As you wrap up the final details of buying your dream home, there will be the issue of whether you want to buy a home warranty. These types of warranties are set up to fix and substitute covered broken or worn items with new ones. If you think your next property could be headed for some maintenance issues, make sure you apply for one prior to the closing of escrow.
A home warranty is designed to repair and replace certain mechanical systems and built in appliances in your house, such as the plumbing, furnace, and electrical wiring. For an additional fee, you can add coverage for the air conditioner, jacuzzi, swimming pool, and roof. If you should have a malfunction with any of these, you can call your warranty company to check it out. If the insurance company deems the repair is a covered benefit, you’ll pay a flat fee for parts and labor which ranges between $60.00 to $100.
If you decide to check into the customer complaint history of most home warranty companies, you’ll be disappointed to learn most companies have piles of complaints filed against them. Many homeowners are angry when they uncover the hidden pre-existing condition clause which prevents coverage on pre-existing issues. If you were checking out a warranty policy that has this pre-existing condition clause, make sure you understand your policy will not cover you for any new problems.
You’ll also find most home warranty policies have extra exclusions which include repairs needed as a result of poor maintenance or servicing, faulty installations, and areas the inspector could not access. Some policies even refuse to cover the repair until you invest additional funds to upgrade the system to modern day building codes. Make sure you understand that most warranty policies won’t cover repairs if they’re not caused by everyday wear and tear.
You’ll find most home warranties costing between $300 to $1000 per year depending on the size and type of coverage you purchase. It’s not uncommon for most sellers to include the first year of coverage for your peace of mind. Sometimes your real estate agent will offer to pay for the first year just to make you happy.
But if you have to cover the full cost of the home warranty policy, you’re probably smarter if you invest money each month towards an annual repair fund to cover unplanned repair problems. You should aim for a goal of $5000 each year to cover future repairs.
Not all homeowners are dissatisfied with their home warranty. In some instances, you can get a helpful repair person who gets the warranty company to approve the repair. It’s important to check each policy carefully and read through the exclusions.
If your state has a government agency which regulates home warranties, check the complete record of a company you want to sign up for.
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