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Top 10 Tips When Choosing a Home Warranty Company

What you'll learn: What type of home warranty is right for you


We’ve all had that sinking feeling when an appliance fails to operate as it should, or a major system failure wreaks havoc on your plans -- and your budget. In order to build more consistency into your home maintenance schedule and plan for the unexpected, a home warranty may be a good option.

However, choosing a home warranty company isn’t as easy as picking the first company you find on Google. First, you’ll want to take a look at the range of services and the hidden costs that differentiate one provider from another. Here are ten things to take into account as you start your search.

1.   Upfront Cost

This is probably the price you’re most familiar with and the one you’re most likely to compare -- the upfront annual cost (sometimes broken up into monthly payments) that makes you eligible for a home warranty company’s services. This usually amounts to a few hundred dollars plus the cost of optional add-ons.

2.   Optional Coverage

There are a variety of systems and items that are not covered by a standard home warranty. For these, you’ll find optional add-ons that are priced separately. Optional coverage can be purchased for pools and spas, guest houses, tiny homes, or accessory dwelling units, well and septic systems, and extra appliances.

3.   Call Fee and Deductible

This is where you start getting into the nitty-gritty of how much it will cost when you actually need a repair or replacement. First, there will be a fee to initiate a service call. Then there is an amount you’ll pay as a deductible for any completed repairs. When judging whether or not to use your home warranty, consider whether the cost of repair or replacement is likely to be more than the total you’ll pay for these items. If not, you may be better off with your own independent repair professional.

4.   Maintenance Requirements

To comply with your warranty obligations, you may have specific maintenance requirements, including semi-annual inspections and services. It is important that you keep track of these to ensure that you don’t accidentally void your warranty. Remember that a home warranty is no substitute for consistent upkeep and scheduled maintenance.

5.   Uncovered Exceptions

Standard home warranties do not cover most structural elements like doors, windows, and roofs. In addition, outdoor features like in-ground irrigation systems may not be considered part of the home’s internal systems. Finally, watch out for secondary appliances and systems, like dual HVAC systems or an additional freezer or laundry room appliances. These may require additional add-on coverage.

6.   Customer Reviews

One of the best things about evaluating service providers today is that you can generally determine what to expect before you commit. In addition, online reviews can offer you a sense of how the service operates and whether it is worth the cost. So do your research and choose the warranty company that is consistently highly rated and responsive.

7.   Annual Limits

Check for annual limits that can kick in if you have several repairs in the same year. This is especially important if you know that a major component is on its last leg. The annual limit may keep it from being fully paid for in the event of a system failure. On the other hand, suppose you expect to be facing more than one major repair in a year. In that case, it’s a good idea to explore additional coverage options or to set aside a little extra money in your savings each month in anticipation.

8.   Fine Print

While home warranty companies may court new customers with big splashy specials and promises, it’s the fine print that tells you what will happen after you sign up. Take the time to read up on the service’s exceptions and exclusions so that you’re not surprised later. Don’t hesitate to ask questions before you sign, especially if you are unsure about any of the specifics you find there.

9.   Reporting Process

It’s a good idea to find out how easy (or difficult) it is to report problems in your home and how long you’ll wait for a scheduled service call. Then, look for convenient apps or online submissions so that you won’t spend your time sitting on hold to book a repair.

10.   Choice and Flexibility

Ultimately, the more options the home warranty company provides for you, the more likely you will be satisfied with their service. Ideally, the service should be designed to fit your needs, not the other way around. So, add that to your home buying checklist. It’s worth taking the time to shop around and find a warranty provider that is truly focused on what’s best for you and your home.

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1Rates are updated daily at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.