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The benefits of a home warranty

The benefits of a home warranty

August 25, 2011
 
States have different laws concerning home warranties, so it's a good idea to look into the applicable ones before purchasing one. Lelia Chapman of warranty provider American Home Shield told RISMedia that sellers are most likely to offer a warranty as a sweetener for buyers, but buyers can reap significant benefits.
 
Warranties may cover the repair and replacement of heating, ventilation and air conditioning components, water heaters and appliances such as dishwashers, ovens and garbage disposals. These items are not necessarily protected by homeowners insurance, although buyers should do their research to avoid redundant coverage.
 
Similar to insurance, home warranty coverage may have a deductible applicable to 
service calls or to individual repairs, and benefits for specific repairs may be 
limited. According to the Commonwealth of Massachusetts, some warranties may 
award a refund if cancelled before the term expires, or allow you to transfer the 
warranty if you sell the home.
 
Home warranty advantages
 
RISMedia noted that replacing certain items, such as a dishwasher, may be individually more expensive than a home warranty. Most warranties cover typical 
appliances and systems, but terms should be looked over carefully, and homebuyers 
should know that many companies offer add-ons to protect less common fixtures 
like ceiling fans or swimming pools.
 
Buyers may find the coverage particularly helpful in a new home due to their lack 
of personal familiarity with the systems and components. Warranties commonly last 
a year, though the length can vary, and are not always bought at the same time as 
the property. They may be purchased later as well, if the buyer-turned-homeowner 
finds him or herself in changed financial circumstances.
 
Builders' warranties
 
Newly built homes, and in some cases condominiums or other properties, commonly have a builders' warranty as part of state law. This warranty may protect against various issues for different lengths of time. In New Jersey, for example, the 
builders' warranty covers new homes against structural problems for 10 years, 
defects in plumbing, electrical, heating and air conditioning systems for 2 years 
and faulty materials or workmanship for 1 year, according to the state's Department of Community Affairs.
 
These warranties are legally mandated and separate from commercially purchased 
warranties, so the two should not be confused. As with homeowners', property and 
other related types of insurance, homebuyers might wish to learn the relevant 
state and local laws in order to avoid spending on excess coverage.
 

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