Home warranties have become a common addon to listings and sales contracts so are they really worth it? YES! Home warranties will cover items which a buyer’s home owners insurance will not cover. Home warranties are an insurance policy, placed on a property either at the time of listing by a seller or at the time of purchase by the buyer. The warranty if placed on the property by the seller will cover the seller for the listing period then when the home is sold the warranty will cover the buyer for one full year. The warranties cover items such as the furnace, hot water heater, internal electrical, internal plumbing, AC unit, duct work, sump pumps and some apliances just to name a few (please refer to the policy coverage of the individual warranty provided by the seller’s or buyer’s agent which applies to your property). Most policies also cover addittional items at a minor cost to the buyer or seller. The policy will usually have a deductable which is paid to the contractor which comes to the property to do the repair. Deductables range from $50 to $100 in most cases which is much lower than the deductable on a typical home owner’s policy. Most home owner’s policies do not cover items previously mentioned and if they did the deductable would be too high and the claim would not be worth it. Unlike claims on your home owner’s insurance policy, a claim on the home warranty does not affect your insurance standings or credit. Recently a statistic came out that nearly 71% of home warranties have a claim in the first year, this is even higher in the North Eastern US with our older communities and weather conditions. So yes, home warranties provide a great value to the buyer and the seller so the next time the question comes up about home waranties consider their value!

This entry was posted on Monday, January 15th, 2007 at 4:16 pm and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.