How to Buy a Home Warranty

Builders generally provide a limited period warranty on newly constructed houses. However, home warranties are different in the sense that they cover repair and replacement cost for appliances and other home systems, regardless of age of the property. A good home warranty can help you at the time of selling your house as it makes the deal more attractive to potential buyers.

Difficulty: Moderate

Instructions

1. Study the difference between a home warranty and what is known as a hazard insurance policy. The former replaces items that fail on their own, while the latter provides coverage to them in case of fire, wind or other perilous events.

2. Read the policy carefully before investing as home warranty coverage varies company to company. You may specifically look for insurance of plumbing, appliances, and heating and cooling systems.

3. Get multiple quotes from agents. Compare the premium quoted by different companies. The standard ones generally vary from $350 to $450. However, it is more important to compare the items covered by each one of them.

4. Remember, the renewal cost of warranty policies after their expiry is higher than the fee paid for the initial policy. So drawing a comparison between renewal fees is also important.

5. Compare the co-payments also. It is the amount paid to a repair person when they visit to fix a failed system.

6. Check out the credibility of the company and previous case records before making your purchase decision.

Tips & Warnings

• Paying an extra fee can get you warranty coverage for private wells, septic systems and other items not mentioned in the standard list.
• In case the house is being sold, the buyer should try to convince the seller to include the home warranty in the purchase price, or at least negotiate a split.