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What is a Home Warranty?

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A home warranty is a service contract that covers the repair or replacement of many of the most frequently occurring breakdowns of home system components (such as HVAC, plumbing, electrical) and appliances.  A home warranty can be a real lifesaver in a time of need – saving you from costly repairs in a crisis.

Since your home is most likely one of your biggest investments, unexpected repair or replacement costs can easily strain your budget if you do not have a warranty.  Additionally, finding an approved and insured contractor to solve your problem can be stressful and inconvenient, especially at that crucial moment when a system breaks down.  While a home warranty cannot prevent systems or appliances from breaking down, it can help make covered repairs or replacement easier and less costly.

While not everything is covered, coverage for many of the most frequently occurring breakdowns of home system components and appliances is actually included.  Applicants should review their contracts or sample contracts carefully, to confirm covered items, terms and conditions, limitations and exclusions.  In some cases “supplemental” home warranty coverage may also be necessary, for items such as swimming pools and their filter / pump systems, garage door openers, secondary appliances (i.e. a deep freezer that is not the primary appliance), etc.

Whenever you apply for a mortgage loan, most lenders require that you have proof of insurance on your home before they will allow the closing to take place.  Very often, what homeowners feel is covered by their home owners insurance policy, is not included in their policy.  A home warranty can be very useful in this respect.  Carefully reviewing your homeowners insurance policy and comparing it to a home warranty, and then adjusting each to be complimentary to the other, can give a homeowner REAL peace of mind knowing that they are in fact fully covered for any event that may come their way.

If you have a seller’s home warranty (a type of home warranty provided by the seller to help promote the sale of the property), once the sale closes, any problems that may occur in the home will be covered.  Any expensive repair the home may require, will be taken care of by the home warranty.  A homeowners insurance policy will not likely cover many kinds of problems which will occur from time to time, nor will it cover wear and tear on home systems.

Unless you’re carpenter or contractor by trade, a home warranty is a great investment.  In most cases you will recover your modest investment in the home warranty plan via replacement of home systems and appliances, which will all eventually fail and need to be repaired or replaced.  The best advice is to check around and compare home warranty coverage and rates.  Both quarterly and monthly payment plans for are available, and the internet is a great resource to begin your home warranty search.

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