What Is the Best Way to Protect Your Critical Home Appliances, Systems, and Equipment? (Part Two of a Three-Part Blog Series)
A lot of time, effort, and money goes into buying a home. Once you’re moved in, though, especially if it’s your first time purchasing a house or condo, you may be thinking that it’s time to kick back, relax, and enjoy the fruits of your labor and investment.
However, a house or condo is a large and important asset that can add considerable work and numerous worries to your plate. For example, what if your furnace calls it quits in the middle of winter, or your garage door opener breaks when you’re already late for work, or your plumbing backs up right before the family comes over for Thanksgiving?
Unfortunately, your standard home insurance policy is unlikely to provide the coverage you need to make repairs or get a replacement. While homeowners insurance does cover the structure of your home and personal belongings for many common perils, it generally will not cover systems and appliances that break due to age and normal wear and tear, or as a result of a sudden and accidental mechanical or electrical failure.
For this reason, it’s critical to have a plan in place for these types of situations. The Gilbert Insurance team has created a three-part blog series that explores the following options available to you for protecting your home’s most important equipment.
Whether one of these options or a combination makes the most sense for you, Gilbert is here to help you think through the optimal way to protect your home’s most important mechanicals—and your wallet—from the unexpected. Today, we’ll review the coverage details of a home warranty.
Should I purchase a home warranty?
Whether you are about to close on your first home, or you’ve lived in your house for decades, you can purchase a home warranty. Many homeowners end up investing in a home warranty because they are hoping to gain peace of mind that their major appliances and critical home systems will be covered in the event they break down and need to be repaired or replaced.
Before purchasing a home warranty, it’s essential to understand the benefits you’ll be getting. We recommend you ask servicers the following questions and see how their answers match up with your expectations and the general information we’ve provided.
These warranties are service contracts that guarantee to pay the cost of repair or replacement of all covered items. A comprehensive home warranty plan typically includes:
- Plumbing and electrical
- Water heaters
- Kitchen appliances
- Washers and dryers
- Built-in microwaves
- Ranges, ovens, and cooktops
- Garbage disposals
For an additional fee, you can extend the coverage to a pool, spa, septic pump, well pump, guesthouse, stand-alone freezer, and possibly more.
More importantly, what’s not covered are repairs to anything nonmechanical, like windows or your foundation. Most home warranties also will not cover an appliance or system that has pre-existing conditions, unusual wear and tear, was improperly installed or maintenanced, or is not up to code.
These plans typically are purchased for a one-year term and are renewable on an annual basis. If you are buying a home, you could ask your real estate agent to try to negotiate a one-year home warranty plan into the purchase and sale agreement.
The cost of your plan will vary, depending on where you live and the type of plan you select. For example, if you want a plan to pay just for the cost to repair your major appliances, you should pay a few hundred dollars less than for a plan that includes your home’s electrical and plumbing systems. You will also want to ask if there are any additional expenses you will have to pay during the warranty period, such as a copayment to the contractor doing the repair work.
When you have an issue with any covered item, you can typically call your warranty provider, file a claim, and expect to see someone out at your home within 24 hours to evaluate the problem and outline the solution.
Once the home warranty servicer has given you sufficient answers to your questions, there are a few more things we recommend you check into, prior to making this purchase.
- Check for any existing manufacturer’s warranties on all appliances and systems in your new home. If they are covered, purchasing a home warranty might not make sense.
- Be aware of home warranty caps on payouts for your appliances and systems. For example, the home warranty provider might cap plumbing and electrical repairs at $500 per year, leaving you to pay the rest out-of-pocket.
- Consider the age of your home systems and appliances and if there is a risk they will break down in the next year. This will help you evaluate if you’re putting your money to good use by investing in a home warranty.
A home warranty has several benefits but also some disadvantages and, of course, will have an impact on your wallet. For this reason, we encourage you to read Part III of this blog series, in which the Gilbert team discusses an affordable and powerful coverage option: a home systems protection endorsement.
At Gilbert Insurance, helping you select the right coverage for unexpected failures of your home systems, equipment, appliances, service lines, and more is just one way our team hopes to reduce your stress and expenditures as a homeowner.