What Home Buyers Need to Know About Home Warranties

Posted by Justin Havre on Friday, August 2nd, 2019 at 1:07pm.

What to Know About Home Warranty PoliciesAlthough a home doesn't quite have as many moving parts as a car or cell phone, items can still break and be in need of repair. Often times these repairs can come out of the blue and can be rather costly to fix.

In the instance of an older home or any situation where a homeowner anticipates something might go wrong, a home warranty can be a beneficial tool. An agreement between a homeowner and a home warranty company, this contract can cover a number of repairs.

The Basics Of The Warranty

Each home warranty might look a bit different, but the ultimate goal is to provide protection and monetary coverage should something break in one's home. Many times a home warranty is included with the purchase of a home as an additional perk, or it can be purchased privately at any time the homeowner decides. Stipulations vary from company to company, but they usually cover items including appliances, plumbing, heating and cooling, or electrical issues.

Let's imagine it's a cold winter day and suddenly the heat stops working. If the furnace is in need of a repair and you are working with a limited budget, the future might look a little chilly. However, if there's a home warranty in place, for a small servicing fee, you can usually have a repair person come out and fix the issue without making too large of a dent in your bank account.

The cost for a home warranty can be paid annually or could potentially be broken up into monthly payments. In many instances, it can offer peace of mind, especially when cash flow is limited or there are questions about how well a home has been maintained by previous owners.

It's Not A Perfect Solution

While a home warranty sounds like a great idea for every homeowner, there are some caveats to think about before automatically making a purchase. Just like auto or health insurance, a home warranty might be a bill that gets paid for years without ever having to use it. While it's not insurance for your home, many compare it to that type of coverage, in that it's costly when it's not needed but great to have when something comes up.

When dealing with an older home, a warranty can be particularly troublesome if certain appliances weren't maintained correctly. In the example of a furnace, if the previous owner did not take proper care and maintenance of it, the warranty you purchased might not actually cover it.

How to Look for a Reputable Home Warranty Agreement

Since home warranties are still a relatively niche product, most homeowners are completely unaware of what they should cover or cost. You may find a plan that sounds great only to see an even better offer after signing up and paying for the first. Shopping around for a reputable and reliable home warranty agreement is easy once you know how to evaluate them. Signs of a reputable warranty include:

  • Clear and unambiguous terms about the limitations of the coverage so you know what you'll still be covering out of pocket
  • Affordable rates of less than a few hundred dollars per year, or you might as well just put the cost into savings and self-insure
  • Information on whether appliances and other systems will be replaced until the plan or only repaired
  • Maintenance requirements on your end, since many warranty companies can avoid paying if they can prove you failed to keep up with routine maintenance.


Evaluate If It's Right For You

Ultimately, a home warranty can bring a plethora of benefits for a homeowner, but people need to remember that it's not a blanket policy that will fix every item in the home under any circumstance. As long as this idea is kept in mind, the comfort and security of having a home warranty in place just might be a great thing for many to protect an investment in a great home in an area like South East Calgary. If in doubt, talk with a real estate professional or even friends and family to find out if it's a smart purchase for your home.

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