In this episode of the Houston Home Talk, James explains what you need to know and what the differences between a home warranty and home insurance.
Shownotes:
[00:55] What Is Home Insurance?
[04:09] What Does Home Warranty Cover?
[08:16] If you have questions, reach out to us.
[00:02] INTRO: Welcome to Houston Home Talk featuring all things real state in the Houston area. We'll interview real estate professionals, local business owners and special guests from right here in the Houston community. This is where you get the inside scoop about what's new in real estate, new community openings and business openings and much more. The Houston home talk show starts right now.
[00:37] JAMES: Welcome guys. Welcome. What's up? It's James Jay. Welcome to another episode of Houston home talk and today, we're going to talk a little bit about home warranties. Now, this oftentimes gets confused for some people for home insurance, so these are completely, completely different coverages. They do different things and quite honestly, you need both. You need home insurance and you need home warranties for your home or your investment property. I'm going to go a little bit into discussing hallmark warranties. What you need to know. Again, what the difference is between a home warranty and home insurance.
Let's just get right into it. Home warranty, typically this is something that you're going to get when you're purchasing a specialty, a resale home, okay? You definitely want to have it when you're purchasing a resale home. It's something that is completely negotiable. It is not something that a seller has to give you or offer you.
It is something that you and your agent asked for as part of the negotiations, but it's not something that's mandatory that a seller pay. When you're looking at purchasing a home where they'd be resale or even new construction, new construction's homes are typically you're going to come with a warranty typically a year. There might be a builder to that habit for two years. Most of the builders are going to offer you a one year warranty that's almost like a bumper to bumper warranty for your home. If anything happens in the home during the year or two years, whatever the case may be, the home builder will come out and fix the issues.
Now once that warranty is done with as far as the builder warranty goes, then you're going to want to have your own home warranty moving forward because you'd never know what's going to happen that is why you have a home warranty. It's just like car insurance, right? You have car insurance, you may drive two years, three years, four years, never have a car accident. Well, when you do, if hits you or someone rear ends you, you're going to be very happy that you had car insurance. Well, the home warranty operates in the same way. Home warranties are pretty much designed to protect your homes, appliances and systems from breakdowns caused by normal wear and tear. Whereas homeowner's insurance pays for damages and loss caused by perils like fire, weather damage but it won't help you if your washing machine simply breaks down. Or if it's July and August and your ac unit breaks down.
All right, home insurance is not going to do a thing for you, but a home warranty would definitely cover items like that. What does a home warranty actually cover? Other than your AC unit and some of the other major appliances, water heater is covered. That's one of those major items in your home you want to have covered. Then those options for you to add additional coverages so you could cover a dishwasher. You could cover refrigerators. You can cover garage door openers, septic systems. There're a lot of other optional coverages that you can have with the home warranty, but it's not something that comes typically with their basic coverage. These are basically like upgrades more or less for your home warranty.
Depending on what you're looking at purchasing, it may be something that you definitely want to consider. What happens on a home warranty? You have an issue, you have an item breakdown. Let's use the AC unit because for me, that is probably the biggest appliance. Excuse me, not appliance, but more a system in your home and the most expensive to have to replace.
Now I'm speaking from personal experience on this because I've had an AC unit go out on me in the middle of summer. I couldn't fix it. The home warranty carb company could not fix it and they replaced it. Now there are some additional fees that come along with replacing the AC unit and depending on your warranty company, they will run those by you. It is much, much less than you have it to go and replace an AC unit for your home.
Basically, what happens is this. You have an issue. You AC unit goes out. You call the home warranty company to come out and take a look at the issue. You pay what they call a trade fee. Depending on which plan you pick, depending on which home warranty company you're using, it may be a trey call, which might be $75. It might be $60. It could be $100. It just depends on the company. You pay them a fee to come out and assess what the issue is. If they can't fix it, they will replace it.
Now again, there may be some additional fees that come along with fixing certain items and AC unit in particular because there are some fees that come along with disposing of an AC unit that you actually have to pay. Again, much, much better than you having to go and replace an entire AC unit, which could cost you thousands of dollars. Home warranty, you requested, they typically come out within a few days and again, if they can't fix it, they will replace the item.
One thing to keep in mind, if you have an issue with an AC unit right now and you'd hear this and you say, 'You know what? I'm going to call a home warranty company right now.' Typically, these home warranty companies are going to have a period of usually 30 days, that's from 30 days from the time you initiate having that home warranty. They're going to have what they call basically a waiting period.
That means you can't claim anything within that 30 day window because they don't want you to call them knowing that you have an AC unit that's not working just to get them to come out and fix it. It's almost like a preexisting condition for life insurance. That's exactly how this works. Yu can't get life insurance with a preexisting condition in most cases. There's some, sure, there's some coverages out there that will allow you to have a policy with the preexisting condition, but they're going to charge you for it. With the home warranty, same thing. You cannot make claims typically during that first 30 days after you get the home warranty because they do not want people taking advantage of the whole warranty.
In a nutshell, definitely something you want to have guys. It is one of those things. You kind of get it, you forget about it. These range…the coverages are going to range anywhere from 350 to 450 for the most part. There are going to be some coverages where you can get where their 500 and up. Again, do your research. If you have questions about home warranties, reach out to us. We'd be glad to help you and make sure that when you get a home, whether it'd be a rental property that you're getting, or personal resonance that you're getting, or new construction, you want to get a home warranty.
You're going to have a little more leeway with new construction because typically, again, the builders going to have that warranty. As soon as that build a warranty ends, you want to get yourself a home warranty. If you don't, you'll regret it. I promise you will regret it.
Again, guys, you got questions, let me know. Would love to help you guys with any questions you may have about home warranties. I will talk with you guys on the next episode.
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