Make no mistake, home warranty contracts have limits and you should pay close attention to what they are before you buy! This is one of the most common types of complaints we hear from our visitors, and it is too bad, because if you examine a home warranty sample contract, all the limits are clearly described.
I Want A Home Warranty Contract Without Limits!
That would be called self insurance. 🙂 There are no home warranty contracts that come without limits, because you would never be able to afford them and home warranty companies are in the business to make money!
For the best protection, go online and read a home warranty sample contact so you know the limitations before you buy. Let’s examine some of the most common limitations found in home warranty contracts. Keep in mind, these limits only apply after a home warranty company approves a repair.
Code Violation – When a home warranty repair is under way and a contractor discovers that an item was not installed in accordance with city construction codes or new codes exist. There may be additional costs involved for the repair such as permits. Home warranty companies will commonly set a limit of $250.
Home Square Footage – Home warranty company contracts usually have a square footage limit of 5,000, and other options for homes 5,000 to 10,000 square feet. Make sure you are not hit with the NOT COVERED decision by ensuring you purchase the home warranty plan.
Transfer To New Owner – Many of the home warranty company contracts have a provision that allow the transfer ownership of the home warranty to a new owner, but the home warranty company must be called, and the exact process followed.
TIP: Usually it is better to have the new owner get a new Real Estate Home Warranty as it is more forgiving and has more options,. So unless there is a real reason to transfer the ownership of a home warranty, opt for the Real Estate Home Warranty as part of the real estate contract.
Service Call or Trade Fee – There is a fee for each home warranty claim made. Most home warranty companies will have a provision that will waive the service call fee if a home warranty contract claim is made for the same issue within 60 days. For example, a home warranty contractor came out and fixed the garbage disposal, but for some reason, it stops working again and they must be called out again.
Air Conditioners and Heating Systems – There is usually a limit to the max size Air Conditioner or Heating System they will work on. The most common limit is 5 Tons.
Refrigerant – When a repair is completed and there is a need for new refrigerant, the home company will usually pay around $10 per pound of refrigerant.
Accessing AC or Plumbing Components – When a covered component requires access through some kind of structure, home warranty companies will have a limit to access, diagnose, repair or replace component, and return the opening to its rough finish. The most common limit we see is $1,000. For example, if there is a slab leak and a contractor must access the leak through the concrete slab or if there is a heating duct behind a wall.
Water Heater – This one can be a shocker when consumer is told NOT COVERED! Some home warranty companies will have an age limit on a hot water heater and will not replace it, if it is older than that. Like a car battery, hot water heaters will have labels on them showing their age. Most common age we have heard is 10 years or more.
TIP: If you hot water heater does go out and you want a bigger one, it’s your lucky day! Most home warranty companies will allow you to upgrade the hot water heater or air conditioner and just pay the difference in the cost.
Refrigerator and Freezer – The most common home warranty repair or replace limit we see is $5,000. If your refrigerator or freezer is builtin, this limit applies to access, diagnosis, repair and replacement if necessary.
Appliances – Think you get full replacement cost if they cannot be fixed? WRONG! Take a close look at the home warranty contract, as there will be a max limit for any one appliance. The most common home warranty contract limit per appliance is $3.000.
Well Pumps – The most common home warranty limit we see is $1,500 for access, diagnosis, repair and replacement if necessary.
I’m Buying A House, What Home Warranty Should I Get?
TIP: If the seller of the property you are buying is providing you a home warranty, make sure you put in the contract that you get to select the home warranty company used!