Many times you will see “Home Warranty Included!” on a property listing. This sounds good right? But many times prospective buyers who negotiate for home warranties have the wrong idea about what a home warranty is and what it covers. Here are some answers.

A home warranty is basically a very limited insurance policy that covers certain home systems and appliances for a fixed time period. Usually when a home warranty is provided as a buyer incentive the warranty is good for one year after the closing. The cost of basic coverage is typically $275 – $400 and covers plumbing, heating, electrical, major appliances and water heater. There are limitations in coverage and plans do not cover preexisting conditions.  Home warranties do not cover mold or structural damage.

Once the warranty is in place the new owner would call the warranty company first when an issue that requires a repair person to be called. The warranty company contracts with certain companies and sends them out to diagnose and fix the problem if it is determined to be covered. At the time of repair the owner pays a deductible. The owners share is usually around $50 to $60 per occurrence.

So is it worth it? Just like any insurance policy you need to weigh the probability of something happening and the severity of the cost if you didn’t have coverage with the cost of the coverage upfront. If someone else is paying it is definitely a good thing to have. If you are paying $400 year after year it may not pay off in the long run but it is an amount that is easy to budget and you won’t be surprised one year by needing a new furnace etc. The other consideration is the age of the home. If it is a newer home the chances of having a problem each year are relatively low. If you have an older home with older appliances the chances of needing repairs on a consistent basis increase.

Here are some home warranty providers in Colorado:



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