Does a home warranty really safeguard your new investment? The providers claim to protect the integrity of your major appliances and home systems, but they also leave plenty of loopholes to jump through. If they offer you a home warranty on the home you intend to buy, then you need to know exactly what this warranty entails and how it works before you sign. You want to know in advance: Are home warranties worth it?

What is a Home Warranty?

The agent or seller includes a home warranty in most home sales. It’s a gesture of good faith to ease the worries of the homebuyer. Much like a warranty on a car, it creates a sense of security in the large purchase being made.

People see them as insurance policies that cover the cost of repairs when things go wrong, but that’s not the case. A home warranty is not the same as home insurance. 

A home warranty is a service contract. The company helps to keep everything up and running and only replaces what cannot be repaired.

How Does a Home Warranty Work?

A home warranty company doesn’t repair or replace anything themselves. They only serve as the middleman. 

When something goes wrong in your new home, you will contact the home warranty company and make a claim. Then they will charge you a deductible and tell you if your contract covers the claim.

What’s NOT Covered By Your Home Warranty Contract?

Chances are, you didn’t read the entire contract. It’s long and has a lot of complicated legal jargon. But you should pay close attention because it’s filled with an extensive list of exclusions that will allow the company to deny your claim. 

Home warranty contracts are intentionally confusing. They can be difficult to understand and contain a lot of gray areas.

Exclusions are typically the most common complaints; e.g. for appliances such as your:

• Refrigerator
• Washer
• Drier
• Central AC Unit
• Heating Unit

Contracts may state that it covers the main HVAC unit, but fail to mention that secondary units are separate. Other surprising exclusions may include:

• Structural Problems
  • Doors
  • Windows
  • Walls
• Outdoor Systems
  • Septic System
  • Exterior Plumbing
  • Pools and Hot Tubs

It’s also important to note that a home warranty will not cover problems documented in your home inspection report. They are referred to as “pre-existing conditions.” 

Now you understand more about your contract. Let’s move on to the home warranty process. 

Contractors and What to Watch Out For 

Assuming that you are in luck and they accepted the claim, now what? They pick your electricians, HVAC specialists, roofers, plumbers, and so on, and send them to your home.

Many new homeowners are shocked when their home warranty doesn’t allow them to choose the contractor that works on their home, but that’s the way most companies do it. They have a large directory of local independent contractors whom they have partnered with and find one near you.

These small businesses receive new leads (customers like you) in return for offering specific services at a reduced rate. You will still pay something out of pocket. It is not free. And not everything the partnered contractor does will be at discounted prices. 

Contractors accept this partnership because it is an opportunity to profit. Sometimes they will arrive knowing that the home warranty does not cover the repair and will offer to fix it for their regular price. Out of convenience and/or desperation, the homeowner may agree to the work.

Many contractors will purposely look for other issues to remedy. If none are at hand, they can make up problems that don’t exist. Imaginary conditions or code violations mysteriously appear. 

So, Are Home Warranties Worth it? Why Home Inspections Help You Make the Most of Your Future Home Warranty

A home warranty does not cover pre-existing conditions, but how do you prove a problem was present before you bought the house? A home inspection report can outline exactly what was wrong with your home before you closed the deal.

They cover the rest, right? 

Wrong. 

It should work that way, but some companies argue that the inspector missed something. That’s why Divinity Inspection Service includes a meticulous report that not only documents defects but also notes what works properly at the time of inspection. When you have hard proof of what was and wasn’t working within the home before the deal is closed, it forces home warranty companies to cover repairs that are within their contract.

Let’s get back to our question: Are home warranties worth it? Our answer: Some can be, provided that you:

• read their contracts carefully,
• are cautious when working with their contractors
• always get a thorough home inspection performed by an inspector who reports everything. 

For inspectors you can trust, contact Divinity Inspection Service today!