Home Warranties: What They Are & Why You May Need One

Buying a home is an exciting adventure. You’re not only buying a new place to live. But you’re also buying the place where you’ll make new memories. And because of the size of the investment for a home, protecting your new property will be important for both your finances and personal well-being. One way to do that is with a home warranty.

But what is a home warranty? And why might you decide to get one? Let’s talk about it.

What is a home warranty?

Home warranties offer you protection for a specific period – such as 1 year – against potentially costly problems like unexpected repairs on appliances or home systems (which are not covered by homeowner’s insurance).

A home warranty will cover the cost of repair or replacement (regardless of value) for items such as the HVAC, plumbing, electrical system, water heater, refrigerator, dishwasher, or oven. But the range of items and level of coverage all depend on the terms of the warranty. The home warranty will typically cover these costs if the breakdown is from normal wear and tear, mechanical failure, or other covered events outlined in the warranty.

You’ll pay a fixed annual premium for your home warranty. But keep in mind, a home warranty is completely optional and can be purchased at any time. 

How is a home warranty different from homeowner’s insurance?

Homeowner’s insurance and a home warranty are different types of coverage that serve different purposes.

A home warranty covers repairs and replacement of major appliances and home systems. A homeowner’s insurance policy provides coverage to the home’s structure and your belongings in case of damage or loss from events (like fire, theft, or natural disasters). It also provides liability protection should someone get hurt on your property.

The other key differences are that mortgage lenders typically require you to have homeowner’s insurance (whereas a home warranty is optional) and homeowner’s insurance will have a deductible & limit on coverage in case of a loss.

Should I get a home warranty?

Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home – a time when many people find themselves cash-strapped.

When thinking about getting a home warranty, it’s important to assess your individual needs and situation. But a home warranty can be beneficial if you want to protect yourself from unexpected repair costs – especially if you’re moving into an older home that has older appliances or systems prone to breakdown. 

Yes, it’s an additional cost to a costly process. But it can be helpful should something surprising happen.

Here are a few of the benefits of having a home warranty.

1. It protects from repair costs that can be expensive. 

Florida’s hot and humid weather is harsh on home systems and appliances. So you may find yourself repairing or replacing something sooner than you expected.

2. It provides you with peace of mind.

When buying a home, it can be difficult to understand the condition or age of the home’s systems and appliances. Often you have limited knowledge of the property’s history and what repairs the previous owner did (or didn’t) make.

3. It’s convenient.

When something breaks at your home, the home warranty company will typically arrange for a technician from their vetted list of vendors to come to your home and handle the repairs. You won’t have to spend any time researching and finding a vendor yourself.

4. It can save you money.

There is an annual premium you pay for your home warranty. But that’s instead of you having to pay for the cost of repairs and replacements out of your own pocket.

5. It can have transferable coverage.

Some home warranties will transfer to a new owner should you sell your home. This can be a selling point that’ll make your home more attractive to potential buyers.

How much does a home warranty cost?

A home warranty’s cost varies depending on the level of coverage, the size of your home, and the specific items covered.

But the average home warranty costs from $300–$600 per year. And a comprehensive home warranty can cost $800 or more per year.

There are other costs associated with a home warranty, like service fees or deductibles for service calls. But this all varies depending on the terms of your warranty.

Still not sure if you should get a home warranty?

Sit down and make a list weighing the potential benefits and cost savings of a warranty against the annual premium (and other costs). Depending on your investment and specific needs, a home warranty may be just what you need (or not). 

And don’t forget to carefully review the terms and conditions before purchasing to ensure you have the coverage you need.

If you have questions about home warranties, let us know. We’re happy to direct you to the right resources!

Your Team at Liberty Title Company of America

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