How Much Does A Home Warranty Cost?

A home warranty is a service contract that serves to supplement a homeowner’s insurance policy. A warranty is not itself an insurance policy. It is a contract to repair or replace any appliances or systems that are listed in the contract. The warranty does not cover damage to the home itself. It serves as an added value for a potential home buyer. As such, it is paid for by the seller or the real estate agent. Often, the home buyer has the option to extend the warranty before it expires for a small monthly fee. Because it can protect new home owners from the unexpected repair expenses for which they used to rely on a landlord, home warranty cost can be worth the money.

Home Warranty Companies

Home warranty companies, do not service the contract themselves. Rather, they subcontract the repair work to local service providers. The National Home Service Contract Association is a non-profit industry trade association that has compiled a list of member companies. According to the NHSCA, basic home warranty cost can run anywhere from $350 to $500 a year. Along with this cost, there is usually a service call fee, associated with any repairs. Along with the NHSCA list, realtors often have their own home warranty companies with which they are associated. These are not necessarily your best choice, as the real estate agent receives a small commission from each warranty that is sold.

Home Warranty Programs

When considering the cost of a home warranty it’s important to realize that home warranty services do not fix everything. They will not, for example, fix any pre-existing conditions. These should be discovered during a professional home inspection and fixed by the seller before the buyer signs the real estate contract. Because these warranties are contracts instead of insurance policies, they are not regulated by state insurance agencies. Also, it can take anywhere from 3 to 5 days for a repair technician to show up at your home, depending on the company and location. Claims for repair might be denied due to evidence of unusual wear or improper maintenance or installation. If you try to fix a problem first and make it worse, the warranty company will not fix it for you. They can be very handy in the case of the failure of a major appliance like a furnace.

Home Warranty Coverage

Home warranty coverage generally lasts for one year. After this term, the home owner can purchase additional coverage. This second year of the home warranty costs more than the first year, and the cost of a home warranty rises as the home ages. Except in the case of structural warranties, home warranties do not cover physical damage to the home caused by the failing appliance or system. For example, if a pipe leaks inside the wall of a home, the pipe repair will be covered. However, any damage to the home caused by the leaking water will not be covered. Also, most warranties will not cover the cost of disposing of old equipment or the cost of any building permits that might be necessary for major repairs or installations. This cost will have to be factored in as an addition to the home warranty cost.

Home Warranty Policies

Home warranty cost can vary and so do the different kinds of policies available. Most just cover the cost of repairs, minus a deductible and a service fee. Others actually cover structural problems, but these are usually associated with new construction homes. It is important to understand that these policies were designed to make money for the warranty companies more than to provide a service. Therefore, the customer service from these companies can be suspect at best. A professional home inspection is essential before purchasing one of these policies. When filing a claim, the company is going to want to know when the appliance or system was last working. This is to protect them from repairing any preexisting conditions, which should have been fixed prior to the sale of the home by the seller. Having a professional inspection report is crucial to prove that the problem you are having is not a preexisting one.

Home Appliance Warranty

Home appliance warranties are the most basic of these policies. The home warranty cost here usually falls between $250 and $400 a year. Home appliance warranties cover repairs to appliances due to normal wear and tear. These repairs are not covered by home owner’s insurance policies. These contracts can be worth it if the appliances are older. However, if all the appliances in the home are new then there is no real need for a warranty as the appliances are probably all covered under their own warranties anyway.