Do I need home warranty when buying a house?

Do I need a home warranty when buying a house?

Before we get into whether you need a home warranty, lets look at a home warranty is. Basically, a home warranty picks up where your home owners insurance drops off. As you know, home owners insurance covers the structure of the home against catastrophic loss. A home warranty on the other hand protects you against unexpected failures for the equipment in your home. You know, things like the refrigerator, stove, water heater, furnace and the like. The operative word here is unexpected. If a refrigerator is at the end of its expected life cycle and fails, the warranty would not cover it. The same is true if the equipment is noted to be defective on a home inspection report. On the other hand, if the AC is working fine when you buy the house but suddenly fails mid summer…a home warranty could be the difference between you being able to afford having it repaired in a timely manner.

How does a home warranty work? Home warranties are term policies which are typically purchased in one year increments. (Cost estimate $500)

Once a year you pay the premium to purchase the coverage. (in real estate this is typically when the house is bought).

You then provide the warranty company with a list of your appliances and major home systems. If you just bought the home they will frequently request a copy of the home inspection report as well.

When one of those systems breaks, you notify the warranty company.

They either send out a repair man, or authorize you to call one out.

You pay a deductible (typically $50- $100)

The warranty company pays for the repair (up to a certain dollar amount which varies widely between companies and policies…but it’s usually a reasonable amount).

You go on living life.

Do I want a home warranty? If you are buying a home, chances are money is going to be a little tight around the time of the purchase. You can hardly afford to replace an HVAC system that seemed to be working fine at the time of inspection. So the short answer is yes. This is especially true as you can frequently get the seller of the home to pay for the first year of the warranty.

So short and sweet as it is, there is the skinny on home warranties.

By the way, I should mention I am not a licensed insurance salesman, this article is for educational purposes only and is not in any way a solicitation to purchase any form of insurance.

I am an awesome Realtor though, and if you would like to buy or sell a home you should call me at 317-657-8059 or email to set an appointment.

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About Robb

A husband, Dad to 5, and Grandpa to 9. US Navy Vet. 18 Year Postal Employee turned full time Realtor. I enjoy a wide variety of things, but you will find that here I mostly write about Indianapolis, government/politics, recent news, and whatever book I am reading or have just finished at the moment.
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