A basic overview of home warranty companies and the benefits they provide

Home warranty companies help safeguard against the cost of repairs and replacements of major components of home systems and appliances that fail due to the usual wear and tear. Purchasing a home warranty from home warranty companies for systems and components can be tedious. Here are some pointers that you need to understand before availing a home warranty.

What is the difference between home warranty and home insurance?

• A mortgage lender usually asks for a homeowners insurance. It protects the structure of your home against the risks and damage of your home that could be caused by severe weather conditions and/or theft. It also protects against the secondary damages of system and appliance failures. However, in a home insurance, you pay a deductible cost which is around $500 to $1000.
• As discussed above, the home warranty companies provide a cover only for home systems and appliances and repairs and replaces them. When availing a home warranty, they might levy a service fee every time you request a service for a repair that ranges from $50 to $100.

What are the limitations of getting a home warranty?

• There are many home warranty companies that come with limitations in their contracts.
• Other limitations entail how many units are covered by that home warranty company.
• Some home warranty companies have a set an overall limit. Anything covered in the contract will be covered up to that set up limit.
• Once the company has paid that amount, it will no longer pay for repairs and replacements of the appliances after it.
• There are also some home warranty companies that have limitations over certain items in your house. If these items are not mentioned on your contract, they will not be covered. So make sure that you read your contract and make sure that all the appliances and systems that you need to cover are mentioned.

What is excluded from the home warranty contract?

• Home warranty companies offer coverage that excludes coverage on systems and appliances that have been intentionally damaged or have been misused intentionally.
• Some home warranty companies also exclude non mechanical parts of the appliances; for example, handles or knobs of an appliance.
• Most home warranty companies will not cover home appliances and systems if the problem was known prior to purchase of the contract.

How to use a home warranty?

• When any of your home system breaks or malfunctions, you should first call your home warranty company. This is because home warranty companies will not reimburse you for the repairs and replacements that you do out of the contract.
• Once the company has made sure that the appliance or the system is covered by the contract, it will send a contractor to your house. The owner will pay a service call fee to the contractor in exchange of diagnosing the problem with the failed system or appliance.
• After the contractor has diagnosed the problem, he or she will get the approval from the home warranty company. On receiving the approval, the contractor will go ahead with the repair.
• The contractor will be paid by the home warranty company as long as the cost of repair or replacement is not more than the set limit of the contract.

Which are some of the popular home warranty companies?
Some of the popular home warranty companies (in no particular order) have been listed below:

• American Home Shield – It offers nationwide home warranty coverage. They offer a premium in the range of $250 to $500 based on what appliances you have opted to cover for. They have a deductible on warranties which ranges between $75–$125.
• First American Home Warranty – Established in 1984, it offers a nationwide coverage, which offers warranties that are effective from 30 days after enrollment. They offer a premium between $280 to $470 and a deductible of $65 to $75.
• The Home Service Club – This company offers premiums at $400 and was established in the year 2008.
• Choice Home Warranty – With a deductible of $60 on warranties, they offer premiums anywhere between $370 and $450.

You can log on to the official websites of these home warranty companies to know more about the warranties they offer. Ensure to read the reviews online to choose the best company to cover for your home systems and appliances.