When performing Home Inspections in Las Vegas, there are times we inspect homes that have a home warranty or hear buyers talk about getting a home warranty. Reviews can be mixed about home warranties. I recently read a post on a home inspector forum from
another inspector asking how a warranty company could charge such a low fee for the service. I decided to do a little research on my own.
What Is A Home Warranty?
A home warranty is like a service contract, which will usually cover the heating system, cooling system, electrical, plumbing, water heater, kitchen appliances, etc. The sales pitch for these contracts is, if an item in the home fails, the warranty will cover the repairs, with little or no money out of your pocket. A typical warranty costs about $500, but prices vary depending on the options selected. The warranty company has a list of service providers they use to perform repairs, but only up to a certain dollar amount. For instance, one popular warranty program will cover up to $1,500.00 towards a heating system repair. While this would cover the cost of the warranty program, this would only put a dent in the cost to replace a boiler. There is also a deductible that the owner must pay each time, regardless of the cost of the repair.
Limitations? What Limitations?
One of the most important things to be aware of is that pre-existing conditions are not covered, lack of maintenance is not covered, and items that have not been properly installed, are also not covered.
As a home inspector, I know there are a ridiculous amount of items that are not properly installed. In the past month, I’ve seen three water heaters installed with permits, and inspected by the city, but were still improperly installed. I believe that most people don’t read, or follow installation instructions – they do enough to make it work. I’ve even been guilty of this myself… a long time ago
So how can a $500.00 warranty cover all these expensive repairs?
Many of the claims get denied due to pre-existing conditions, improper installations, or improper maintenance. The warranty companies will ask their providers for information that could be used to deny a service claim, and will often find one. If the warranties didn’t exclude so many things, the price of the warranty would have to be much higher.
So, why is a Las Vegas home inspector writing about home warranties? Because my job is to identify defects with installations and identify items that are not in working order when I conduct an inspection, and it’s important to know about these things ahead of time.
Purchasing a warranty to cover repairs for defective household items may sound silly, but I’ve heard of people doing this over and over. Home warranties are not all bad, especially for items that are maintained and may be at the end of their serviceable life, but I would strongly recommend reading all the fine print before purchasing a warranty.