A home warranty is a type of insurance policy that helps protect your home and its systems and appliances from unexpected repair or replacement costs. When selecting a home warranty, it is essential to understand what is included in the coverage and choose a plan that best meets your needs. This guide will help you know what to look for when choosing a home warranty.
Waiting Periods
When choosing a home warranty, the waiting period is the first to look for. A waiting period is when you must wait after purchasing the policy before coverage goes into effect. For example, if you purchase a home warranty on September 1st and there is a 30-day waiting period, coverage will not begin until October 1st. It’s important that you select home warranty companies with no waiting period or a waiting period of 14 days or less. Be sure to ask about the waiting period before purchasing a home warranty to know when coverage will begin.
Description of Coverage
Another vital thing to look for when choosing a home warranty is a clear description of the coverage. Most home warranties will cover the major systems and appliances in your home, such as the heating and cooling system, the electrical system, the plumbing system, and major appliances such as the refrigerator, oven, and dishwasher.
Some home warranties will also cover items such as swimming pools and hot tubs, while others will only cover the home’s systems and appliances. Read the policy’s fine print to understand what is covered and what is not.
Deductibles and Copays
Most home warranty plans come with a deductible, the amount you will have to pay out-of-pocket for a covered repair or replacement. The deductible may be a set dollar amount or a percentage of the cost of the repair or replacement. For example, if your deductible is $100 and the repair cost is $500, you will only have to pay $100 for the repair.
In addition to a deductible, some home warranty plans also require a co-pay. A co-pay is a set dollar amount you will pay for each service call, regardless of the cost of the repair or replacement. For example, if your copay is $50 and the repair cost is $100, you will still only have to pay $50 towards the repair. Before selecting a policy, understand what deductibles or copays are required under the home warranty plan.
Claims Process
Another vital thing to look for when choosing a home warranty is a clear and simple claims process. The best home warranty companies will have a toll-free number that you can call 24 hours a day, 7 days a week, to request service.
The company should also have a network of pre-screened and qualified contractors that they will dispatch to your home to perform the repair or replacement. Ask about the claims process before selecting a home warranty plan.
Policy Limits
Most home warranty plans have policy limits, the maximum amount the home warranty company will pay for a covered repair or replacement. Policy limits may be per item, per occurrence, or year. For example, a home warranty plan with a $500 per item limit would pay up to $500 for the repair or replacement of any covered entity.
A home warranty plan with a $1,000 per occurrence limit would pay up to $1,000 for all repairs or replacements resulting from a single covered event, such as a power surge. A home warranty plan with a $2,000 per year limit would pay up to $2,000 for all repairs or replacements during the policy year. Be sure to ask about policy limits when choosing a home warranty plan.
Refunds and Cancellations
Before selecting a policy, ask about the home warranty company’s refund and cancellation policies. Most home warranty plans are non-refundable, but some companies will offer a refund if you cancel within a certain period, such as 30 or 60 days.
Some home warranty companies also charge a cancellation fee, usually a percentage of the policy’s total cost. For example, if you cancel your home warranty policy after six months and there is a 10% cancellation fee, you would owe the home warranty company 10% of the cost of the policy.
When shopping for a home warranty, remember these things to choose the best policy for your needs. A home warranty can be a great way to protect your home and budget from unexpected repairs or replacements. Still, it’s essential to understand what you’re getting before you purchase a policy. Be sure to read the coverage’s fine print to understand what is and is not included in the policy.