Get the most out of your Home Warranty
As home inspectors, we feel that all houses that are more than 5 years old should have a warranty. Why? Because things fail. A good home warranty can protect you from unexpected repair bills. The problem is that if a defect is pre-existing, meaning it was there before you took possession, your claim could be denied. That is why you need to have a great Home Inspector. If they miss an existing defect, it could void your home warranty leaving you stuck with the bill.
According to American Home Warranty, one of America’s largest home warranty companies, about 80% of home buyers prefer to have a home warranty. And it is easy to see why. Here is a breakdown of the most common claims.
So what are the things that break down in a house the most?
Approximately 79% of all Home Warranty claims are for mechanical failures. Mechanical items are those items in a house that were typically assembled off-site. Some of these items include the garage door openers, food waste disposers, water heaters, and appliances. The remaining claims are for structural items such as the roof, foundation, garage door, etc.
Of all of the mechanical claims made, the vast majority of claims relate to the heating and air conditioning systems (HVAC). These make up over 30% of the mechanical claims. That is why it is so important to have a competent home inspector carefully check these systems during the home inspection. If the HVAC system was not installed properly, or if the defect existed before the new buyer takes possession, the claim could be denied. With such a high claims rate, you need to be sure the HVAC system is functional at time of inspection in order to be covered. While furnace are nearly always a covered item, AC systems are not always covered. Be sure to add the AC coverage to your policy.
Structural items include the roof, foundation, and other items that are frequently built onsite. Of these, roof problems make up the largest portion of home warranty claims. If you have a claim due to a leak, don’t always expect a whole new roof. You will probably get the area repaired, but an entire new roof is likely not covered. Keep in mind that roof coverage may be optional. So be sure you add it to your home warranty policy.
Home Inspectors often hear people overlook defects in a house which the inspector calls out. For example, an inspector may note that a water heater is at or beyond its expected life. Often there are signs of pending failure. A buyer or agent may say “don’t worry, your home warranty will cover it when it leaks.” Please keep in mind that this is not a wise strategy. While the home warranty company may replace a water heater that leaks, it will not cover secondary damage due to water damage. And the water damage may be far more significant than the cost of a water heater. If your Home Inspector recommends replacing an item, you should consider doing it.