Home Warranties Can Save You Money

Buying a home does have some risk. You haven’t lived in the home, so you don’t know what works and what doesn’t, and the sellers may not be forthcoming about any problems. One tool that will help you minimize costly problems is a home warranty. For a one-time fee of $300–$500, you get a one-year insurance policy covering electrical, heating, and plumbing systems. Also included are built-in appliances such as dishwashers, disposals, compactors, and range/ovens. However, refrigerators, air conditioners, washers, and dryers usually are not included in the basic coverage of most policies but can be covered at additional cost.
With most programs, if you have a problem you call the warranty company, which sends a repair person from its own local network of contractors. Since the contractor usually has a service charge of $35– $50 for each call, it pays to handle the small or inexpensive repairs yourself.
The major benefit of a warranty is protection from problems you didn’t see during the inspection. But, it’s important to realize that most warranties don’t cover structural repairs such as a roof or foundation. There are, however, a growing number of companies that do offer—for a higher premium—coverage for structural and roofing work. Also, coverage of plumbing systems varies widely. Some policies cover all pipes—inside the home and out—but others don’t. You’ll need to read the fine print to find out what’s covered.
One of the most important policy restrictions to look for is ‘‘preexisting conditions.’’ Many warranty programs don’t cover problems that may have been present and detectable before the policy went into effect. The coverage varies widely, so it’s important to read and compare policies carefully before buying.