Does a Home Warranty Serve a Purpose?
If you’ve recently bought a house, your real estate agent may have asked you about purchasing a home warranty. This is not the same thing as your homeowner insurance. There are pros and cons to investing in this financial product. Keep reading as The Purpose Of Money shares some insight on what you should know before buying a home warranty.
What Does Home Insurance Cover?
To understand why you might want a home warranty, you should understand what your home insurance does and does not cover. According to Allstate, home insurance usually covers things like your home’s structure and personal property. It will not cover your systems, appliances, and other items, like a sauna or pool. These are the gaps that a warranty may help cover.
How a Home Warranty Works
A home warranty works by acting as a contract between you and the home warranty company. Essentially, it says you will be responsible for maintenance and not abusing your appliances or systems.
In exchange for this and an annual premium, your warranty company will kick in if normal wear and tear render one of these items unusable. The best Florida home warranty companies will also use vetted contractors, and because the home warranty company has a great relationship with its contractors, it’s likely that you’ll receive priority service.
Reputation Matters
Anytime you’re going to invest your hard-earned money into a product, you have to make sure that you’re going to receive what you pay for. Make sure to read reviews of your potential home warranty company, even if your realtor recommends them. The House Method blog explains that scam companies provide unclear terms and make it really hard for you to cancel. They are also likely to have a reputation for denying claims and sneaking in unexpected expenses.
Cost Breakdown
While there is no way to look into a crystal ball and determine your exact repair or replacement expenses, you can use typical costs to get a good idea of what you might spend or save by investing in a home warranty.
Let’s say that your warranty costs $700 per year. Your HVAC system breaks down, so you call your home warranty company, which sends out a contractor. The contractor says it cannot be repaired, collects a $125 service fee, and coordinates with your home warranty company for replacement. In this scenario, you’ve spent $825. If you had to pay for the HVAC system replacement, it could have cost $7500 up to $15,000 or more.
Ensure You’re Covered
When you purchase a home warranty, you’re purchasing peace of mind. But, as we asserted previously, you are expected to properly maintain covered equipment and pieces. While there are many ways to do this, it’s not as difficult as it might sound.
Mister Sparky explains, for example, that your electrical system can be inspected just once each year. As long as you keep your records, repair damage, keep your appliances clean, and utilize the right voltage service and outlets, you’ve done your diligence. When you maintain your appliances and systems, your home insurance company is less likely to deny coverage.
Digital Documentation
One quick note. Keep all home warranty documents, including maintenance and repair receipts in a digital PDF. You can then use a PDF splitting tool to send pertinent pages to your home warranty company if questions arise. Once you save your files, name them according to the appliance and system in question.
Maintenance and home repairs are just one of the many unexpected expenses you might not expect when buying your first home. You can offset some of these by investing in the right products. A home warranty is a great choice for those looking for a way to bypass major repairs that aren’t covered by homeowner insurance.
Make sure that you find the best homeowner policy. Don’t forget to digitize your documents to back up your maintenance claims.
Visit The Purpose Of Money blog often for access to more great content.