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Most homeowners in New York are required to purchase homeowners insurance as part of their mortgage agreement. Homeowners insurance policies usually cover significant damages to a home, personal liability in the event of an injury, or losses from theft.
Homeowners insurance differs from a home warranty because the latter is considered supplementary protection. More specifically, home warranty policies are optional measures that can cover the cost of replacing or repairing home systems and appliances when they break down.
Purchasing a home warranty can be a frustrating experience for many homeowners, but knowing what to look for can help you make the right decision.
1. Know What a Home Warranty Covers
Because home warranties are focused on repairing and replacing your home’s functional infrastructure, you should consider how likely you are to need these services and precisely what a policy might cover.
The upside to a home warranty is that these policies offer you an affordable way to make repairs without the need to hire a contractor or pay for costs out of your own pocket.
The majority of home warranties in New York cover essential services like:
- HVAC systems
- Plumbing
- Electrical
- Ductwork
- Water heaters
- Refrigerators
- Dishwashers
- Stoves
Because home insurance only covers major damages, it may be beneficial to purchase a home warranty to supplement any additional repair costs down the road.
2. Consider the Age of Your Home
When you buy an older home, you inherit the wear and tear left behind by the previous owner. The appliances and fixtures might not be up-to-date, or they might show signs of substantial deterioration. Additionally, major home systems may be in poor condition and require significant maintenance.
Anytime you think the age of a home may call for ongoing maintenance, it’s wise to purchase a home warranty.
Even when you purchase a newer home, most appliances have relatively short manufacturer’s warranties. As such, even brand-new appliances and installations have the potential to break down and need replacing.
3. Be Mindful of Budget Considerations
If you’re a new homeowner, you’re likely paying insurance and property taxes in addition to your mortgage. As a result, your budget may be limited, and purchasing a home warranty may not always be financially feasible.
Though home warranties offer excellent protection, they come with a cost. Most home warranty policies in New York can set you back a few hundred dollars a year. Additionally, you’ll have to pay service request fees whenever you require repairs.
When money is tight, you may have to make serious financial decisions. For instance, replacing faulty electrical systems or HVAC units can cost thousands of dollars. Home warranties may be a solid investment in the long run should you ever have to make significant repairs.
4. Carefully Review Your Home Warranty Contract
One mistake many homeowners make when purchasing a home warranty is not reading the fine print on their contract.
Insurance policies are often complicated, and there may be important legal factors to consider before you sign. In the worst-case scenario, failure to review your contract could result in denial of claims or unexpected fees later on down the road.
Most home warranty contracts contain detailed lists regarding:
- Covered items
- Optional coverage
- Plans and fees
- Claims processes
- Limitations and exclusions
- Miscellaneous terms and conditions
In some cases, there may be elements that a home warranty will not cover, such as pre-existing defects. Systems and appliances must be in good condition before an insurer can establish a policy. Other times, policies may cover overall services like plumbing and lighting but won’t cover specific items.
Skilled Legal Help for Real Estate Contracts
As with any contract, it’s crucial to read the fine print; otherwise, you risk experiencing costly financial losses.
Merlino & Gonzalez represent real estate planning clients in and around Staten Island, NY. Contact us today to schedule a consultation if you have questions about home warranties.