5 Tips for Picking the Best Home Warranty Plan
5 Tips for Picking the Best Home Warranty Plan
Home Warranty Plans
When you buy a home you have many competing priorities but one of the most important decisions with long-term implications is selecting the right home warranty plan. The major mechanical systems that serve your home have a finite life span and are very costly to replace. When these systems do fail, the right home warranty plan can protect you from financial hardship and stress.
As you learn more about home warranties and how they work, you will discover the benefits of the coverage and the financial security and peace of mind that they can provide. But you need to select the right plan for your home and circumstances. That is where we come in with our 5 tips for picking the best home warranty plan.
1. Know What Your Home Warranty Covers
Many people confuse a home warranty with homeowners insurance, but the coverage they offer is very different. Homeowners insurance provides coverage for unforeseen calamities and losses, such as storm damage, fire, and similar disasters. A home warranty provides coverage for items that need to be repaired or replaced due to age or mechanical failure.
For example, if a water heater fails and floods your home, homeowners insurance will pay to repair the flood damage but not for the replacement or repair of the water heater. The home warranty will pay to repair or replace the water heater but will not pay for any of the damage caused by the flooding.
A typical home warranty will cover the cost (minus deductibles) to repair or replace failed mechanical systems including heating, air conditioning, water heater, plumbing, electrical, and appliances. The coverage term is usually 1 year from the date the plan became effective and must be renewed yearly thereafter.
2. What are the Plan Limitations and Exclusions
Almost every home warranty has limitations and exclusions on what they cover. Therefore, it is important that you select the plan with the broadest coverage and the fewest limitations. Some of the exclusions and limitations to watch out for are mismatched equipment and code upgrades.
Mismatched Equipment
Mismatched equipment is generally an issue with heating and cooling systems. If the inside furnace is manufactured by Trane but the outside condenser unit was previously replaced with a unit manufactured by Carrier, the system is considered mismatched. Although the systems are compatible and have been working fine in your house for the last 15 years, some home warranty policies will deny or limit coverage due to mismatched equipment. To avoid this potential problem, our pros recommend you select a plan that does not have a mismatched exclusion.
Code or System Upgrade
Code or system upgrade coverage is a common problem. Building codes and equipment requirements are changing all the time. Any additional equipment or changes that are required to meet existing code would be considered a code upgrade that many home warranty policies exclude from coverage. The homeowner would be required to pay the cost of the upgrade, which could be substantial. To avoid this problem our pros recommend you select a plan that provides code upgrade coverage.
Mismatched Equipment
Mismatched equipment is generally an issue with heating and cooling systems. If the inside furnace is manufactured by Trane but the outside condenser unit was previously replaced with a unit manufactured by Carrier, the system is considered mismatched. Although the systems are compatible and have been working fine in your house for the last 15 years, some home warranty policies will deny or limit coverage due to mismatched equipment. To avoid this potential problem, our pros recommend you select a plan that does not have a mismatched exclusion.
Code or System Upgrade
Code or system upgrade coverage is a common problem. Building codes and equipment requirements are changing all the time. Any additional equipment or changes that are required to meet existing code would be considered a code upgrade that many home warranty policies exclude from coverage. The homeowner would be required to pay the cost of the upgrade, which could be substantial. To avoid this problem our pros recommend you select a plan that provides code upgrade coverage.
3. The Size of their Service Network
When does the water heater break down? On Friday night after a tough week when all you want to do is have a well-deserved glass of wine and a hot bath. This is the moment your home warranty is put to the test. Will the problem be resolved quickly and easily or will it be 2 weeks of nonstop frustration?
A home warranty company is only as good as its service network. The better companies will have an extensive network of qualified technicians that will get the problem fixed in 1 or 2 days at most. This is where research and local reviews are critically important. You want a home warranty company that has a good reputation for getting problems fixed timely without undue stress. This is one of those times where a bit of effort upfront pays off in the long run. Our pros recommend you do the research now so you do not suffer later.
4. Do they Offer the Coverage Option You Need
Every home is different. Some are older and are prone to more mechanical issues. Some have swimming pools, spas, and saunas. The unique attributes of your home should be considered when shopping for a home warranty
Just like homes, home warranty companies are different. Most companies offer the basic plan but some will also provide options for additional coverage. There are several common add-on coverage options such as swimming pool equipment, solar panels, water well pump, water softeners, and main sewer lines. Our pros recommend you carefully review your options and select the plan that provides the additional coverage you need.
5. What is the Cost
There are many home warranty companies with a plethora of coverage options. It can be difficult to know which one is right for you but the best approach is to compare and contrast the coverage offered and the overall cost.
When doing a price comparison, you need to take into consideration the amount of the deductibles/copays and what your total cost would be if you had a major item fail within the coverage year. This is part art and part science, as you need to guess if you will have a major mechanical issue within the year. Our pros recommend a balanced approach by selecting a plan that has reasonable rates and acceptable deductibles. Keep in mind that plans are for a 1-year term so you can easily change plans next year.
The Bottom Line
Spending the time to find the right home warranty plan is important. You need to make a decision that you feel good about and that gives you peace of mind. We hope these tips point you in the right direction so that when a major repair becomes necessary it will be resolved quickly without financial hardship and stress.
Brought to You by the Mac Realty Team
This information is provided by Mac Realty Team, a team of full-service discount real estate agents with Global Realty. For additional information, current market sales data, or for help selling your home we invite you to visit www.MacRealtyTeam.net
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Mac Realty Team | 5 Tips for Picking the Best Home Warranty Plan