Buying a new home warranty is very similar to buying an extended warranty for your refrigerator or car – there are many questions to ask yourself.
Many states have different laws regarding home warranties. For example, in California, state law allows you to sue builders for general defects for up to four years after the home is finished. You can also hold the builder liable for latent defects in major components for ten years. Why would you need the warranty if the law says the builder must pay?
We are beginning to see that many warranty products are being offered on existing homes. You must be careful with these products.
Start by checking with your state’s Department of Insurance. The department regulates the industry. They will be able to tell you whether or not a particular home warranty company complies with state regulations.
Many advisers suggest that you should spend your money on resale home warranties. These warranties include standard coverage for the home’s heating, electrical, and plumbing systems. Your kitchen appliances are usually part of the standard coverage. Often times, you can add your air conditioner, pool, well pumps, solar components, and root coverage for an additional cost.
You will often find that sellers offer the guarantees. The warranty is in no way an acceptable substitute for a professional home inspection. If the seller pays for the insurance, that’s fine. But if you are asked to do so, you should think carefully about it.
Not only will you spend a couple hundred dollars on the plan, but you’ll pay around a $ 50 deductible every time someone goes out looking for a problem.
Most plans also limit how much they pay to correct problems. You are better protected if you have a professional home inspector who will thoroughly inspect the home and discover problems for you. Inspection is a better use of your money.
But the plans are popular. Eighty percent of existing home sales include a warranty in California. If you are considering getting a home warranty on your new purchase, you should ask your friends and family for referrals. Look for a company with a good track record of satisfied customers.
Be sure to shop around. Look at the company’s pricing, service fees, coverage, and stability. Make sure you look at all the costs you will have to pay and the amounts of coverage. Make sure the coverage is applicable to your home. You don’t want the policy canceled because your home is too old.
If you want to buy warranty insurance, go ahead. Some people benefit from coverage. Like all insurance, the company is betting that you will never make a claim. If you don’t, you’ve wasted your money.