Home Warranties Protect Buyers and Sellers
We believe that a home warranty is an essential part of every home purchase. A home warranty benefits both sellers and buyers. A seller can create a feeling of confidence in the buyer, who will be protected against repair bills should an appliance or system fail. We have had many satisfied home buyers who have used their home warranty to correct problems that occur in the first year of ownership, from plumbing leaks to defective appliances, and more.
We sat down with Nancy Butera, a Sales Executive at Fidelity National Home Warranty Nancy has worked at Fidelity National since 2000 and serves Marin County and San Francisco. We’ve been recommending Nancy for many years, so we asked her to explain how home warranties operate. We credit her unique customer service with the high rate of satisfaction from our clients.
What Does a Home Warranty Cover?
Answer: A home warranty contract pays for the costs associated with the repair or replacement of major home appliances, electrical, plumbing, and HVAC systems – things you can turn on or off inside the home. Unlike a homeowner’s policy, a home warranty does not cover structural items integral to the home, such as windows, countertops, and doors. So, for example, if your stove doesn’t heat up or you have no hot water, you would make a claim under a home warranty. If your refrigerator is leaking, we cover the repair of the leak but any water damage to the floor would be covered by a homeowner’s policy.
Like any insurance policy, a home warranty has limits. It doesn’t cover pre-existing issues, so if an appliance isn’t working before the house is sold, it won’t be covered.
How Much Does a Home Warranty Cost and Who Pays for It?
Answer: On average, a home warranty policy in Marin County costs about $500 per year. So even if just one thing goes wrong in that year, the policy is worth it. Pricing depends on what add-ons a homeowner might want to cover, for example, a swimming pool, roof, outdoor kitchen or guest house. We offer a list of options. Refrigerators and washers and dryers can also be added – these appliances aren’t included in our basic policy because some homes are sold without them.
Most policies are taken out when a home is purchased. The buyer’s real estate agent works with the buyer to assess their needs and then reaches out to me to discuss options and pricing.
Usually, the seller pays for the policy, although the buyer’s agent may purchase the policy as a gift for the buyer.
Can a Seller Purchase a Home Warranty?
Answer: Yes, sellers can get basic coverage during the listing and escrow period for about $1 per day. This protects them if something in the home fails before the purchase is closed.
Also, a home warranty simplifies the life of a seller if a problem arises in the first year after a sale. This happens in the best maintained home.
Can a Warranty Be Renewed?
Answer: Yes. Policies can be renewed annually for a fee, usually around $100. Unlike homeowner policies, where the premium might go up if claims have been made, the price for a home warranty remains the same regardless of claims. Having said that, we have the option not to renew if we’ve incurred very high costs on several claims.
What are the Most Common Claims You Receive?
Answer: Plumbing systems and stoppages make up 60% of the claims we receive. On average, we receive two claims on each policy per year.
How Does a Policyholder Make a Claim?
Answer: While it’s easy to make a claim online by calling our 1-800 number, I always recommend that clients contact me directly. I’m experienced in responding to claims and am paired with a dedicated agent from our customer service department. That means clients receive faster service.
The policy is mailed to the buyers after closing and it includes the contact information for the dedicated sales agent. A good buyer’s agent will connect me to the buyers and I can then explain the policy coverage and let them know I’m available to handle any claims.
How are Claims Handled?
Answer: We contract with outside vendors to provide technicians to visit the home. The homeowner pays a $90 trip charge (as of 2024), regardless of how many trips the technician needs to make to address the particular problem, and the policy pays for all parts and labor. If the appliance or system can’t be repaired, we replace it with one that has the same features. We don’t replace brand for brand. We offer the homeowner various options but if they would prefer something else, we give them cash in lieu (with different caps depending on the appliance), which they can use towards the purchase of the appliance they prefer. That cash amount is what it would have cost us to purchase the replacement offered, so it is less than retail value.
We recognize that many homes have high-end appliances, and we are now offering an Appliance Limit Upgrade that costs $100 and provides higher coverage.
How Do You Decide Whether to Deny a Claim as a Pre-Existing Condition?
Answer: A home warranty does not cover pre-existing conditions; it’s issued on the understanding that everything is in good working order when the sale closes. If a homeowner makes a claim within the first 30 days, we would typically want to ascertain when the problem first arose. We might send a technician to make a determination – he might believe that the problem could indeed have happened overnight or he might see rust, for instance, which would indicate it happened some time ago. If there is a dispute, we would ask to see the home inspection report – if it doesn’t indicate there was a problem, that really helps the homeowner’s case.
How Quickly are Service Calls Scheduled?
Answer: Our contracts with vendors require them to contact the homeowner within 24 hours to schedule an appointment. That does not mean that a technician will arrive in 24 hours – scheduling depends on the availability of both the technician and the homeowner. I advise clients who need rush service for emergencies – like no hot water or a leak that is making the home uninhabitable or ruining furniture – that they should arrange for a vendor of their choosing to come out if I’m unable to get a technician to them quickly. However, in this circumstance, we will reimburse the homeowner only for the amount we would have paid our own vendor.
How to Proceed.
If you are working with Madeline Schaider Real Estate, we will have you covered. If you are buying with another real estate professional, we hope you will find this information useful.