Home buyers ask me what is included in a home warranty and how it to use it in a time of need. As a homeowner and landlord, I would HIGHLY recommend getting a home warranty policy. Below I will outline what is included in a home warranty and share my personal experiences.
What is a Home Warranty?
A home warranty provides extended protection for buyers when they close on a new house. A home warranty company covers specific items that were in working order prior to close of escrow. If a serviceable item stops working, your home warranty company will send a contractor to your house to diagnose and fix the problem. There is no out of pocket cost to you outside of the trade call fee. This fee varies between $65 and $100 depending on the company.
Below you will see the standard items covered by First American Home Warranty for a single family home under 5,000 Sq.Ft. Under the Premier Plan, you can get a more comprehensive coverage options. What is new, companies like First American are making central air conditioning an optional coverage item. This is good if you bought a home that is already SEER 13+ (more efficient models). However, I recommend getting the AC optional coverage with the first class upgrades for outdated / older models.
Optional Home Warranty Coverage
What can repairs and replacements cost without home warranty protection? If you were to pay out of pocket for any item below, you can clearly see the benefit of a home warranty.
My Experience with Home Warranties
Here are a few examples when having it saved me THOUSANDS of dollars for both my personal residence and rental property (price and benefits are the same)
- Plumbing Leak (Rental): Called because my tenant noticed brown spots on the downstairs bathroom ceiling (upstairs bathroom floor). Called home warranty and they sent a company out in a few days and diagnosed a small leak and fixed. A second company (paid by the warranty) to patch the hole. A week later, I had a massive second leak from the tub and again, the warranty had the original company come out and fix the issue. Yes, I had a problem the second time but it was due to the entire ceiling being damaged. However, the plumbing company rectified the situation and had the entire ceiling patched and textured. My out of pocket cost: $0 (excluding the $34/month I pay). My regional rep waived the $75 trade fee!
- HVAC (Personal Property): I took a cash out option that gave me $1,001 -after trade call fee, to repair the heater unit. I had been complaining for months that the system didn’t seem right. This home warranty is not the same as the company used above and will never use them again. Main reason without getting to deep is the fact the system is old and I did not have a “first class upgrade”, which is critical for older HVAC systems in CA because the law is any new system must meet a minimum SEER rating. Nonetheless, I was still able to get a $1,000.
- Stainless Steel Fridge (Personal): Recently my fridge went out, and after a few diagnostic attempts, it was finally fully fixed on Friday. Had I paid out of pocket for it, the cost would have been north of $600! My cost, technically $0! $75 was my trade call fee and then the home warranty mailed a $75 check to cover the cost of a small fridge /freezer.
Again, a warranty coverage can save you thousands, but also remove a lot of the headache that comes with fixing stuff that breaks. Now there are certain items that aren’t covered, but a majority of issues are, and it’s in your best interest to utilize this resource. My mom and aunt paid $15k for electrical work and had a home warranty been established, the cost would have been greatly reduced, if not eliminated.