What is a Home Warranty?
Although the popularity of home warranty contracts has increased in recent years, most homeowners do not have home warranties and do not know what they are. Most rely on their standard home insurance policy, which provides coverage for liabilities such as a slip-and-fall and perils such as fire or theft. A home warranty contract is deigned to provide a homebuyer with coverage for repairs and replacements that fall outside of these bounds. It is not, however, a guarantee or an insurance policy.
For a fee of $250-600, a home warranty contract typically provides one year of coverage for things such as major appliances, heating systems and plumbing. For additional fees, warranty companies offer optional coverage for pools, wells and other items they do not consider basics. Warranty holders should also expect to pay a deductible, which is typically the cost of the service call and is usually less than $100.
Although a home warranty may sound like a nice safety net, the home buyer must beware. Home warranty contracts often leave much to be desired when it comes to actual repair and replacement service. Angie’s List, which compiles consumer reviews of local service companies, recently released its 2010 list of worst-graded companies. Topping that list for the sixth consecutive year were home warranty companies. More than half of consumers rating their warranty companies on Angie’s List gave them either a D or F grade. The two main complaints consumers had were that the service they needed was not covered and the quality of repair work was poor.
