13 Questions to Ask When Comparing Home Warranty Companies
Shopping for a home warranty is a big job. First, you should find the policy that provides the coverage you need and affordable prices. Like insurance, no two warranties are the same, so there are specific questions to ask when comparing home warranty companies.
Check out the questions you should ask so you invest in the warranty that will provide you with the best coverage.
What Coverage is Typically Included in a Home Warranty?
Home warranties protect the integrity of your appliances and home systems, depending on the type of coverage you purchase. Home warranty companies cover home appliances, home systems, or both.
A home warranty isn’t home insurance. It doesn’t protect your home’s structure or any damage caused by outside sources, such as a tornado or flood. Instead, home warranties cover the normal breakdown of home systems and appliances.
For example, suppose your refrigerator stops working, and you have appliance coverage. In that case, the home warranty company will send a licensed contractor to evaluate the issue and determine if the refrigerator is repairable. You’d pay a service fee for the visit. If the refrigerator breaks down under a coverable reason, the warranty company will pay to repair or replace the refrigerator.
However, if the refrigerator stopped working because your house flooded from a hurricane, the warranty company wouldn’t cover the fridge, and it would fall on your flood insurance coverage if you have any, depending on its fine print.
When buying a home warranty, one must shop around and know the questions to ask when comparing home warranty companies.
How to Buy a Home Warranty
You can buy a home warranty when purchasing a home or even after owning it. Some sellers may include a home warranty in the sale to entice buyers. However, before buying one, you should understand the steps.
1. Determine what you need to be covered
You can purchase appliance coverage, home system coverage, or both. It’s up to you. Also, decide within the coverage type you choose what you need to be covered. For example, if you select appliance coverage, be specific about the appliances that need coverage. For example, if you have newer appliances with manufacturer’s warranties, the home warranty company won’t cover them, so there’s no need to pay for coverage on them.
2. Get quotes from several home warranty companies
It’s free to get quotes from several home warranty companies. First, get quotes for the premium, term, service fee, and what’s covered. Then, use this information side-by-side when comparing plans, determining how they compare to what you need.
3. Look closely at coverage caps
Each warranty will include a coverage cap. So, for example, if they cover an appliance up to $1,500, but your appliance is worth $3,000, it may not be worth protecting it.
4. Read the fine print
Be sureyou read the fine print. No two warranties cover the same things, and some exclusions or terms may surprise you. Don’t buy a home warranty without knowing what might be excluded or what costs you may incur.
5. Ask about customer service
Test the customer service yourself. For example, do they offer phone support 24/7 or only email/live chat support? Dealing with broken home systems or appliances is stressful, so you want a company that will be available around the clock.
6. Research the company
Take advantage of the internet and research companies to ensure they are legit. Review the Better Business Bureau, TrustPilot, Yelp, and Google reviews. Ensure a company has at least a B rating on the BBB and overall positive reviews on other sites.
7. Buy coverage
Your final step is to choose coverage and purchase it. Remember, your coverage will have a waiting period, so you can’t file a claim the next day. Typically, you’ll wait 30 days or possibly longer.
What Questions Should I Ask a Home Warranty Company?
Before buying a home warranty, you should always know what questions to ask when comparing home warranty companies.
Here are the top questions to include in your list.
1. What Does the Plan Cover?
This is the most critical question, as it’s the bread and butter of why you’re buying a warranty. Not knowing what the plan covers could create unpleasant surprises.
Ask specifically what appliances and home systems it covers and for what reasons. If you have any unusual appliances, such as a central vacuum, ask specifically about those appliances.
Also, ask for specifics about situations they cover. For example, do they cover secondary issues, such as a leaking pipe that causes damage to another system? Of course, most plans won’t cover something like that but it’s always worth asking.
2. What is the Waiting Period?
All home warranties have a waiting period to file a claim. This means you pay the premium, but the plan isn’t effective for a certain amount of time. The average time is 30 days, but always ask, as each company is different.
Warranty companies have a waiting period to ensure people don’t purchase a warranty because they have faulty appliances or systems and want to file a claim immediately. A home warranty covers appliances and systems that naturally break down, not those already broken.
Some companies require a copy of a home inspection or proof the covered appliances and systems are in good working order before allowing coverage.
3. What are the Plan Exclusions?
Like insurance, most home warranties have exclusions. They vary significantly from plan to plan, so always read the fine print.
The plan exclusions could exclude specific home systems, appliances, or certain occurrences that cause an appliance or system to stop working. For example, most plans won’t cover installation issues; the breakdown must be natural through normal wear and tear.
Another significant exclusion is pre-existing conditions. Most companies won’t pay for a breakdown that occurred before coverage was in place. They may require a certain length of time after the known issue before covering the item.
Some policies exclude certain parts of a system or appliance, namely cosmetic or non-essential parts.
4. Are There Dollar Limits on Coverage?
It’s essential to understand the dollar limits on coverage. Some companies have dollar limits per item, while others have a total limit they’ll cover for the year.
Think of it like your insurance coverage. For example, if there is a $2,000 limit on HVAC repairs and your HVAC system needs $4,000 in repairs, you’d be on the hook for the extra $2,000. Also, if your policy has a total limit, such as $10,000 for the year, and you have several extensive repairs throughout the year, hitting that limit, you’d be responsible for any further repairs.
However, if you reach your limit and must pay the remaining costs, you’ll likely get lower rates than someone without a warranty would pay. Warranty holders usually get the lower contracted rates the warranty company worked out with the company.
