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Home Warranty Pros & Cons

When purchasing an existing home, a home warranty can provide peace of mind knowing that repairs to leaky pipes, broken furnaces, or appliance break-downs can be fixed for a “nominal” service charge. However, upon closer inspection, these warranties may not provide all the coverages you might expect.

Home warranties purchased on existing homes are more like limited service contracts that are in effect for only one year. The warranty policy holder typically has no control over who provides the repair service – that is determined by the warranty company itself.

AngiesList.com reports that home warranty companies top the most-complained-about list on their website year after year. The site attributes this to the fact that consumers assume something is covered by the warranty that isn’t, or consumers were surprised by the standard service charges when something breaks. Those service charges can range from $75 to $100 depending on service area.

The typical resale home warranty covers repairs to kitchen and laundry appliances, water heaters and furnaces, ceiling and exhaust fans, plumbing systems and circuit breakers. More expensive repair items such as roofs, pools and window issues are usually not covered. The consumer needs to be aware of the type of policy being offered. Some home warranty companies charge extra to cover air conditioning systems and ventilation issues. There are other exclusions such as ice makers, which break down often. Most policies don’t cover plumbing backups or leaky skylights either.

If you are in the market for a resale home, you need to carefully consider whether a home warranty is worth the cost. Determine if the seller is offering a home warranty as part of the transaction. If they are not, you can always ask the seller to provide a home warranty during the contract negotiations. If the seller offers a home warranty to sweeten the deal, take it. But if you must purchase the policy yourself, shop carefully and understand exactly what is covered for your investment. Research consumer complaints and don’t let the lure of “insurance” lead you into making a purchase.

“Instead of buying one of these policies – or placing any value in the one provided when you buy a home – you’ll do better to place that money into a home repair fund,” says Consumers’ Checkbook, an independent nonprofit that publishes consumer magazines in several locales around the country.

Source: Desert Lifestyle Publishing

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