Post details: Buying a House? Get a Warranty - Part 2

02/17/05

Permalink 11:03:51 am, Categories: Articles, 366 words   English (US)

Buying a House? Get a Warranty - Part 2


What New-Home Warranties Cover

Glenn Burns, executive vice president of Professional Warranty Service in Annandale, Va., estimates that 35 percent of all new homes come with insured warranties. Builders buy the policies and include the cost in the price of the home. These warranties have no deductibles and usually can be transferred to a new buyer if the home is sold during the coverage period. They vary, but a typical 10-year policy has three stages:

- Defects in workmanship and materials are covered during the first year. In practice, the builder usually corrects items that do not meet warranty standards. If there is a dispute between the homeowner and the builder, warranty plans often require settlement through arbitration.
- Wiring, piping, heating, and air conditioning are covered in the first and second years.
- Structural problems are covered for all 10 years. This includes big-ticket items such as a shifting foundation or leaky roof. Could you match this kind of long-term protection by just holding back some escrow money when you're buying the house? No way.

Existing-Home Warranties

When you buy an existing home, chances are no warranty will be in force. So a savvy buyer includes a warranty requirement when making an offer. If the offer is accepted, the seller must buy a warranty. The price of the warranty depends on the extent of the coverage, but expect it to cost about $300.

Any home is eligible for a warranty, but you can't buy a property with serious problems, wave a magic wand and get them fixed. Limitations and exclusions are placed within the warranty to keep it reasonable. Ask what's covered, what's excluded (a swimming pool or spa, perhaps), whether you can buy protection for excluded features and how long the coverage lasts.

Existing-home warranties don't insure against structural defects such as rotted rafters or cracked concrete, but they cover items that have been installed in the house, such as electrical systems, water heaters, ranges, plumbing and central heating and cooling. In addition to a premium, existing-home warranties have a deductible feature, often $35 to $50 per call.

Finally, remember that a warranty is no substitute for an inspection. You need that, too.

Better Homes and Gardens

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