What Are The Choices? Who Offers The Home Warranty?
In California, there’s an association of Home Warranty Providers, and that website has some good information you might want to read. The link ishttp://www.warrantyassn.com/hwac/about_hwac.htm
Member firms of HWAC are:
- American Home Shield Corporation www.AmericanHomeShield.com
- Buyers Home Warranty Company www.BHWC.com
- Fidelity National Home Warranty Company www.HomeWarranty.com
- First American Home Buyers Protection www.HomeWarranty.FirstAm.com
- HISCO Home Warranty Co. www.HiscoHome.com
- Old Republic Home Protection Company, Inc. www.ORHP.com
- 2-10 HBW Warranty of California www.2-10.com
Some things to consider or be aware of:
(1) Several of these home warranty companies may be owned by the same firm
(2) An article in Realty Times (http://realtytimes.com/rtcpages/20030115_haddreport.htm) suggested that the last warranty on this list has had some issues in the past. (2-10 HBW)
(4) I myself have had a very good experience with Old Republic Home Protection so recommend them but do suggest you do your own research!
(5) Ask your friends, neighbors, and folks you know who’ve recently bought or sold homes about their experience with their home warranty company. Eighty percent of homes sold in California do include a home protection plan, so they may well have some input for you which would be valuable.
(6) If you have any other tips for evaluating home warranty companies, please share them with me!
What Do They Cost?
It depends. There are two main types of coverage, Sellers and Buyers .
Sellers Coverage : Home warranties can be purchased for the escrow period (when the home is “listed” or “under contract”). This is called Seller’s Coverage (the seller still owns the home). The cost is usually minimal – pennies a day – but the coverage is normally not as extensive as buyer’s coverage (for after escrow is closed). But it can help a great deal if you have it in place when the inspections are done and the seller is surprised to learn about problems with the furnace, plumbing, etc. Here’s an example from my own experience. During inspections, let’s say it’s discovered that the furnace has a cracked heat exchanger. This is a bad surprise for the seller, as it costs about $1500 to replace the furnace, and it must be done (as a cracked heat exchanger can cause carbon monoxide poisoning). During the seller’s coverage period (once the home is listed and the agent or seller has ordered the coverage – whether it’s pre-sale inspections or the inspections done once the home is in contract or is sales pending), many home warranties will cover $500 of this cost. The cost to purchase the seller’s coverage is probably about $65 for a typical escrow period. So it provides good peace of mind for the “what ifs” of the inspections. It may not cover everything, but the seller will have saved money by having the warranty if something like this is discovered. (For this reason, I provide a seller’s coverage on a home warranty with ALL my listings. If I can help soften any unpleasant surprises, so much the better.)
Buyers Coverage : The cost to provide a Buyer’s Warranty runs from $300 – $500, depending on the type and size of home (condo vs single family dwelling, the amount of square footage) and the amenities covered (it usually costs more to include air conditioning, a hot tub, etc.). It lasts for a year, from the time the home warranty company is paid (or close of escrow, check each company to verify). There are many possible “add ons” – some of which might be a very good idea for you to consider purchasing! If that cracked heat exchanger discovery is made during the buyer’s coverage, the home warranty company may cover all of it.
On average in the US, for every home warranty purchased, there are between 1.7 and 2 service calls made – so homeowners with these warranties are making good use of them!
How Comprehensive Is Your Home Warranty?
Check your home warranty policy to see which of the following items are covered. Also check to see if the policy covers the full replacement cost of an item. An important issue to consider if you are buying an OLDER home is whether code compliance will be covered. For instance, if a water heater was placed in a very tiny closet and it needs replacing, it will then need to go up on an 18″ platform and be properly strapped etc. Many home warranties cover part of this job, but will not cover bringing it up to code. Some offer an add-on to the basic policy that includes code compliance. I highly recommend this for homes that are more than 30 or 40 years old! It may be called something like “Premium Coverage”. Look for it if you are buying an older home.
What’s Included? Check On These (for starters) . . .
Plumbing (often covered in or under the home, but not the lines running out through the yard. Leaks from rust are often not covered too)
Water Heater again, consider code compliance if a replacement is needed
Furnace or other types of heating (radiant, baseboard electric, etc.)
Air Conditioning may be optional
Heating Ducts often not covered if the ducts have been lying straight on the earth and get rust
Dishwasher these are usually covered
Stove/Cooktop/Ovens these are usually covered
Refrigerator may be an extra charge for coverage as it’s “personal property”
Washer/Dryer may be an extra charge for coverage as these are “personal property”
Swimming Pool, Spa/Jacuzzi/Hot Tub may be optional
Foundations and roofs are not usually covered, but check!
I welcome your input on home warranties. I would like to make this page as helpful as possible for my buyers and sellers!