What is a Home Warranty?
A home warranty is an insurance policy that covers specific areas of your home that your typical homeowner policy does not. A homeowner policy typically covers the structure of the home, roof, walls, and flooring, while a home warranty focuses on covering appliances, heating and cooling units, sump pumps and other mechanical systems. Home warranties can be very beneficial to the homeowner, but some caution needs to be given to the following myths!
Myth #1. Purchasing the highest level of coverage will cover all my mechanical systems.
When purchasing a home warranty, special attention needs to be given to the fine print of the contract. The following pieces are examples that are not usually part of the coverage:
- Mini-split systems – not covered by most warranties.
- Second refrigerator – most warranties only cover one refrigerator in the primary kitchen. The second refrigerator in a basement or garage is not covered.
- Window AC Units – not covered by most warranty plans.
Myth #2. If my system cannot be repaired and needs replaced, I will receive the exact model replacement.
Home warranty contracts may state that they will replace the unit with the same features. This can leave the door open to variances of brand and color. An air conditioner in a distinct color may not be an issue, but a stove or refrigerator in a different color may be upsetting.
Myth #3. If my current AC unit is outdated, a new high efficient system will be installed.
Home warranty contracts may state that if an AC unit is found to need replacing, a unit that meets current federal regulations will be installed. Clarification is needed on what all will be replaced. Regulations are changing with refrigerants, efficiency ratings, and sizing of equipment. If the outdoor section of the AC unit is replaced, the indoor section may also need to be replaced or it should be verified that the sizing and refrigerant type is suitable for the upgrade to the outdoor unit (Link to what needs replaced article).
Myth #4. When my system needs repairing, I will receive Original Equipment Manufacturer (OEM) Parts.
Home Warranty companies may buy out surplus sales, or remanufactured pieces to get a better price on replacement parts. Remanufactured pieces and parts are not always re-certified under UL requirements (link to UL article). Equipment manufacturers do not always use remanufactured parts and may stick to UL certified parts.
Myth #5. You can choose or use your contractor of choice to perform diagnostics and repairs.
Home Warranty companies generally have contractors that are pre-screened to meet their requirements of certifications, insurance, and customer feedback/reputation. However, when a policy owner submits a claim, the home warranty company may dispatch their contractor of choice to diagnose and repair your equipment. There are some small home warranty companies that allow you to use your contractor of choice, but these warranty companies are few and far between.
Home Warranties are often sold by realty companies at the time of home purchase or sale. The home warranty gives the buyer peace of mind that they will not have any unexpected expenses shortly after purchasing a new home. Home warranty plans can, in fact, be very beneficial to homeowners, but some research and caution need to be given so the policy holder’s expectations are clear.