5. Do you Set a Limit on the Number of Appliances?
Reading the fine print when considering questions to ask when comparing home warranty companies is essential.
One thing many miss is the limit on the number of appliances. For example, if you have more than one refrigerator in the house (not uncommon), a home warranty company may only cover the main refrigerator in your kitchen. If they offer coverage on the others, it will likely be for an upcharge.
This doesn’t mean all warranty companies won’t cover multiple appliances or home systems. Read the fine print to determine what they will or will not cover.
6. What is the Service Fee?
The service fee is like your insurance deductible. It’s the amount you must pay before the warranty will pay anything.
The average service fee is $50 – $125 but varies widely by company. In addition to knowing how much the service fee costs is how many times you must pay it on the same system or appliance. For example, if you have the same warranty for a couple of years and need repairs on the same appliance multiple times, are you responsible for the service fee for each repair, or is it a one-time fee?
Factoring in the service fee with your premiums will help determine if the warranty is worth it. Also, consider the age of the appliances and systems you cover.
7. What Happens if You Can’t Find Replacement Parts?
A home warranty is meant to repair your appliances or home systems to make them work again. But sometimes parts for older appliances or systems aren’t available.
Many warranty companies will replace the appliance or system with a similar item (not necessarily the same one), but you can’t assume. Also, in your question to ask when comparing home warranty companies ask if any appliances are excluded from the list of appliances they will replace if they cannot repair it.
8. How Do I File a Claim?
Understanding how to file a claim is essential. Ask a warranty company about their policy, such as whether it is online or over the phone. Are they available 24/7, or are claims only accepted during regular business hours?
Also, ask how long it takes to process a claim. Just because you filed it doesn’t mean you’ll have an answer immediately. The warranty company has a process they go through to determine if the appliance or system falls within your coverage, and they may have further questions about the issue you’re experiencing to ensure it is a covered item or claim.
Longer processing times mean a longer time without your appliance or home system, so keep that in mind when comparing policies.
9. What Contractors Do You Use?
The contractors a company uses are a vital part of a home warranty. They must contract with local contractors, so you can research and determine if they are legit.
This is a major factor in choosing a home warranty company. For example, say you purchase a home warranty for $800. You’ve gone through the waiting period, and your refrigerator breaks. So you file a claim only to find out the company coming out to see it has the worst reputation in your area.
That’s the last thing you want. It may feel like money down the drain.
Instead, ask specifically what contractors they use and how they decide who they will send to your house if they contract with multiple companies.
10. What’s the Average Time Repairs Are Completed?
Knowing the average time to process a claim and send out a repair company is essential. Also, ask the home warranty company if they have tiers of ‘urgency.’ For example, a broken furnace may be ranked higher than a broken washing machine. Both issues are inconvenient in your eyes, but a broken furnace can be dangerous.
If you don’t like the average time repairs are completed, ask if there is a rush or emergency fee option if you want faster service.
11. Is Coverage Transferable?
If you plan to move shortly, having an effective home warranty could be a good selling point. Ask the company if the policy is transferable when shopping for home warranties. This allows you to transfer it to the new buyers without cost.
If it’s not transferable, only purchase a policy with a term you’ll use, or it’s like wasting money. However, most companies allow you to transfer a policy.
What is the Cost?
Of course, the cost is essential in your list of questions when comparing home warranty companies. We talked about the service fee, but there are other costs.
First, you’ll pay a premium. This is usually an annual fee, but some companies allow you to break it into monthly charges. You may pay a higher premium to get this, so always ask.
There may be additional costs too. For example, they may charge a higher premium if you need to upgrade coverage for additional appliances or after-hours service. You may also pay an add-on for swimming pools, spas, septic tanks, roof leaks, or a guest house.
13. How Long is Coverage and is it Renewable?
Most home warranties last one year, but some companies offer discounts if you prepay for multiple years. If you purchase an annual policy, it may be renewable. Ask the warranty company if it is renewable and at what rates to determine if you should prepay for multiple years or take it one year at a time.
Who chooses which company provides a home warranty?
If you’re selling a home, you can choose a home warranty company to protect the home and entice buyers, or the real estate agent can choose for you. Since real estate agents often have relationships with good companies, you may want to rely on their expertise. In addition, it may help your home sell faster.
Do home warranties cover structural issues?
Structural issues are not something covered by home warranties. Instead, your home insurance policy would cover structural issues. So, for example, if you have roof or siding damage, non-working gutters, or a hurricane damaged your home, a home insurance plan would cover it, not a home warranty.
Why do real estate agents push home warranties?
A real estate agent’s job is to help you sell your home faster, and they know that buyers get peace of mind when a home has a warranty. Of course, not all home warranties are created equal, so a good warranty will help a home sell faster. But real estate agents want buyers to feel good about the home they’re buying, so they push for warranty because it means less money out of the buyer’s pocket if something goes wrong.
How long before a home warranty begins?
Most home warranty companies require a 30-day waiting period, but it could be longer. So always ask, especially if any of your appliances or home systems have a pre-existing condition.
Buying a home warranty or purchasing a home with a warranty could save you thousands of dollars.
However, no two policies are the same. Therefore, you must know the questions to ask when comparing home warranty companies. Know what’s covered, the cost, exclusions, and any fine print.
Don’t give yourself any unpleasant surprises when you need protection the most. A home warranty should provide financial protection in your time of need. Buy the right policy and know your home is safe, even when things stop working.