When I first bought my house, I had a lot of questions about the process. The loan approval, inspection, and the closing were all new and frankly a bit intimidating. One question that came up after all that rigamarole was can I buy a home warranty after closing since I'd neglected to take care of that bit beforehand.
Can I Buy A Home Warranty After Closing?
So to address the question can I buy a home warranty after closing, the answer is yes, you can. You can purchase a home warranty policy at any time, whether you have just moved in or have lived there for 20 years. Whew, that's a relief!
Now that we've answered that pressing question let's take a look at what a home warranty is and what a policy will cover.
What Is A Home Warranty?
Your home warranty is a type of service contract which will cover major appliances and systems, including heating, air conditioning, plumbing, refrigerator, and washer, among others. Typically this policy is renewable annually.
Most home warranty providers have a variety of plans available so that you can pick and choose your coverage. If you only want your refrigerator covered, you can purchase a policy for a specific appliance. If you wish to have all your major devices covered, you can get a policy for that.
If you want to cover your electrical system only, you can get a plan that includes only one. Should you want all your systems covered, there is a policy for that. Finally, you can get a comprehensive program that covers major appliances and structures if you're going to go all in.
What Is The Difference Between Homeowner's Insurance And A Home Warranty?
If you have a mortgage, the bank required you to enroll in a homeowner's insurance policy. Homeowner's insurance covers your belongings and home from accidental damage or loss due to fire, natural disaster, or theft. The plan is renewable annually and generally costs between $300 and $100 per year. There is also a deductible that you must pay when you file a claim. Your home insurance policy will cost less, the higher your deductible is.
The three areas covered by homeowner’s insurance are:
A home warranty will provide coverage for system and appliance failure from age or regular use. The warranty company may provide repair service or replacement, depending on the plan you choose.
The bank does not require a home warranty if you have a mortgage. Home warranty plans usually cost somewhere beginning around $75 per year. Additional systems and appliances coverage will add to the price.
After you file a claim, the home warranty company will provide you with contact information for local contractors who will come to your house. The fact that the home warranty company has arrangements with local service people saves you the effort of having to locate a qualified and reputable service technician.
Typically you pay a service fee for each time a technician comes to your home, but the company holding the policy will pay for the actual repairs or replacement. The service fee might range from $50 to $125, depending on the plan you have.
What Is The Difference Between An Appliance's Manufacturer's Warranty And A Home Warranty?
Both a manufacturer's warranty and a home warranty will provide you with repair, service, and replacement of specific systems and appliances. A manufacturer's warranty will cover only one device or home system for a limited time. It will also only be available to the original purchaser.
You can buy a home warranty for appliances and systems which are older and have not been acquired by the original owner.
What Does A Home Warranty Cover?
A home warranty pays for the cost of replacement or repair of systems and appliances covered in the specific plan you purchased. Home systems include telephone, electrical, septic, plumbing, heating, and cooling.
Major appliances include refrigerators, microwaves, stoves, water heaters, garbage disposals, ceiling fans, dishwashers, and washing machines. Any other systems, like pools or spas, sometimes can be covered for an added price.
A home warranty will not provide coverage for doors, windows, or other structural features. It also will not pay for permit fees if your system must be replaced or haul-aways for broken appliances. If something was broken before the contract was signed will not be covered either.
Most home warranty companies have a limit to the amount of money that can be spent per repair, system, or year. If the company determines that an appliance or home system has not been properly maintained, then the company may deny your claim. Certain circumstances will void coverage, like power surges.
Home warranty companies make the final decision whether to repair or replace your covered items, usually whichever is less expensive for them. You may not agree with their decision. The same is true for the make or model of your appliance replacement. You may want a pink Maytag washer, but a white Whirlpool machine is what the company chooses.
Who Pays For A Home Warranty?
If you are still in the closing process, the seller may offer to pay for a home warranty if there are issues that came up during the inspection process. If the seller does not provide one, this might be something you can negotiate during the closing process. Once the house belongs to you or mortgaged at the bank in an account in your name, then you are responsible for purchasing a home warranty policy.
How Long Do Home Warranties Last?
Home warranties are usually good for one year. However, some policies are limited, especially if the seller has purchased the home warranty. In that case, a particular home warranty might only be good for 30 days or 3 months. You should read the fine print before agreeing to the plan.
What Should I Consider When Purchasing A Home Warranty Plan?
Your home and appliances may be still covered under the original manufacturer's or builder's warranty. Even being under warranty doesn't mean you don't want a home warranty though. Typically manufacturers' warranties are only 12 months after purchase. Builder's warranties could be for one, two, or ten years.
Some credit cards will provide extended warranties with the purchase of new appliances. If this is the case, you may not need a home warranty for every single appliance in your home.
If your home is not new, you should consider the results of the home inspection report and the age of the structure. For example, if the electrical system is up to code; however, the inspector mentioned that it was due for an upgrade in the next year or so, a home warranty is a must.
You may not need to go with a full-coverage plan, especially if you have appliances or systems that are still under the manufacturer's warranty. Before you buy a policy, ask the company provider about flexible plan options and its rules about pre-existing conditions, exclusions, limitations, and applicable fees.
Make sure the plan that you choose fits your lifestyle and budget. You should also check out the company that you are considering purchasing from. Does it have a good reputation? Have there been problems reported by policy owners? You should check the company's rating with the Better Business Bureau for unbiased reports.
Do I Need A Home Inspection Before Purchasing A Home Warranty?
Whether or not you need a home inspection before you can enroll in a home warranty policy varies from company to company. Some require a home inspection, while others only need to ascertain that the appliances and systems are in working order and well-maintained at the time of enrollment.
Part of purchasing a home ordinarily includes a home inspection report. Some home warranty companies may accept a copy of this home inspection report if it is within a specified timeframe. Other companies will want to conduct their own inspection.
As the buyer, having a home inspection report can help you determine which appliances or systems to include when purchasing a home warranty.
How Do I File A Home Warranty Claim?
When an appliance or system ceases to function, you must call your home warranty company to let them know. The company will contact a local service provider or provide you with that information. The service provider and you will agree on an appointment time and date. The contractor will typically receive a service fee from you and submit the repair bill to the home warranty company.
When Is The Best Time To Buy A Home Warranty?
Many people purchase home warranties before closing because they are available at a lower rate. Doing so may not be financially possible for you after the downpayment and closing costs are figured in.
So getting a home warranty can be done after closing although there is usually a slightly higher premium. Sometimes, however, the discount is still applicable up to 30 days after closing, so be sure to ask the company agent.