Buying your first home is one of the most exciting purchases a person can make. It’s also the beginning of one of life’s major learning experiences. Learning how to maintain the home and do many of the repairs that will be required over time is a major part of the responsibility called “home ownership.”
Purchasing a home warranty allows the owner to not worry about the high cost of repairing or replacing the home's mechanical and appliance systems by providing coverage for all of the major systems within the home. When a covered item breaks down, the owner simply dials a toll-free number and a service technician will be on their way to do the necessary repairs. While that sounds simple, there are a lot of variations in the result of the call.
Among the decisions to be made when buying a home is whether to purchase a home warranty plan. And if so, how to choose the home warranty plan to be purchased? Within the current market place there are at least a dozen plans from which to choose. To evaluate each one with their individual features would be difficult and confusing. Additional investigation should be taken before any plan is purchased. home warranty plan provides budget protection and peace of mind for home buyers who otherwise might not be able to handle unexpected repair bills at a time when they are usually least affordable.
The benefits of a home warranty plan include:
- Protection from large unexpected repairs
- Convenience of one call, one small service fee and prompt response
- Most major systems and appliances covered
- Provides ongoing home protection – renewable year after year!
- Full replacement of covered items - if they can’t fix it, they’ll replace it
- Reduced after sale worries - if a breakdown does happen after the closing,
the buyer has someone to call – the warranty company.
CHOOSING A HOME WARRANTY PLAN
Because home warranties are not considered technically, insurance, Home Warranty Plans are not regulated by the state in Arizona. It’s up to the consumer to do the investigation to chose the plan to be used. The following are actions that can be taken to chose the best program.
- Contact the Better Business Bureau and ask about the history and past claims of the warranty being considered.
- Call the 1-800 service number to get a feel for the customer service provided. Ask the following:
How are repair services chosen in the local market place?
What should be the response time be when a problem occurs?
- Consider the financial stability of the company and the likelihood of its future existence.
- Ask for a referral from the agent representing your side of the transaction.
There are at least four issues to be aware of when considering the purchase of a home warranty:
- Pre-existing conditions are not covered by any warranty, the home inspection should uncover these problems during the inspection period so they can be resolved before close of escrow.
- Warranties only cover problems within the stem walls of the home. For example, roots growing into sewage pipes between the home and the street are not covered.
- Home warranties do not cover items that are a result of manufacturers defect or poor workmanship. An example: A few years ago there was a major problem with homes that had been plumbed with polybutylene pipes and copper fittings. That combination created situations requiring entire homes to be re-plumbed. Those situations were not covered by home warranty plans.
- Home warranties have latitude in how changes in government regulations are handled. The current example: The Department of Energy (DOE) measures efficiency in numbers called SEER ratings (Seasonal Energy Efficiency Ratio). For several years, the minimum efficiency standard for newly-manufactured HVAC equipment has been 10 SEER. As of January 23, 2006, the law required manufacturers to stop producing anything less than a 13 SEER unit. That governmental action will make replacement parts more and more difficult to obtain. Home warranties do not address this issue with uniformity. That means one plan may provide better coverage for problems concerning the air conditioning systems in the future.
Home warranty plans play an important role in minimizing the risk that are associated with homeownership, but there is one caveat- they don’t eliminate the risks entirely.