The Good, the Bad, and the UGLY
Home warranties are insurance policies sold to homeowners and property management companies to warrant a home against system breakdowns. A leak under the kitchen sink or a backed-up toilet? No problem. A call to the warranty company, and a licensed vendor is sent out to correct the problem. Landlords and property managers appreciate the convenience and the savings (sometimes) that these warranties provide. Items covered can include heating, air conditioning, water heaters, plumbing and electrical issues, and kitchen and laundry room appliances.
When a breakdown occurs (a ceiling fan starts wobbling, a bathroom faucet is leaking, the A/C isn't cooling, the dryer starts making a loud noise, or the dishwasher starts leaking), one might normally have to start calling around to find the right vendor and take a chance with a stranger to fix the problem, all the while wondering what the total cost will be to get things right. This can also be very time consuming. But with a warranty, it takes only one call to the warranty company, and they send out the vendor to fix the problem.
The cost of these warranties range from $450 to $550 per year. Some (but not all) also require a deductible ranging from $75 to $125 for each call.
All warranties have their list of exclusions, that is, items that are not covered under the warranty.
For example, the refrigerator may be covered but not the ice maker, bathroom plumbing may be covered but not the whirlpool jets that come in some tubs. Any items that were improperly installed or not installed according to code may not be covered.It is usually a long list of items. –Also, any problem that pre-existed the purchase of the warranty will not be covered.
Home warranties are an excellent way of providing homeowners with the security of knowing that most sudden or large repair issues in the home will be covered by the warranty.
Not all warranties are Equal, however. It is important to shop around. Get recommendations from a property management company, as they are likely to know which ones are good and which ones are better to avoid. Online reviews can also be very helpful.
Read the contract to find out the amount of the deductible, if any, and to see what is covered and what isn’t.