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Why a home warranty is a great idea
By Deb |
This time last year I was in the process of purchasing a home after years of being “a renter.” My landlord had just given me a friendly ultimatum: Buy the house we were currently living or move by the end of May so he could sell it. I didn’t want to inherit all the costly repairs I knew we’d have to face if we stayed there, so we looked for a home we could call our own that was in better shape than the one we were leaving.
As a single mother with three children, renting had been both a blessing and a curse I had to live with. The downside was that nearly every time I moved into a rental property the landlord wanted to sell it. (This happened with my last three rentals.) I embraced the fact that I was not financially responsible for any major repairs, but knowing that moving day could be just around the corner was always on my mind. Renting a house was like a security blanket that could be ripped away at any moment.
I did my research before buying a home, but I made a few freshman mistakes along the way. I felt a little stressed because I knew I had a budget, and I knew I had a deadline. The biggest mistake I made was trusting the kind voice of the seller as she walked us through her house and talked about repairs she and her husband were in the process of making. The moment my children and I walked into the house, we knew we had to have it: older home, beautiful wooden floors, more space to live in, and an above-ground pool in the backyard. Going against everything I knew about buying a house, I let my exuberance show. She knew we were already sold.
As we edged closer to the closing date, the seller emphasized that she would make numerous repairs, clean the pool until it was “sparkling clean,” and replace a door in the hallway. As we walked through the house, there was a repairman outside working on a project. With all the kind testimonials from my soon-to-be new neighbors, I had no reason to doubt her word. Boy, did I learn my lesson. Once the ink dried, the repairman left and her promises were obsolete. Without a signed agreement, I was left with nothing but an older home that needed more repairs than I originally realized.
One positive step that I made was to purchase a home warranty. A home warranty covers certain repair costs to the home such as heating and cooling systems, plumbing, appliances, and pool/spa repairs, just to name a few. Like an insurance policy you pay a premium. Fees vary depending on what type of plan you invest in. Then, when you need a repair, you pay a small service fee and the home warranty company covers the rest.
Recently, I learned just how smart I was to buy my warranty. In a short period of time my plumbing fell apart underneath my kitchen sink, the dryer lost heat, the oven stopped working, my refrigerator had an issue with the ice maker, my bathroom sink started leaking, the bathtub backed up, and the gutters fell off my house after some turbulent weather. Most of these problems happened within the same week!
Fortunately, my home warranty covers most of these issues. For a $55 service fee (per problem), a professional service agent comes to my home and take care of the repairs. (Although the gutters weren’t covered, a good Samaritan secured them back to my house for free!)
Unless you’re a Jill of all trades, a home warranty is a great investment. I know that I’ve already recovered the price of my plan. Check around and compare rates. Some warranties offer monthly payment plans while others require quarterly payments or payment in full.
Topics: Articles, Budget, Personal Experiences |
April 4th, 2008 at 12:25 pm
I think you were lucky to have a warranty company who honored your claims and did not deny them with using the pre-existing conditions clause.
May I ask which warranty company you used, and what part of the country you are in ?
April 4th, 2008 at 11:18 pm
I didn’t use the home warranty to fix pre-existing conditions. The repairs that the seller “promised” to make were more along the lines of replacing doors, fixing some things on the outside and inside of the house, and cleaning the pool until it was “sparkling clean.” (The water was beyond green. It was black and had several inches of dead leaves on the bottom. I even found a dead animal at the bottom of the pool.) It took about two months and more than $500 in chemical costs to get the pool into shape.
I hired a handyman and fixed many of the pre-existing conditions. For instance, the seller didn’t want to turn the electricity on for the inspection. (Okay, I was naive.) She said it would cost too much. I later discovered that the electric company will turn on the electric just for inspections without the deposit. Anyway, after I moved in, I discovered that a light and ceiling fan didn’t work when I had the power turned on. I learned my lesson there.
She concealed the fact that there was a window pane out of my kitchen door. (This was covered with mini blinds.) I discovered it when her friends walked into my home–after the sale–by putting their hand through the window and unlocking the door. This is only the tip of the iceberg. There’s more to this story.
Anyway, I use American Home Shield and am very satisfied with the service. I was beginning to wonder if I had wasted my money because I hadn’t used it all year and then–you guessed it–everything fell apart at once.
With AHS, you can pay the premiums a year in advance, in quarterly payments, or monthly. The service was quick, and all I had to pay was a $55 service charge. Because so many things broke down at once, I REALLY saved. The gutters weren’t covered, but someone offered to put them back on my house for free, so it all worked out.
April 4th, 2008 at 11:23 pm
To clarify, the $55 service charge is per trip. If someone attempts to fix the problem and doesn’t, you only pay the service charge once. The follow-up is covered by the warranty. I didn’t fix all those problems for just $55 because different companies had to address different problems.
April 5th, 2008 at 11:55 am
I am really glad for you. From my reasearch, you were one of the lucky ones. There is ample evidence online that the AHS has upset their customers with denied claims.
My biggest issue with most home warranty companies is the pre-existing conditions clause and any other condition used as a loophole to deny claims that a thorough home inspection would preclude.
Most people have their claims honored, from the figures the Home Warranty folks give the real estate agents, but there is no guarantee.
I suspect however that those whose claims are denied are probobly the high dollar claims.
But it would take an insider to shed some light on that question.
April 5th, 2008 at 2:11 pm
That’s interesting. I was in the house 11 months before I had to file a claim.
If you have any information about home warranty companies that give better customer service, please share with our readers.
August 12th, 2008 at 1:51 pm
Philip,
The net is a biased way to look at this. Ever hear of the silent majority? If home warranty companies were that bad, they wouldn’t be able to stay in business. I have had AHS for 5 years and it has been great for me. I’ve had one major replacement, one major repair, and several minor repairs done. The AHS contractors were always timely and professional and I’ve never had a problem getting any of the repairs covered by AHS.
August 13th, 2008 at 12:51 pm
Rick,
Again, the majority of claims are likely to be honored. The point is that there is a loophole for the warranty companies that allows them to pick and choose which ones they will honor. T
hey would not be able to stay in business if they honored all legitimate claims.
None of this will matter to you until you are in the position of being wrongfully denied a claim.
Glad you were treated right !