An Overview of Home Warranties

A home warranty is purchased during the home buying process that covers the costs of property and/or appliance repairs for a specific period of time after the sale. This is especially important when buying an older home or when the sellers do not have records or warranties on file. It may also be helpful when the seller doesn’t know all the details of the home being sold, for example a rental or an estate. You can customize coverage to include anything from HVAC and roof leaks to pools and hot tubs.

Home warranties are issued and effective at the time of the home sale, and will cover repair or replacement due to normal wear and tear or unexpected failure. Home warranties do not cover acts of nature or disasters, pest damage, solar systems, or conditions that existed at the time of the home inspection. This coverage is tailored to your new home, and offers additional protection above and beyond your normal homeowner’s insurance policy.

The cost of home warranties will vary widely depending on the level and length of coverage you choose, but expect it to be $450 to $800. These can be paid for by the buyer or the seller as a part of contract negotiations and the initial premium paid at the closing table. The company generally gives you the option of extending the warranty, and will contact you before the policy expires. There are several companies to choose from - it’s important to look at their policy offerings and see who has coverage that fits your needs best.

Now the caveats: home warranties do not cover sewer repair or replacement (one more reason to get a thorough scope during your inspection!), and cover roof damage, but not replacement.  The home warranty company is partnered with specific contractors, so you won’t have a say in who comes out to do the covered repairs. Lastly, there is generally a $100 trip charge for contractors.

Though there are some limitations, home warranties are a great way to have peace of mind as you settle into a new home. If you have questions about whether a home warranty is right for your specific property, we are always happy to help!