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Is A Home Warranty Important?

Is a Home Warranty Important?

Buying a home is one of the biggest decisions you will most likely make in your lifetime. It’s an exhilarating and quite possibly a terrifying process. There are several factors to consider beyond the color and location of the home. One of the decisions you may want to consider is a home warranty. A warranty can protect you from unexpected expenses that might occur like a broken appliance.

What Is a Home Warranty?

A home warranty is a package contract with a company that agrees to fix or replace home systems and/or appliances that stop working due to natural wear and tear. The warranty company charges an up-front premium for the first year (many times funded by the seller) and then a deductible or “Service Fee” is collected when a claim is filed. The company contracts with local vendors at negotiated rates to evaluate and repair the malfunction. As a homeowner, your job is to simply place the claim.

So what are some reasons to purchase a home warranty?  Here are some good ones!

Owning Vs. Renting

There are numerous benefits to buying a home vs. renting. None the less, some individuals might be leery of purchasing a home because of maintenance that is often required in home ownership. If something breaks at your rental, you just call the landlord and they fix it. When you own a home, the cost and responsibility fall to you. A warranty can help cover those expenses and keep more money in your pocket.

Warranties are not Always Speedy

A home warranty will probably save you money, however your business might not take priority over someone else’s’ when dealing with a contractor. The warranty company has a certain timeline they must follow to get the repair done. However, since the local contractor is working at a negotiated (below market value) rate, warranty claims are not always their number one importance.

A common example for those of us who currently rent or own a home in the Coeur d’Alene, Idaho area, would be the failure of a central heat unit in December. When you file a warranty claim, you could wait 1-2 days for a repair. If you call a local contractor and are willing to pay top dollar, they can usually fit you in that day. The problem comes when you get the bill for the repair. A repair would have cost one hundred dollars with a warranty could cost you $1,000 or more without one. Is it worth the risk?

Oh Yeah, That’s Not Covered

Many homeowners make the mistake of thinking that their insurance policy everything, however that is not always the case. A homeowners’ policy does not cover “wear and tear” malfunctions. It’s also important to take into account that a warranty doesn’t cover “acts of God,” either like a snow or lightening.

How good are you with a Hammer?

Some people are really handy, and a broken appliance does not phase them.   Then there are those of us that couldn’t hit a nail on the head if our life depended on it. If you are that type of person, a warranty is right up your alley!

You Might Not Need it

If you are buying a new build home, with brand new systems and appliances, those items are possibly covered by the manufacturer for the first year or more, sometimes up to 10 years on certain parts. In those cases, the warranty will save you on labor costs, but that’s about it. Also remember that not everything will be covered in your home warranty…better double check if that pool pump is covered!  These are all questions your real estate agent can help you answer, but they are definitely worth asking.

These are just some of the factors you should consider when considering a home warranty.