Thursday, February 21, 2008

An Introduction To Home Warranties

A common trend among homeowners, especially new homeowners, is to purchase home warranty protection to protect their investment. A home warranty is very similar to an insurance policy in that it protects the homeowner in case a covered system or appliance is in need of repair.

There are several companies that offer home warranties, and many of them now have deals with real estate agents, brokers, and loan officers to include home warranties anytime a new piece of property is bought or sold. The fact that home warranties are often included in new real estate transactions is the reason why they are very popular with new homeowners. New homeowners are often given this protection for a year as part of their home purchase, and since oftentimes they will use the service at least once during that first year, many of them continue to buy the protection after that first year is up.

Although it varies from company to company and location to location the standard price range for a home warranty is typically between $300 and $500 per year. Although the first year is usually paid ahead of time for the entire year, after the first year many homeowners choose to pay on a monthly basis, normally between $25 and $40 per month.

Particular coverage again varies company to company, but generally most household systems are covered. Examples of systems that are commonly covered are the plumbing system, the heating and cooling system (including the air-conditioning unit), ceiling fans, electrical systems and exhaust fans. Most policies also include some or all of the appliances such as the refrigerator, stove, dishwasher, washer, dryer and microwave.

Most of the home warranty companies work on a national basis therefore it would be impossible for them to send a repair person from their company out to each individual's home. Not to mention that each individual's problem may require a different type of technician. For example, if you are having a problem with your kitchen sink you may need a plumber, however, if you're having a problem with an electrical outlet you'll need an electrician. The way the home warranty companies handle this is they have contracts with individual contractors in each city that they have members. When a covered member is in need of repair they call the home warranty company who then contacts the contractor in the member's city and schedules an appointment for the repair. In the event that a covered system or appliance cannot be repaired it will generally be replaced by the home warranty company by a new system or appliance of equal value.

All in all home warranties can be an excellent and affordable way to protect your real estate investment. The average home warranty owner uses their home warranty service twice per year. Wouldn't you like to be protected in the event something goes wrong in your home?

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