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The home is probably your family’s most valuable asset, and taking care of it is important to you and your loved ones. The things you buy to furnish your home, such as entertainment systems all come with their own warranties, but what about the systems within the building itself? That’s where a home warranty plan comes into its own. Before we go any further, it’s probably a good idea to say this type of warranty doesn’t cover the fabric of your home, and the structure in the event of storm damage, flooding or fire.
Think about all the things in your home that might break down and would be costly to repair or replace, and that in broad terms is what a home warranty will cover. Every company offering a home warranty plan has slightly different terms and conditions, but a basic package will usually include the following:
✓ Electrical Systems. This means the electrical power circuits in the home from the fuse or breaker box to the outlet sockets in every room, and any fitments such as lighting or cooker.
✓ Plumbing Systems. Any of the plumbing in the home, from the clean water coming into the wastewater going out.
✓ Heating & Cooling Systems. If you have a central heating system for the winter, and air conditioning for the summer, the furnaces, and heat exchangers should be covered, along with any piping, ducting and radiators.
✓ Washer & Dryer. The home laundry is often included in the cover.
The cost of a home warranty can depend on when you decide to purchase it. Most companies offering warranties allow homeowners to buy the cover at any time. However, the best deals are often available at the time you buy a new home. A home warranty can come packaged with the purchase price of the property, giving you coverage for the first year, after which you can decide to extend for another year or bail out of the warranty. The cost of basic cover starts at about $300, and can more than double to $600 if you want something with all the bells and whistles. Facilities such as swimming pools are generally not included in the basic package and warranty cover for those can be purchased as an added extra.
Home warranty plans are often marketed at owners selling their homes, and potential buyers. The idea is that a home warranty will give peace of mind to buyers, who will not have to worry about any added expense should any of the major appliances or systems within the home fail soon after purchase. Some sellers even offer to cover the cost of the first year warranty as a marketing gambit to entice potential buyers.
However, with new build properties, the appliances and systems will be covered by the original manufacturer’s guarantee, which can be anything from one year to five or maybe seven depending upon the appliance. So, these home warranty plans are more of a benefit for people intending to buy an older property, as we know, the older the home, the more likely something is going to go wrong or break. On the plus side, the majority of companies offering home warranty cover do not differentiate over the age of the property, and the cost is the same no matter how old.
You may already have protection for some or all of your appliances. If they were purchased with a credit card, then they may well be already covered by a warranty. Some card providers double a manufacturers warranty from 12 months to 24 months, if the appliance has been bought using their card. You might find that the card provider will give an additional 24 months warranty extension beyond that offered by the manufacturer.
Consider the cost of the warranty and the possible costs of replacing or repairing your appliances. Most of the warranty plans only cover the replacement of the appliance, and not the fitting by a contractor. This additional cost can be anything from $60 to $125, depending upon the plan.
Read the small print, as most complaints about home warranty plans concern the coverage. The circumstances of an appliance breakdown often matter, if it has been regularly serviced, it if was not correctly installed. There is a wide range of provisions in many home warranty plans that make reading the fine print so important.
Does the plan cover repair or replacement? If the repair of an appliance will cost more than the current value of the item most home warranties will offer a replacement. However, they may only give the current value of the appliance, which means the homeowner will have to pay more to get the same or a similar model.
The maximum payout on these home warranty plans can be limited. Some plans have a maximum payout for any single item during the time of the plan, and another higher maximum for the total claims during the time the warranty is valid.
Obviously, you don’t have to have a home warranty plan, as it is not obligatory like homeowners insurance cover for a mortgage. However, rather than spending hundreds of dollars on a plan, which may or may not cover the complete repair or replacement of an appliance, an alternative would be just to put that money aside as your own self-insurance. The money set aside may well be enough to cover any mishap involving an appliance or the heating or cooling systems of your home. It also means you can pick and choose your contractor for any work, and upgrade an appliance rather than have to accept like for like.