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Home Warranty: A Health Insurance Policy for Your Home.

January 26, 2011 San Carlos Real Estate 1 Comment

Peace of Mind.

You’ve just written arguably the biggest check in your life to purchase a home — for some buyers, that means scraping together every bit of loose change to make the dream happen.  So the last thing you want to face in the first year of owning your home is an unexpected expense if the refrigerator suddenly quits, or your furnace decides that it’s taking a vacation on the coldest day of the year.   Repairing or replacing a major appliance is not cheap, and it only gets more expensive when the word “plumber” comes into the discussion.    So how does one get a little peace of mind as they’re settling into their new home?

Enter the home warranty.

Think of the home warranty policy as health insurance for your home.    If something goes wrong in your home, you pay a small deductible and the insurance takes care of the rest.   Like any insurance policy, of course, there are limitations.   They generally don’t cover pre-existing conditions, and they’re pretty specific about which expenses they will or will not cover in the home.  And not all home warranty companies are created equal, so it’s important to read up on the policy.

But with the cost of an annual policy around $400-$500 (depending on the level of coverage), and the typical deductible of about $50 per service call, it’s easy to see how it basically pays for itself the first time you use it.

A Great House-Warming Gift.

The first year in your new home can be stressful enough, with the effort of moving and acclimating to a new home and neighborhood.  So I like being able to remove the worry of unexpected repair expenses for my clients.  That’s why I always purchase a home warranty policy as a house-warming for my clients when I help them buy a home.   As it turns out, over 50% of the policies that I have purchased for my clients end up being used at least once during the first year.  So while it’s not as pretty as a bouquet of flowers, it’s far more practical.

And besides, flowers only last a week.  A home warranty is good for a whole year!

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Currently there is "1 comment" on this Article:

  1. Michael says:

    It’s always been a nice gesture by our agent and a potentially money saving concept, but our experience with these warranty companies has been less than stellar.

    I agree that they provide service if a problem on a covered component arises. However years ago, we were expected to wait in the middle of a November cold snap 3 days without heat when the furnace gave out until one of their approved repairmen were able to come out. It was irrelevant that I could get almost any other repairman out same day. We didn’t wait and fixed the furnace at our own expense. After the warranty gave out, we ended up replacing our 50-year old furnace ourselves because it had gone out 4 times during the 1 year warranty.

    I am not sure what it takes to actually get an appliance replaced, but if they do, it is the bottom of the barrel (in our case the garbage disposal) and something that we ended up replacing afterward anyway.

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