The rate of homeownership in the U.S. is 67.9 percent. If you’re part of this statistic, the last thing you’d want as a homeowner is to deal with malfunctions, especially for a new home. The major systems and appliances in your home might break down when you least expect.
Yet, some of these homeowners don’t have a home warranty. Most people hardly understand the concept of home warranties. Nonetheless, a home warranty coverage has significant benefits for both homebuyers and sellers.
So, how does a home warranty work? Check out this guide to know what home warranties entail.
What Is a Home Warranty?
A home warranty refers to a one-year contract that protects your home budget from unexpected replacement or repair of appliances and home systems. The contract is typically one year, which is renewable. This kind of service isn’t part of the homeowner’s insurance policy.
The warranty plan covers components such as HVAC systems, plumbing, and electrical appliances for a standard home. When these appliances and systems malfunction, the home warranty company can replace or repair them.
When getting a home warranty coverage, you must be clear on what’s included in the cover. You’ll also need to confirm any deductibles or cap limits on the coverage. For first-time homeowners, getting a home warranty is particularly essential since one has minimal experience in the maintenance of several systems.
How Does a Home Warranty Work?
The type of coverage depends on the plan you have invested in. If you get the right home warranty, it’s functioning is quite straightforward. The first step you need to do as a homeowner when your covered system or appliance stops working is to call your home warranty company.
Home warranty companies often partner with businesses that offer several repair services. After you call, the company then calls the provider to make an appointment with you. The contractor will come to assess the problem and strategize on how to go about it.
A service provider will fix the issue, with the payment being under the warranty company. If the trade service fee were not part of the plan, the homeowner would have to part with an amount. It’s vital to confirm such details when applying for this warranty.
Home warranties are often in varying sizes and shapes. While some are full-service plans, others are quite narrow. However, none of these covers structural items such as fences, roofs, and windows.
What Is the Average Cost of a Home Warranty?
The annual home warranty premiums vary based on your location and contract inclusion. Averagely, the home warranty contract can cost you between $300 to $600 per year. Providers often bill the contract cost every month.
Additionally, you might need to part with a trade service call fee every time you’re filing for a claim. Homeowners often pay the service fee directly to the contracted technician. Some providers won’t charge you if they are forced to make multiple visits.
As the homeowner, you’ll pay for the warranty after you move in. However, some home sellers provide free coverage for the buyers for the first year. Sellers use the tactic to convince potential buyers to close a deal.
The home warranty is one of the easiest ways to increase your home’s value year after year. You’ll be confident knowing that your coverage is addressing any issues within your home. If you ever decide to sell the house, the improved or optimally working appliances will be a major plus.
Benefits of a Home Warranty
Now that you have the answer to the question ‘how does a home warranty work?’ understanding its benefits is crucial. A housing warranty has benefits for both the homebuyer and seller.
For a current homeowner, breaking down your HVAC system or any other appliance isn’t a new thing. In fact, there is a likelihood you have called in a service provider within the last year. With a home warranty, you will have adequate protection against the inevitable wear and tear of the appliances and home systems.
For first-time homeowners, the home warranty coverage offers significant benefits. A new homeowner might be in a financial crunch for the first few years. A home warranty can come in handy, especially if one experiences a system malfunction.
Given the uncertainty of the economy, a home warranty should be a priority for all homeowners. You never know when your heating and cooling system might decide to act up! Instead of waiting for such occurrences, it would be best to have a measure to address the situation.
Sellers also benefit from home warranties if there’s a breakdown when the home is still in the market. The last thing a seller would want is a having a postponed or derailed sale due to such eventualities. A home warranty ensures that every system and appliance in a home remains in the best state until it gets a new owner.
What Might Cause Payment Denial?
Not all claims are accepted. Most insurance companies will analyze the case thoroughly to determine if they cover applies. There are instances where payment denial is almost inevitable. If the installation was improper, chances of honoring a claim after a malfunction are minimal.
If you’ve got the answer to the query, ‘how does a home warranty work?’ you’ll realize that they are some regulations that a home warranty company upholds. Violation of the codes might cause you to get payment denials.
During a home inspection, the process might reveal other underlying issues. A home warranty company isn’t liable when you want to address the problems that were in existence even before getting the cover. Improper maintenance can also prevent the company from covering a claim.
How Does a Home Warranty Work? You Now Have the Answer
A home warranty isn’t as popular as homeowner insurance. There’s a tendency to use the terms interchangeably despite their notable differences. If you’ve been asking ‘how does a home warranty work?’ there you have it.
A home warranty is the best protection against your appliances and systems. It would be best to vent the home warranty companies before settling for one. You’ll be glad you did!
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