Are home warranties necessary?

A home warranty is a kind of insurance against defects or malfunctions that might occur in the home after the sale. Your real estate agent can advise you about the kinds of home warranties available in your area, including what they cover and what they cost. You can also look for home warranty companies online or in the real estate section of your local paper.

Typically, home warranties protect buyers (or homeowners) for such items as:

• Repair costs of built-in appliances

• Roof leaks

• Plumbing, electrical, and heating and cooling systems

• Structural problems

Some sellers include a home warranty as part of the sale — and if not, you might be wise to ask for one. Sometimes buyers and sellers split the cost since it offers peace of mind to both parties. Be sure to educate yourself as to what a warranty in your area covers and what it costs.

Some warranties exclude appliances from coverage. Some warranties also specifically exclude swimming pools and spas, or else require an additional fee to cover them.

Warranty policy example

How one warranty policy describes what is covered and what isn’t:

KITCHEN REFRIGERATOR/SUB ZERO UNIT

Covered: All parts and components that affect the operation of the unit

Not covered: Ice-makers (except where noted, subject to all other agreement limitations), crushers, dispensers and related equipment, internal shell, racks, shelves, food spoilage, independent freezers (except where noted, subject to all other agreement limitations)

MICROWAVE OVEN (BUILT-IN)

Covered: All parts and components

Not covered: Interior lining, door glass, shelves, rotisseries, meat probes, portable countertop units, lights

GARAGE DOOR OPENER

Covered:Motor, wiring, switches, receiver unit

Not covered: Garage doors, remote transmitters, track drive, sensors

ELECTRICAL SYSTEM

Covered: Outlets, switches, junction boxes, breakers, main panel, sub panels

Not covered:Power failure/surge, D.C. components, low voltage, and accessories. All intercoms, fixtures, inadequate wiring capacity, cable wiring, fiber optic, access to wiring

What to look for

Whether the seller buys the warranty or you purchase your own, read it carefully. If what you read is not satisfactory, choose a different policy or a different company. Make sure the policy spells out:

• The term of the warranty (usually one year, but there may be an option to extend).

• The names of the persons being protected by the warranty.

• If the warranty is being transferred (from the seller to you), clear specifics of how that transfer will take effect.

• A precise explanation of how to file a claim.

• A clear description of what is covered — what is included, what is excluded, any limitations on personal property coverage; any deductibles or other fees besides the cost of the policy itself.

• A clear explanation of who will make repairs (Does the warranty company have its own repair people? Does it have a designated service company? Or will you be reimbursed for the cost of having repairs done?).