Home Warranties

My washing machine just broke…again.  It’s only 1 year and 3 months old!  Before this GE washer, I purchased a new Maytag when my husband and I bought our home in 2004.  The one that came with our house was the original 1970’s olive green machine.  It still worked well, but I felt kind of gross washing my clothes in something older than me.  The Maytag started having problems a few months after the manufacturer’s warranty had expired.  Finally, the tub cracked and the home warranty company gave us the new GE machine.  Now that machine is having issues.  They just don’t make things the way they used to!

Thank goodness we have a home warranty.  A home warranty is a renewable yearly service contract that protects sellers against the cost of unexpected repairs or replacement of major systems and appliances in their home.   It’s basically an extended warranty for the parts of your home.  When a part breaks, you call the home warranty company and they send a contractor out to fix it.  If it is beyond repair, they replace the item with another one of similar quality.

A basic plan usually covers heating and air conditioning, plumbing, electrical, and appliances.  Some companies also cover roof leaks!  There are optional add-ons, too:  coverage for swimming pools, hot tubs, spas, or if your home is large and has extra bathrooms and square footage.  Check with the home warranty company for details (see below for links).

A warranty plan has an annual fee (usually between $300 – $500) and the homeowner pays a nominal trade call fee (aka deductible) when the repairman shows up to correct the problem.  My plan is through AHS and I pay a $55 deductible for each problem.  If the repairman needs to make multiple visits to correct the same issue (within 30 days), you are not charged extra.  Some warranty companies allow you to break up the annual fee into monthly installments.  

The annual fee, deductible and items covered vary from company to company, so be sure to compare them.  You also want to read the fine print.  Certain items may not be covered if the damage is not due to normal wear-and-tear.

So far, I’ve used the home warranty company several times.  They’ve replaced my garbage disposal, fixed my furnace,  fixed and replaced my washing machine, stopped my refrigerator from leaking water, and unclogged a plumbing stoppage in my shower.  My brother-in-law has one, and had his AC unit replaced.  That’s worth $3,000 if you were to have to pay out-of-pocket.  For him, it just cost the $55 trade call fee.

I think everyone should have a home warranty.  If the home is older and the systems are working but at the end of their expected useful life, you should have one.  If the home is new construction, a builder will usually offer a home warranty.  People generally think that if a home is new, there is nothing to worry about.  But I have seen new homes with just as many, if not more, issues than older homes.  They just don’t make things the way they used to! 

A seller can offer a buyer a free home warranty as a way to help sell their home.   It can mean a higher sales price, or a less-intense negotiation of home inpection items because the buyer will have peace of mind that they won’t have to spend additional money to replace a big-ticket item.  If a seller decides to offer a home warranty to a buyer, then most warranty companies will cover the listing period for free and they will delay the annual fee until settlement.  So when a seller puts their home on the market, they can have the same coverage and not pay anything until the home sells.  At settlement, the buyer gets a full 1-year warranty.

If a seller does not offer a home warranty, the buyer can negotiate with the seller to provide one, or the buyer can purchase one at any time before or after settlement. 

Here are a few home warranty companies that operate in the DC area:  American Home Shield, HMS, 2-10, and Old Republic.

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