Are Home Warranties Really Worth the Money?
By Sherril Steele-Carlin
Many of these warranties aren't worth the paper they're printed on.
As an incentive to buy, many realtors negotiate a home warranty policy paid for by the sellers of the home.
Often, these policies seem like an excellent idea, especially if the buyers are purchasing an older home. Normally the policy comes a week or so after the sale of the home, and they stipulate that any repairs on the home must be approved by them first. Home buyers must be very diligent about calling the company and using the approved vendor they send out to fix the problem, or the home warranty company will not cover the cost of the repair. Even if the homeowner has an emergency, and cannot get approval from the company, they most often will not cover the cost of the repair.
Homeowners should be entirely aware of what is covered under their policy and what is not. For example, most companies do not cover any item "outside" the foundation of the home, which includes septic tanks. Even with additional septic tank coverage, most companies will not cover the cost of replacing the septic system or leach field, and most septic coverage is only good for one year and cannot be renewed.
Often, heating ducting and vents are not covered, either. What home warranties do cover are really the basics, such as appliances, heaters (remember, no ducting), and plumbing, but only inside the house. For example, if your sewer or drain line ruptures outside the house, that is not covered, but backups inside the house are covered.
Deciding which policy to buy is a dizzying decision, and one that the homeowner should clearly research. All companies are not the same, so prospective buyers should ask for satisfied customers, and ALWAYS ask for a comprehensive list of exactly what is and what isn't covered. Don't assume that because the heater is covered, that anything that goes wrong with the heater will automatically be covered. In addition, find out what your rights are if you dispute a claim.
You may find it's not worth it for you to invest in one of these polices. They sound good on paper, but for many of them, that's about it.
Some Online Sources to Learn More about Home Warranty Policies:
