Some sellers offer a home warranty when you offer on their home. We have purchased a home warranty before when we moved out of town and rented out our home. However, we actually never used it. So…..is it useful to buy a home warranty?
A home warranty is a insurance against the failure of major appliances as well as against structural defects (depending on your policy). It can provide peace of mind, especially when considering an older home with appliances or systems that are nearing their end of life. If the seller does not offer a home warranty, you can, of course purchase one yourself. Generally, they run around $300 or $400 and cover damage or malfunction of major appliances and utilities in the home. A service fee around $50-$75 make sure you check the fine print in your home warranty.
While hard to predict when the roof will start leaking, or the water heater will fail, the below expected lifetime information might be helpful for you to know when considering the value of a home warranty:
- Refrigerator: 15 years
- Electric range: 15 years
- Dishwasher: 10 years
- Water heater: 10 years
- Washer and dryer: 8 years
- Air Conditioner: 8 years
- Microwave: 5 years
- Asphalt Roof 20 years
- Warm-Air Furnace 10 years
- Septic System 15 years
If you have found the perfect home, but have concerns about appliances or structure (depending on your policy), a home warranty will provide some additional protection. As a rule of thumb, chances that something breaks when the home is only 1-5 years old are comparatively slim. Maybe you’d just like to get the cash instead of the home warranty?
TIP: If you choose a home warranty – whether you pay for the insurance or the seller, make sure that you submit your home inspection report to the company. This will avoid any claims by the insurance that whatever broke might be a ‘pre-existing’ condition and therefore would not be covered under the warranty.
It will be hard to find a home warranty company without any complaints. However, you should still take a look at review sites and the BBB.org to see what the reviews and complaints state. See that your insurance
- Has no ‘Pre-Existing Clause.’
- Will pay on all warrantee-able items
- Realtors can have faith with their reputation
- You will not find any complaints about.
Do not mistake a home warranty for any home insurance. A home owners or home hazard insurance, will insure the home owner against damage and many times liability. Cost varies with region and coverage. A lender usually requires a home insurance – ANY home insurance, as long as the structure is sufficiently covered. This means that there are additional coverages for you to consider like the insurance of the possessions in our home, any liability and possibly additional coverages “riders” like sewer damage or in case of our recent wild fires, foundation removal.