ll be able to see what you can expect to pay should you commit to a specific plan.
7. Speak with a home warranty agent
As you inventory your needs and do your research into home warranty providers, you’ll likely end up with some questions. Take these questions to the source, by contacting a home warranty agent directly. Agents employed by their respective warranty companies will be able to address any concerns you may have. And, if you decide to buy the plan, the agent will be able to walk you through the sign-up process.
Frequently Asked Questions (FAQs) about Home Warranties
There’s a lot riding on your choice of home warranty, so there’s nothing wrong with asking questions before you make a decision. Her are some common questions that many homeowners have about home warranties:
- What is a home warranty?
- How is a home warranty different from homeowners insurance and a manufacturer’s warranty?
- What makes the best home warranty?
- How much does a home warranty cost?
- How long does a home warranty last?
- Who pays for a home warranty?
- Do home warranties cover HVAC systems?
- What does a home warranty cover?
- Are there exceptions to home warranty coverage?
- Do home warranties cover older appliances and systems?
- Who are home warranties for?
- How does a home warranty work?
- How do I get a home warranty?
- How do I submit a home warranty claim?
- What is a trade service call fee?
- What if an appliance or system cannot be fixed?
- Do I need to have a home inspection to qualify for a home warranty?
- What if I sell my home before my warranty expires?
The Home Service Club Difference
With a decade of service behind it, HSC Warranty is committed to providing you with the service, assurance, and information you need to keep your home in the best possible shape. The Home Service Club will eliminate the hassle, frustration, and expense of repairing or replacing covered home appliances and mechanical systems that inevitably break down due to normal wear and tear. By purchasing a home warranty from the Home Service Club, you’ll have the peace of mind that comes with home service warranty protection against unpredictable breakdowns. And HSC Warranty takes things even further, by offering extensive warranty plans and some of the best coverage limits in the industry.
Affordable, reliable financial protection for your home’s most important appliances and system, backed by unmatched industry experience and expertise. That’s the Home Service Club difference.
Other perks of joining the Home Service Club include:
Protect Your Investment
A home is a major investment. And once you’ve paid your earnest money, covered your broker fees, made your down payment, and taken care of the closing costs, the last thing you want to do is pay for a bunch of repairs out of pocket. A home warranty protects you from this danger. And whether you’re buying a new home or are just interested in safeguarding the home you’ve got, investing in coverage for your appliances and home systems makes a lot of sense.
If you’re buying a home, selling a home, or looking for a better way to protect the appliances and systems that support your home, a home warranty from the Home Service Club gives you the power to enjoy the freedom that comes with homeownership… without the responsibility of paying for that next big emergency repair. To put it simply, a Home Service Club home warranty means no worries; just service.
Contact Home Service Club today, and get the protection your home needs to help turn your American dream into reality.