Is Home Warranty Insurance Worth Considering

The last thing any home buyer needs to worry about once they begin the move-in process is whether anything in their new home is going to break down or malfunction. This is especially true for the first-time home buyer. There are a number of items and systems within a home that this can affect so you should consider purchasing some type of home protection plan in order to gain some peace of mind. In this instance, we are referring to home warranty insurance.

What Is Home Warranty Insurance Anyway?

A home warranty insurance policy is a specific type of agreement or document that is provided to the homeowner by different types of individuals or organizations such as:

building contractors or home builders
insurance companies
risk management groups

From a legal standpoint, any warranty issued in the US must adhere to federal and state guidelines. However, the wording in these agreements does not always mean that it is a legal warranty by definition. In fact, it is best described as a home service agreement or contract.

Deciding Whether Or Not To Make The Purchase

The question that arises for many first-time new home buyers is whether or not that home warranty insurance is worth considering. In order to answer this question you have to look at the advantages and disadvantages of having this type of protection. Nearly all new homes on the market today come with some type of builder's warranty that covers the following:

electrical and plumbing systems
home's structural integrity
mechanical systems

Other components (e.g. appliances and windows) that are normally covered by a manufacturer's warranty may be covered by your home warranty insurance so it is important to inquire about this. However, if you want to extend the protection coverage for the structure and systems mentioned above, you will have to purchase home warranty insurance.

Advantages

There is quite an extensive list of interior items, structural issues, and systems that a home warranty insurance policy covers including:

basic appliances such as microwaves, ovens/stoves, refrigerators, and washers and dryers
duct-work, electrical, and plumbing which includes disposals, hot water heaters, sinks, toilets, and tubs
mechanical systems such as air conditioning and heating

Any of the above items will be repaired or replaced. However, the only cost the homeowner will incur is usually the service fee that the technician charges for coming to your home and doing the work.

The Primary Disadvantage

It is well known that preventative home maintenance typically reduces the necessity of making and repairs or replacing any defective items. The less you file claims against your insurance policy, the more expensive your premiums are going to get over time. This is the primary disadvantage and possibly what discourages the homeowner from taking out an insurance policy.

In closing, you can typically you can receive quotes over the internet or by calling an agent that offers home warranty insurance. Ultimately, the decision to purchase this insurance or not rests on the homeowner.