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Learn the Basics of Your Home WarrantiesJuly 21st, 2014 by
Buying a house is a milestone experience, but there are a lot of unknowns.
You can’t, after all, tear your new abode down to the studs to ensure that you won’t encounter hidden surprises in the future, nor can many homebuyers afford to immediately replace every existing appliance.
A lot can go wrong, and when you’re the homeowner, unplanned repairs and expenses are your responsibility.
To help lessen their anxiety about the potential financial burden of major home repairs, many homebuyers choose to purchase either full home warranties or warranties for the different parts of their home—windows, gutters, roofing, and carpet, to name a few.
If you decide to enter into a warranty agreement for any part of your home, be sure to read the fine print so that you know exactly what is and is not covered as well as how any repairs or replacements will be handled by your service providers.
Let’s Be Clear: What Exactly Is a Home Warranty?
According to the National Home Service Contract Association (NHSCA), which is a nonprofit organization that supports home service contract providers and consumers, a total home warranty is a service contract between you and your chosen home warranty company that allows for service, repair, and, in some circumstances, replacement of components of major parts of your home.
Typically, this includes HVAC, plumbing, electrical, and most kitchen appliances. Contracts for laundry machines, refrigerators, and pool and spa equipment are usually options that can be added to the agreement.
Most home warranties last for one year and can be renewed annually, but some companies offer different terms. Sounds great, right? It certainly can be—as long as you understand the limitations of the agreement.
The NHSCA states that many home warranty contracts require you to pay a service fee of approximately $30 to $100 for each tradesperson who comes to assess a problem.
Depending on where in the country you live, you’ll also pay a yearly premium of around $400 to $550, according to the NHSCA. That may seem like a small price to pay if your home does indeed need a major repair, but keep in mind that your request for service could be denied.
If your home warranty company determines that your furnace hasn’t been properly maintained, for instance, they will most likely refuse to repair or replace it—even if the lack of maintenance is the fault of the previous homeowner.
And if you have a problem that requires a visit from multiple tradespeople (an electrician and a plumber, for example), you will most likely pay a service fee for each individual.
Home warranties can be an excellent option, however, if your home isn’t brand-new—most sources recommend them for homes that were built more than five years ago—and if you’re a first-time homebuyer who may not have a significant savings cushion to cover unexpected expenses.
Most home warranty contracts clearly spell out what they will and will not cover, so take the time to read yours carefully before you sign on the dotted line.
What About the Rest of the House? Other Warranty Options
While your home warranty may provide assistance when a major appliance or part of your HVAC system needs to be repaired or replaced, it probably will not cover some of the other expenses you could encounter.
Home warranties typically do not cover roofing, gutters, windows, or carpeting, so what are your options if something goes wrong in one of those areas?
If your carpet starts to unravel in the corners or your new double-pane windows fail, your best bet is to take a deep breath and then investigate the manufacturer’s warranty or the installer’s warranty.
With products such as roofing, gutters, carpet, and windows, you’ll find that most warranties cover one of two different circumstances: problems or defects with the manufactured items or workmanship errors that occurred during installation.
Typically, the product manufacturer offers the warranty on product defects, while the contractor or installer offers the warranty on problems that result from installation.
According to GAF, the largest manufacturer of residential and commercial roofing material in North America, a roofing warranty can cover defects in the shingles caused by the manufacturer, or it can cover problems with the roof that were caused by improper installation of the roofing material.
Roof shingles, depending on the material, usually carry either a manufacturer’s lifetime warranty or a warranty of twenty to thirty years, while roofing contractors often offer five- to ten-year warranties that cover problems caused by workmanship errors.
Your gutter warranty will vary according to the brand of gutters you install. For example, if your gutters are specifically designed to keep out leaves, sticks, and other debris but clog up with that material anyway, your gutter warranty will most likely cover the cost of fixing the problem.
If your gutters are more basic, however, the warranty will probably not cover the cost of unclogging them—in that case, keeping your gutters clean is your responsibility. If there is a problem with the way the gutters were installed, your gutter contractor may have a warranty agreement to cover that issue.
Much like the gutter warranty, the specifics of your window warranty will vary depending on the product you choose, so read the details carefully.
Some window warranties only cover replacement glass and sealant material, while others provide more coverage, including labor costs. Improper installation and use of off-brand components (locks, shades, screens, etc.) can void the warranty, and you will have to take care of the bill for the repair or replacement of your window.
Each carpet manufacturer has its own warranty, and manufacturers usually offer several different types of carpet.
A carpet marketed toward pet owners may carry broader stain warranty coverage than others, for example, so make sure that you carefully read the warranty details for your specific carpet.
Many carpet warranties also have requirements that homeowners don’t often think about. For instance, in many cases, failing to show proof of having your carpet professionally cleaned at regular intervals (usually every 18 months, depending on the manufacturer) will void your warranty.
Warranties can save you a lot of money, but it’s important to closely read the fine print to understand what is and is not covered and what will and will not void the agreement.
Your home is probably one of the biggest, most important financial investments you’ll ever make, so be sure to take reasonable measures to protect it—as well as your wallet.