Is a Home Warranty for You?

What makes a house a home? Of course, the usual answer is a loving family, a welcoming atmosphere and feeling of safety. That is all true as far as it goes. On a functional level, a house runs on its infrastructure, i.e. its electricity network, its plumbing system and the myriad appliances that afford that loving family some degree of comfort and convenience. Like the home value, these set-ups age with the passing of time, requiring the inevitable repair and restoration. Good financial stewardship involves making provision for such contingencies. A home warranty is one way to do it.

What Is a Home Warranty?

Many people confuse this product with homeowners' insurance. In fact, homeowners' coverage is targeted at damage caused by vandalism, fire, flood, violent weather and otherwise unpredictable traumas. Furthermore, this insurance is there to restore structural damage to the house, as when a tree falls on a house due to high winds. Home warranties have a different purpose. They do not cover risks that are rarely -- and sometimes never -- realized. They are in place with the full expectation that a claim will be made. It is not a matter of if, but when.

How Does the Claim Process Work?

Making a claim on a warranty is fairly straightforward. If an appliance or system malfunctions or breaks down, the customer submits a request. The warranty provider subsequently sends out a contractor to assess the problem and often make the repair. The devil is in the details of the contract. Some cover only very specific items: washers, dryers, dishwashers and automatic garage doors, e.g. Others are more comprehensive, embracing heating, air conditioning and emergency generators. Thus, a familiarity with the specifics of the contract is essential if home owners are to get their money's worth.

Are There Any Drawbacks?

Home warranties sound like the ideal vehicles to provide assurance and a level of comfort to homeowners. Not everyone would agree with that opinion. According to an April 2019 investigation by the Washington Post, the Better Business Bureau is routinely inundated with complaints about warranty companies. Many of these grievances have to do with the way fees and premiums are advertised. More precisely, the premiums are well-published but the fees are buried in the fine print of the contract. Just when you think your premiums cover it all, you can get hit with a "trade service fee" when the contractor comes to call. Worse, if the contractor determines no service is warranted, the customer must still pay the fee for the visit.

So, Are Warranties Worth the Trouble/

Home warranties are worth the trouble if consumers will take the trouble -- to read, examine and negotiate a contract that is clear about the total compensation for the company as well as the specific areas of coverage. Service fees, for one, may be a nusiance but they are preferable to an overwhelming bill that may come when coverage is absent. As with insurance or the very appliances to which the warranties apply, customers should shop around for the best product, asking many questions and questioning every detail.

Who Can Purchase a Warranty

Home value is not a determinant. The main criterion for eligibility is that the household systems under proposed warranty are intact and working in good order. In fact, even homes a century or older are not exempt from coverage so long as the appliances and functional systems have not exceeded their life expectancies. Key to success is a careful study of the contract.