For many people looking at buying a home for the first time, the subject of home warranty insurance comes up before completing the transaction. Is this type of insurance really necessary? My answer is Yes and No!

Pros and Cons of Home Warranty Insurance

The new home buyer has fears when buying a home and rightfully so. They do not want to experience a major repair bill shortly after buying their new home. So to help relieve these fears, real estate agents sometimes offer home warranty insurance to help close the deal. Many times they may have the seller pay this or they might even pay for it themselves. The average price for this is $300-$1500 a year.

So you can be sure, it will be bought at the lowest costs for one year. After all, this is just a pacifier to help you settle down with your worries and close on the house. So in my mind, if it’s FREE then go ahead and take them up on the deal. Or, you can choose the provider and see if they will use the company you recommend. I found one company after an exhaustive research that has a good reputation. More on that later.

Now, you need to keep a few things in mind.

First of all, you get what you pay for. We’ve heard that one before, right? Second, most of the home warranty insurance companies out there are not very reputable. Many have a history of complaints and dissatisfied customers. It seems that the 3rd party contractors sent out on the claim always have a reason not to replace or even repair in some cases.

So what can you as the home buyer do?

First you need to know exactly what is covered and how extensive this coverage is.

The short list of coverage is:

• Appliances
• Inside Electrical System
• Interior Plumbing not Including the Fixtures
• Heating and Air Conditioning

How to Evaluate This Type of Insurance

So your job will be to find out how much coverage you have and for how long. You must realize that there are different levels of coverage. In some cases they may cover the furnace but not the air conditioning unit sitting outside. You have to ask. You want to understand. Also you need to know the reputation of the company. You can find out quickly by using the internet and typing in their name.

Almost all of them will have some complaints, you are looking at how many they have and are they resolved.

The good thing about having home warranty insurance is it can give you peace of mind since you are likely stretched on the budget anyway. The last thing you want is to have an appliance or a furnace go out in the first year after moving in.

Another thing you need to watch out for is “pre-existing, defects or deficiencies” since these are not covered. You will find that most all home warranty insurance companies will not allow the policy to take effect until you have lived in the house for at least 30 days.

Now the bad thing about this type of coverage is most of the contractors called out on a claim will try to wiggle out of doing any replacement of appliances etc. I’m sure you can understand why. They are not really getting paid much money for being there. Suppose you needed a new furnace and the cost was $5000. The yearly premium of $300 paid by your seller will not cover this. Who will make up the difference?

So it’s a true numbers game as it is with all insurances. So you want to be sure you are with a home warranty insurance company that has the least amount of complaints and the best customer satisfaction.

I did a great deal of research to find one and was able to discover one company that rises to the top of the heap. Out of dozens of companies I researched I found one for you that seems to take good care of their customers.