We — as in us here at the Keri Shull Team — recently told you everything there is to know about home warranties, except how to choose the right home warranty company for you. Consider this “Part Two,” a sequel to our first home warranty guide for the prospective home buyer or home owner who has already decided that a home warranty sounds like a good idea. Now that you know what a home warranty is, how it works, and the pros and cons of home warranties, you need to know what to look for in a home warranty company. Unless you bought a new construction home or recently purchased a home with an included warranty, you’ll need to choose a home warranty company to work with, and there are a lot of them out there.
So how do you know which one to choose? Well that’s where we come in. Read on to find out how to choose the right home warranty company and policy for you.
Questions to Ask a Home Warranty Company
Imagine that you are an employer looking for new employees, and that you have to conduct a couple of interviews to ensure they’re the right person for the job. This is essentially the same thing you need to do to choose a home warranty company. You’ll need to do some research to ensure you choose a trustworthy home warranty company with a reliable track record. The Better Business Bureau can help you verify whether or not a home warranty company is licensed or accredited, and that’s a good place to start. You can also contact your state’s real estate commission to verify a home warranty company’s credentials.
Once you have a list of home warranty companies in your area, be sure to ask the following questions when “interviewing” each company:
- What is the standard pricing? — This may seem like an obvious question, but know that most home warranty companies increase the cost of the premium after the first year. The premium is often discounted for the first year as an incentive to get you to sign up.
- What is the cost of the deductible for service trips? — Nearly all home warranty companies charge a deductible or fixed rate for each service call. Make sure you know what you will have to pay each time someone comes out to your house to repair your appliances.
- What is covered by the home warranty? — Another obvious question to ask, but consider the answer carefully! Appliances that you may assume would be covered may not be included in this home warranty company’s standard coverage. Not all home warranties are created equally, so be sure you know exactly what would be covered before you sign a contract. Ask about all limits and exclusions.
- How high are the coverage limits? — Every home warranty company limits liability to some extent. Be sure to ask if there is an annual limit on how much service you can receive, and whether there are limits for specific components or appliances. Some companies even limit the number of claims you can make per year.
- What responsibilities fall on the home owner? — A lot of home warranty companies require proof of regular maintenance on a home’s component before they will cover the repairs. This is a common exclusion. Coverage may be denied if a contractor believes an appliance wasn’t sufficiently maintained, so also ask about maintenance disputes and how they’re handled.
- What is your repair or replace policy? — One of the biggest issues with home warranty companies is the repair vs. replace situation. It is almost always more cost effective for a home warranty company to repair an appliance rather than outright replace it, but this can end up costing you more money in service fees if an appliance requires a lot of different parts. If the company does replace an appliance or system, do they replace it with the exact same kind of model? You don’t want to be stuck with an older, lower-grade system when your appliance need replacing, so familiarize yourself with their replacement policies.
- What is the timeframe for repairs? — Does the company offer emergency services? How long will you have to wait between making a claim and receiving service? Get as much information as you can about the timeframe for repairs and claims because when the air conditioner suddenly croaks in the middle of July, you’re going to want fast service!
- How are disputes handled? — As we mentioned above, you should also ask a home warranty company how disputes are handled. If the contractor disagrees with you about the maintenance of an appliance, you need to know how it will be dealt with by the company. If you’re not satisfied with the work, you need to know how it will be handled. Know your rights when it comes to your home warranty company.
- Which contractors do you employ? — It is very important that you ask a home warranty company about their contractors. You want to know what qualifications they look for, who they partner with, and how they vet their contractors. Ultimately, you want to choose a home warranty company that uses bonded and licensed contractors, so you can rest assured that any repairs will be handled by a professional.
What to Look for in a Home Warranty Company
When shopping for a home warranty, call up your local, go-to real estate agent to help you with the process. An experienced agent will be able to help you vet home warranty companies and provide referrals. In the meantime, do your research and interview potential home warranty companies to find the right one for you. Aim to find a home warranty company that:
- Offers a range of options in coverage plans
- Allows customization and specialized add-ons
- Has a 24-hour claims department
- Works with vetted, professional contractors
- Delivers quality service with a simple claims quote process
- Has been licensed and/or accredited