Is Home Warranty Insurance Worth the Cost?

There are many companies out there that offer home warranty insurance. As the home buyer, you need to know what it is and if this is really worth the costs.

If you are buying your first home, you do doubt have fears of big repairs bills, right? So many real estate agents may try to put your mind at ease and tell you "this house comes with a home warranty". So my advice is, if they offer it at no charge to you, then fine, feel free to accept. However there are some important things for you to know, especially if they are offering it for a fee.

First of all, you want to realize that with a majority of home warranty insurance companies out there, many of them have major complaints and they do not really pay off. Why is this? Unfortunately, many are citing some fine print in the contract. In my research, I only found one that was any good. But you will have to do your homework too.

Thus, you want to be prepared and really know what is covered and what is not. Also, you must realize that "pre-existing conditions, defects or deficiencies" are not covered at all. It's very normal for the policy to have a 30 day waiting period after you close before it takes effect. This allows time for some of these "pre-existing" things to surface after you move in.

With that said, what is this type of insurance supposed to cover?

Here's the short list:

• Appliances
  
• Interior Electrical System
  
• Plumbing System (not including fixture)
  
• Central Heating and Air Conditioning Systems
  

Each and every home warranty insurance company has a whole variety of ways they detail what this coverage offers. For example they may have different levels of programs. So you have to ask, "What is Covered" and make them be specific. You can do this by asking a series of "What if" questions. For example, some of them cover Air Conditioners while other do not etc. Just be sure to ask.

The good part of having this type of coverage is you may not have to worry about major repair bills in the first year after closing. The bad thing is, you may have to fight rather hard to get it covered. Why is this? Well, many times the contractor sent out by the insurance carrier is paid a small flat fee for the repair. So they may resist replacing anything. If you think about it, there is no real money in it for them. So be prepared and find out ahead of time what is involved to file a claim and what your recourse may be in the event you are dissatisfied.

Another thing you may expect to hear is that the item is not covered by your home warranty insurance. Now that you are over a barrel, because you need the item, you will be offered a new one as a replacement.

All is not lost though, there is only one company (out of dozens) I found that has a great record of taking care of their customers. Make sure that any company you are considering has good reviews. This is a good thing to do before you make the purchase. That way you can be sure that this insurance company and the coverage they offer is worth the money you are going to spend.

Since buying a home is probably the biggest investment you will make in your lifetime, you don't want to throw money away needlessly. So take the time to do your homework before purchasing home warranty insurance.

Jeffrey Ragan has several years of experience helping people reach their goals and wants to help you learn more about home warranty insurance and other helpful information on their website, First-Time-Home-Buyer-Solutions.com.