A first-time home buyer should always buy a home warranty plan or a home protection plan so that he does not have to worry about maintenance. Such a plan provides coverage for maintenance of a home system or appliance, in case a breakdown occurs. When a person buys a new home, this plan is either brought by the seller of the home or by the buyer himself. A seller usually prefers to pay for the coverage to relieve himself of the tension that might arise after giving possession of the house to the new owner. A real estate agent responsible for fixing the deal can also buy a warranty plan as a gift to the buyer. Such a plan is framed as a contract of one year, which can be subsequently renewed year after year. Similar to other contracts, it has its own share of positives and negatives.
Pros of a Home Warranty Plan
♦ Provides Peace of Mind
A new home brings along many items which require care and maintenance. Air conditioning and heating systems, electrical fittings, appliances like dishwasher, microwave, etc., work well for a particular time period after which they tend to falter. An advantage of buying this protection plan is that you don't have to worry about fixing them up. Whether they need repairing or replacement, you know whom to call to rectify the problem for you.
♦ Costly Repairs Turn Cheaper
Some repair works like fixing up an air conditioner calls for a lot of expense, if there is a major fault in the system. A home protection plan pays for all the expenditure, and leaves you with a minor expense of service fee charged by the service provider.
♦ Easy Fix for Difficult Repairs
You cannot always choose to repair your systems and appliances all by yourself. Some problems call for technical experts for rectification. This plan helps you by providing the right technical experts to tackle a particular kind of problem, which would otherwise be difficult for you to solve on your own.
♦ Service on Call
One telephone number solves all your home-related problems. You need not remember contact numbers of several service providers pertaining to each kind of problem that may arise at your home. One call and you are done! It will make your life easy and simpler.
♦ Get It from the Seller
When buying a new house, you can always ask for a home warranty plan from the seller as a part of the contract. This plan would provide coverage for only one year, after which you can continue or discontinue it, depending on your need.
♦ Short Coverage Period
This can be considered as a positive point because you can decide to discontinue the plan as and when you feel like. If you regularly maintain your appliances and use them as per the set guidelines, it is quite obvious that your appliances will require less of repairing. So, after one year, if you feel you do not have much need of the policy, you can choose to discontinue it.
Cons of a Home Warranty Plan
♦ Premium Charges
A coverage is always provided in exchange of a certain amount of premium. The premium charged for such a warranty plan is around $500-600 which might be expensive for some pockets. Apart from it, the service charge levied at the time of service may add on to the expense, if an appliance is frequently breaking down.
♦ Repair Over Replacement
Even though an appliance is faltering very often, the service providers tend to repair it rather than replacing it because it will cost them more. Due to this tendency of service providers you have to face the same problem again and again, without having much control over it as you are tied down by investing in the plan.
♦ Time Required for Providing Service
Companies providing such plans have their own set of service providers. If you call your own service provider and get the problem solved, you will not be reimbursed for the same. This means every time you face a problem, you need to wait for their service providers to solve the issue. They sometimes take several days for providing the service after you have informed them.
♦ Restricted Coverage
A warranty plan does not provide service for all the issues that occur in households. They have their own set of coverage limits, beyond which they do not provide any service. It is therefore important to read the documents carefully so as to check what is covered and what is not.
If a warranty plan buyer is interested in adding something to the coverage list, he must be ready to pay extra premium for the inclusion. If you are buying a new home, I would suggest you to ask for a one year home warranty protection plan from your seller as a part of contract, after which you can weigh its pros and cons and decide whether you want to continue it or not. Good luck!