Angie's List: Home Warranties

Understanding Home Warranties Now Saves Headaches Later

Written by Angie Hicks

Real estate agents commonly throw warranties into home purchase deals as enticements, sometimes urging the seller to purchase home warranties for the new owner. More than 80 percent of Angie's List poll respondents admitted that they only had a general idea of their home warranty contract details or hadn't read them at all before using them.

A typical home warranty covers the following:

• heating/air conditioning systems
• electrical systems
• ductwork
• oven/range/stovetop
• garage door opener
• interior plumbing
• water heater
• dishwasher
• garbage disposal

Additional options could also include:

• washer/dryer
• pool/spa equipment
• refrigerator

A home warranty usually doesn't cover items that fail due to something other than normal wear and tear, are improperly installed or modified, and consequential damage caused by the failure of a system. If your water heater bursts, for example, and the water ruins your hardwood floor, the home warranty covers the water heater, but not the ruined floor.

New homeowners are already dealing with an enormous amount of details, but they should carefully read and understand their home warranty contract before purchasing it.

Key points to consider:

• Is the warranty company licensed? Not all states require licensing, but if your state does, the company should be licensed as a home service contract company, a home warranty company, a home protection company or a residential service company.
• Is the warranty company a member of the NHSCA? The National Home Service Contract Association requires member companies to use local contractors who meet state and local licensing regulations.
• Read the contract carefully. Don't make assumptions about coverage. It's important to understand what's covered and what isn't.
• Who's making the decisions? The home warranty company will make decisions on whether something will be repaired or replaced and which contractor is sent out to diagnose the problem. Ask the warranty company for the names of three contractors they could send out, check those contractors out with Angie's List and other resources, then call the warranty company back and tell them which contractor you prefer.

For more information on home warranties, other consumer topics, and companies who can perform work in your area, visit www.angieslist.com.