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Home Warranties Explained
Dated: December 16 2019
Jennifer Gagne from HMS Home Warranty joins me today to provide some clarity about what home warranties are, how they work, and what you need to keep in mind when you get one.
My guest today is Jennifer Gagne from HMS Home Warranty, who is here to answer your questions and discuss some guidelines you should keep in mind when it comes to getting a home warranty.
What is a seller home warranty plan, and how does it work?
Seller home warranty plans are used when you list your home; they’re great ways to make your home stand out since they’re so uncommonly used. If you put a seller warranty on your home, you’ll have coverage from the time you list your home until you close on the sale. It also gives your buyer a year of coverage after closing. If something happens to the home during the transaction, like a furnace breaking or a water softener malfunctioning, the warranty will cover it.
Generally, seller warranties cover things that could be classified as ‘mechanical failures’—kitchen appliances, furnaces, AC systems, and washer/dryer units can all be put into a plan that will cover failures due to lack of maintenance for buyers and sellers.
What is the difference between a warranty and a home service plan?
Home service plans outperform warranties when it comes to minor repairs. There’s typically not a deductible for appliance repairs, but with a home service plan, the company will send out a truck to fix the broken appliance.
Home warranties outperform home service plans when it comes to major repairs or full-on replacements. If, for example, your fridge were to break down beyond repair, a home warranty would give the homeowner a new refrigerator of like-kind.
What are the out-of-pocket costs?
When a homeowner has the policy, they’ll have a deductible to pay per each claim. If they have a base plan policy, they might expect some out-of-pocket costs. Suppose you were dealing with a furnace replacement; the warranty covers the unit itself and the labor to replace it, but you’d have out-of-pocket costs for permits, code issues, and similar.
Any time that you’re considering a home warranty plan, there will always be an upgrade option or a higher level of coverage that will start addressing those extraneous items. An upgraded plan could really limit your out-of-pocket expenses by providing coverage for permit or code issues.
How does the claim process work?
Home warranties work somewhat like health insurance in that they have networks of service providers. When you place a claim in the case of, say, a broken dishwasher, your claim would be assigned to a local provider. The technician from that provider would run the call and report their diagnosis via an online portal, as well as their prescribed solution. That lets people like Jennifer know if there’s a repair that needs approval or if the unit needs to be replaced. In the case of a repair, the technician would fix it and the homeowner would pay the deductible to the technician. The service provider would pay the balance directly to the technician for any work above the deductible. In the case of a replacement, the homeowner would pay their deductible and the provider would order the replacement unit. Be sure to call your warranty provider before you call up a local handyman; because providers use a specific network, using a technician outside the network could make it very difficult for you to be reimbursed.
If you have any questions about home warranties, homeownership, or real estate in general, don’t hesitate to reach out to the Snyder Home Team. We’d love to help you.
As a licensed real estate professional in Minnesota and Wisconsin and a nation-wide referral community. I provide much value to facilitating real estate transactions with focus in the luxury and reloc....
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