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Common Questions that Investors Ask about Home Warranty

Common Questions that Investors Ask about Home Warranty

While it is important to have a home warranty to secure your investment, it is essential to understand from the start what the plan entails, its costs and the length. Being a contract, a home warranty is legally binding; hence, you have to be careful, before committing yourself. 

To ensure that you get the best deal, you can ask the following questions:

1. What is the cost of the coverage?

This might seem as an obvious query but investors have made big mistakes on it. Most are interested in hearing an umbrella quote without probing to know what lies under the standardized price. For most companies, the first year coverage rates are good, but the subsequent years are characterized by high premiums. Mostly, the home warranty providers discount the first year warranty to lure you into signing up, only to increase the rate in the following years. It is your responsibility to ask questions about what happens after.

2. How much is the cost of service calls?

Usually, most home warranty companies have set a standard charge for each service call they make. Ask questions about the price of each service trip, whether there is a fixed price or they have an extra charge for emergencies. In addition, get to know whether the provider is willing to waiver the annual premium and in return increase the fixed rate for service trips. This will enable you to find out whether you can afford the particular home warranty plan or you need to keep looking.

3. How extensive is the coverage?

The main purpose of securing a home warranty is to cover systems and appliances, which would not be covered under the home insurance policy. However, the extent to which a company can cover your property varies from one provider to the other.  Since warranties are a liability to the provider, some place limits on the times they can come to your rescue within a year. Some contracts give a window of escape to the warranty companies, by allowing them to pay you a fixed amount. It is rewarding to hear this from the company itself, so that you can plan accordingly if the terms are not agreeable with your expectations and needs.

4. What items does the home warranty cover?

This is another question that seems so basic, but you should look at it carefully. Systems and appliances that you might think they are covered in the package could be excluded. Ask whether the roof and air conditioning are covered. Inquire also whether the coverage stretches beyond the foundation, or you will be responsible for utility lines and sewer systems, which are in the property but outside the foundation.

5. Does the warranty repair or replace?

Mostly, home warranties give the provider an option of repairing an item since that is more cost effective. This may be a disadvantage to you, if actually a system or an appliance breaks down beyond repair. In addition, after every visit you will be charged, which makes the overall cost higher. On the other hand, if the contract affirms that a replacement of any kind is good as long as the equipment is working, you might end up with a low-grade item. Ensure the provider outlines these terms clearly.

6. What is expected of you? 

As an investor, you need to know under what circumstances the warranty will stand. For instance, some providers will not repair or replace an item if they realize the problem was caused by poor maintenance.

If you want to make the most of your home warranty, do not just pick the first one that you come across. Ensure to ask the questions outlined above. This way, you will get the best home warranty package.

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