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Warranty Policies
A home warranty is basically an insurance policy. It insures the mechanical, electrical and plumbing parts and
systems of a house. A home warranty
provides the same comfort as any insurance against unforeseeable events.
Many homeowners claim that their warranties have more than paid for
themselves.
HOW DOES IT WORK?
While
each home warranty company operates a little differently, there are some basics
that apply. Each has a “basic”
plan that covers routine heating, plumbing and electrical systems.
In addition, they offer optional coverage for air conditioning, pools and
spas, appliances, etc., charged on a per item basis.
Some companies offer more comprehensive “basic” plans that cover
features such as irrigation systems and garage door openers.
A home warranty plan can be ordered at the time your home
is placed on the market. This will
protect you during the listing period, usually not exceeding six (6) months, and
then it will be assumed by the buyer at the time of the sale. A home warranty may also be purchased during the escrow process, and some home
warranty companies will allow the buyer to make the decision to have a plan
initiated
after purchase.
THE PROCESS STEP-BY-STEP
First, the application is completed and submitted to the
home warranty company, either by phone or by fax.
The application should specify which plans and options are being ordered,
and include the listing agent’s name and the property information. Some companies offer different plans depending on whether it
is for a listing or for a sale. For
example, some companies offer more options to the buyer at the time of the sale
than to you, the seller, at the time of the listing. Some, but not all, companies require a mechanical inspection
prior to approval of the application. In this case, a report of the inspection is faxed to the ordering agent
with the results. Upon approval,
the policy is in effect.
Depending on the company, when service is needed, the
policyholder may be required to call the warranty company, provide their policy
number, state their problem and then wait for a call from an outside service
company (within 24 hours) to arrange for service. Some
companies allow the policyholder to call the warranty company’s in-house
service department directly to arrange for service.
PAYMENT AT CLOSE OF ESCROW
Most home warranty plan payments are not due until
close of escrow. At that time, a
copy of the invoice listing the coverage ordered is sent to the escrow company
for payment (along with an inspection report, if requested).
A copy of the policy is then mailed to the new policyholder. During the transit period, the policy is in effect.
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