What is a Home Warranty?
Home Warranty (aka Residential Service Contract) is a contract between a homeowner and a home warranty company that provides discounted repair and replacement service on the home’s major components, such as the furnace, air conditioning, plumbing and electrical system. A home warranty may also cover major appliances such as washers and dryers, refrigerators and swimming pools. Most plans have a basic component that provides all homeowners who purchase a policy with certain coverages. In addition to the standard items, expanded coverage can usually be added at a premium.
What is the difference between a Home Warranty and Homeowners Insurance?
A home warranty is not the same thing as homeowners insurance, nor is it a replacement for homeowners insurance. Homeowners insurance covers major perils such as fires, hail, property crimes and certain types of water damage that could affect the entire structure and/or the homeowner’s personal possessions. A home warranty does not cover these perils.
How much does a service call cost?
Home warranty companies have agreements with approved service providers. When something that is covered by a home warranty breaks down, the homeowner calls the home warranty company, and the home warranty company sends one of its service providers to examine the problem. If the provider determines that the needed repair or replacement is covered by the warranty, he completes the work. The homeowner only pays a small service fee (you will usually have an out-of-pocket charge of $50-$100 per service call).
How much does the Home Warranty Cost?
The annual cost can vary depending on the coverages and exclusions, but typically ranges from a few hundred dollars for small condominiums to $800 for larger homes. This is a negotiable item on the contract and typically paid by the Seller.
What is Seller’s Coverage?
Is coverage the Seller purchases for protection from system or appliance failure during the listing. This provides the Seller peace of mind and elevates costly repairs during the listing so that the Seller can proceed to closing on time. I recommend Seller’s coverage to all my clients.