How does a home warranty insurance plan protect you?

In a relatively short period of time, home warranty plans have grown dramatically in popularity. Today, the plans are almost standard in California real estate transactions, where eight of every 10 home sales are covered. Home warranty plans, also called home protection plans, are essentially service contracts or insurance policies that cover the major systems and appliances of a home.
What are the benefits of a home warranty insurance plan?
1. Sellers avoid after-the-sale disputes in case something goes wrong with the home.
2. Buyers have peace of mind and protection against costly home repairs.
3. Real estate professionals report more satisfied clients and less liability for all parties.
4. Buyers have more confidence in buying a resale home.
5. Sellers can be protected against costly repairs during the listing and escrow period.
What parts of a home are covered by a home protection plan?
Home warranties typically cover the mechanical systems of a home such as plumbing, heating, electrical, water heater and most built-in appliances. Structural components typically are not covered. Some home warranty policies cover garage door openers and roof repairs with certain limits.
How long do the home warranty policies run?
Coverage normally runs for a year, but it may be extended at the owner's option for a renewal fee. Some people keep their home warranty policy in place for years and years. If the home protection plan is ordered at the time a home is purchased, inspections are usually not required.
Is home warranty insurance coverage available during the listing period?
Sellers can protect their mechanical systems while selling their home for about a dollar a day. There's usually a waiting period after the application is submitted, before the policy goes into effect and an inspection may be required to prevent fraud.
Do home protection plans offer extra coverage?
Additional coverage is available under most home warranties at an extra charge for a pool, spa, air conditioning and free-standing appliances, such as refrigerator, washer and dryer. Limited roof leak coverage is also offered by some home warranty insurance programs.
How much does a home warranty cost?
A standard home warranty contract costs about $400. Extras include $75 for washer and dryer and $50 for a refrigerator. Pool and spa equipment add about $150; central air conditioning is $75 and limited roof leak coverage is about $150.
How do I select the best home warranty protection plan?
A number of different companies offer home warranty plans. Regardless of who pays for the policy, the buyers should review the coverage from the various companies and select one of their choice. Read the fine print carefully to spot coverage limitations and exclusions. Be sure to get a home warranty plan that covers "pre-existing conditions" which were not known to the sellers or their agent. Pre-existing defects that were known are excluded from coverage.
What companies offer home protection plans in California?
Many companies provide home warranty protection plans in California. Some of the main providers are: American Home Shield, Fidelity National Home Warranty, and Old Republic Home Protection Company.
Who usually pays for a home warranty?
Usually the seller pays for the coverage. But, the cost is negotiable and it should be addressed in the purchase agreement. The type of coverage, including what equipment is to be included and the maximum policy fee should be also specified. Otherwise, the seller may provide only a basic home warranty insurance policy.
How do I make a claim?
When a malfunction occurs that involves a system covered by the home warranty plan, the homeowner calls the insurance company and requests a service call. The cost of the service call, which varies from $35 to $95 per visit depending on your location, is paid by the homeowner. The warranty company assigns the call to an approved contractor, and the home protection company pays for the system repair or replacement.
FINAL HINT:  A home warranty insurance protection plan should not be considered as an alternative to having the property thoroughly inspected by licensed professionals. System defects discovered during the home inspection won't be covered by a home warranty plan. These repairs should be negotiated between the buyer and seller prior to closing.

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 Neal Hribar
Berkshire Hathaway HomeServices | California Properties

760-822-8690    E-mail: 

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