If you’re considering taking out a home insurance policy, then it’s vital to know exactly the nature of the cover you’ll be paying for – and this means checking the small print! Carefully going through all those complicated-sounding terms and conditions is no one’s idea of a good time – but if you want to avoid the risk of your policy being invalid, it’s time well spent.
Below, you’ll discover a whirlwind tour of home warranty policies and the most important thing to look out for in all that pesky small print.
Policy Limitations
Firstly, it’s vital to understand and be aware of a home warranty policy’s limitations before signing on the dotted line. After all, the last thing you want is for the worst to happen, and you have to make a claim – only to find you’re not covered for whatever issue has occurred.
For example, the vast majority of home warranty policies won’t cover the structure of your building, or non-mechanical elements, such as windows. Check the small print with a fine tooth comb to check what is included with your policy and – just as importantly – what’s not.
If you’re buying a new property, it’s important to bear to remember that your home, including many of the items within it, is likely to be already covered by the manufacturer’s warranty and the builders’ policy. This means you may initially not need to take out additional cover in the form of a home warranty policy and could save yourself some cash.
So What Does Home Warranty Cover?
While the level of coverage and what items are and aren’t covered will vary for different providers, there are some broad ‘general’ elements to a home warranty plan.
The home systems that are usually protected include plumbing, hot water systems, electrical systems, air conditioning, and garbage disposal. Appliances that are typically covered include the refrigerator, oven, built-in microwave, dishwasher, and washer/dryer. You can often purchase add-on cover for items not covered as standard, such as a swimming pool filter.
As well as checking the details of the policy you’re considering, including the small print, it’s a great idea to read through as many home warranty reviews as possible before choosing a specific plan to get an idea of the level of service you can realistically expect to receive from the provider.
What’s the Difference Between a Home Warranty and Homeowners Insurance?
Good question. Homeowners insurance covers your home’s structure and the personal possessions within it in the event of an accident or unseen disaster. It doesn’t cover a home’s appliances and internal systems.
A home warranty policy, on the other hand, does protect your property’s systems and appliances and provides cover against malfunction caused by general wear and tear.
Repair or Replacement?
It’s also crucial to check the small print to determine whether the home warranty provider is committing to repair a broken appliance or system where possible or if you will automatically receive a replacement.
Often, if a repair proves to be significantly expensive, the home warranty company may offer you a replacement item instead. Be aware, though; the provider could take depreciation into account: meaning that you’ll have to pay the difference from your own pocket if you want a like-for-like model.
Are Pay Out Limits in Place?
There are always limits, but knowing exactly what these are is important before committing to a policy. Many home warranty companies offer a range of policy types, and you can choose the level of cover you wish regarding payouts – although, of course, your monthly premiums will reflect this.
Care of Appliances and Systems
According to the small print of some home warranty policies, how you care for your home’s appliances and systems could affect the validity of your cover. For example, providers may refuse to pay out if they deem an appliance wasn’t properly installed in the first place or if routine maintenance hasn’t been properly carried out.
Similarly, if something within your home breaks down due to a pre-existing condition (even if you didn’t know about this when you took out your policy), then the provider could refuse to accept a claim for its repair or replacement.
Check for Other Anomalies
As well as checking the small print of the policy regarding the above, scour it for anything else that could affect your cover and, particularly, your ability to claim on it if you need to. For example, some home warranty policies will cover the water heater but not the water tank itself. Or some policies won’t cover an oven that breaks down while in self-cleaning mode.
It’s also not unusual for the small print to stipulate that appliances damaged due to a power surge won’t be covered.
The Takeaway
Here are the main points to check in the small print of a home warranty policy before signing on the dotted line!
- Policy limitations.
- Whether systems/appliances will be replaced where possible rather than repaired.
- The nature of the payout limits in place.
- How the care/maintenance of systems/appliances could affect the validity of your policy.
- Other anomalies.
