When you buy a new home, homeowners in Northern Colorado take it for granted that your home systems and appliances are in proper working order. Even if everything is running smoothly when you move in, disaster can strike at any moment. Furnaces suddenly stop heating, refrigerators stop cooling properly, and sometimes your water heater doesn’t get hot enough anymore. In short—expect the unexpected!
When something goes wrong, you can face a costly repair bill. A home warranty will protect you from sudden expenses. However, home warranties are expensive and may not be the right decision for your home. This article will answer new homeowners’ most frequently asked questions about home warranties. I’ll help you decide if the upfront cost is worth it for homeowners in Northern Colorado.
What is a Home Warranty?
A home warranty is a policy that will cover the cost of repair work for your home’s central systems and appliances. You usually purchase this through an independent home warranty company.
A home warranty is separate from your homeowner’s insurance or manufacturer’s warranty. For example, a home warranty will cover the labor costs to fix a failed part on a product that your manufacturer’s warranty won’t. If your home experiences a flood, the warranty will pay for the plumber to fix a broken pipe, and your insurance policy will pay for the damage to your home. A home warranty works hand in hand with your insurance and other policies when something goes wrong.
What Systems Are Typically Covered?
Home warranty policies usually cover air conditioning and heating systems, water heaters, furnaces, plumbing, and built-in appliances (such as dishwashers and refrigerators). You can buy a policy that includes other home systems like a hot tub or swimming pool for an additional cost.
What Isn’t Covered by a Home Warranty?
Home warranties do not cover your property’s exterior, walls, windows, floors, or sprinkler systems. Your roof and exterior appliances are not covered. A warranty won’t cover appliances that are too old, in bad condition, or installed incorrectly.
It’s essential to read over the fine print of your contract and understand exactly what the policy covers and what it does not cover. Here are some typical actions to be aware of:
- Large systems (heating or air conditioning) are covered, but replacements are not.
- Breakage due to poor maintenance by the homeowner won’t be covered. However, the normal wear and tear of an item are usually covered.
- Certain items are excluded from the warranty. For example, a policy might cover repairs to the refrigerator but not the ice maker.
- It doesn’t cover items once they reach a certain age or have gone beyond their serviceable life (i.e., 20+ years old).
- The policy doesn’t cover pre-existing conditions. Items need to be correctly installed, maintained, and in good working condition when you apply for coverage.
How Much Does a Home Warranty Cost?
Most warranty providers sell plans that range in price and coverage. The average annual cost of a home warranty should be around $400 to $600 a year. That means an average monthly payment of about $35 to $50. When you make a service call, you’ll also likely have to pay an average deductible of $100.
Who Can Purchase a Home Warranty?
In many cases, home warranties are only available to new homeowners at the time of the closing. That being said, more home warranty companies have recently started allowing longtime homeowners to purchase a policy. With a bit of research and a little luck, you can find a policy suited for your situation.
What Happens When You Need to Make a Repair?
When something breaks, contact your home warranty company first! Then, they contact their preferred service provider and send them to your home. Once the claim is approved, your policy provider pays the service provider. If you call someone to repair an appliance without first contacting your home warranty provider, they may not cover the repair cost.
One downside of having a home warranty is that you do not control who repairs your appliances or systems. This can be frustrating for some homeowners, especially if they have to wait a long time for a repair. If your furnace breaks down during a cold spell, you’ll have to wait for the home warranty company to deal with their subcontractor. The extra step might take a while.
How Do You Choose a Home Warranty Company?
It’s crucial to find a reputable company that others have highly recommended. Before you purchase a plan:
- Investigate a company’s long-term history and Better Business Bureau information.
- Compare coverage levels and upgrades to standard packages. Know what to expect in terms of deductibles and service fees.
- Read the fine print in the contract to make sure you understand co-pays and exclusions.
- Ask about cancellation policies.
A home warranty covers costs that your homeowners insurance and appliance warranties do not. This type of policy is not suitable for everyone, but the monthly fee pays for itself in most cases. If you decide to purchase a home warranty, read the fine print. I’m happy to help answer any additional questions you may have to help you determine what policy works best for you as homeowners in Northern Colorado.
I'm Lauren Haug! I'm a teacher-turned-real estate agent, and I teach people how to build wealth through real estate in Northern Colorado.
schedule your free consultation