With all that’s involved in purchasing a property, it’s quite understandable if a home warranty isn’t the first matter on your mind. Nevertheless, it can be a worthwhile investment. Buying a house is, after all, one of the biggest and most important financial decisions that you and your family will make, so you want to safeguard your investment. Here’s what to know about home warranties.

What they cover

Home warranties typically cover what your house insurance doesn’t include. Basically, these warranties are contracts that offer financial protection if you need to repair or replace critical things such as your home’s plumbing, air conditioning or heating systems. If one of your kitchen appliances or your washer or dryer stops working, a home warranty will normally take care of the cost of a service call and fixing the item or, if need be, replacing it.

Types of warranties

Rest assured that newly built homes will already come with a home warranty. Alberta's New Home Warranty Program requires builders to provide a warranty on new builds that offers coverage for defects in construction and materials and for other elements including plumbing, ventilation, heating, and electrical. Pay attention to the length of the protection as it varies. Your builder may also provide additional warranty coverage as part of the purchase price, or as an option for you to buy.
If you’re closing the deal on a re-sale property, you might find that the home comes with some warranty protection. For example, if it’s a newer home there may be time remaining on the builder’s warranty, particularly if the seller purchased extended coverage. There might be warranty coverage on items that the seller has replaced relatively recently, like kitchen appliances or a new furnace. In addition, you’ll find that some mortgage lenders will offer home warranties for re-sale properties. Depending on the bank, these are in effect from six months to one year.  

How to decide

Whether you’re purchasing additional coverage from a builder or reviewing warranty insurance for a re-sale property, remember that all plans come with limitations. Make sure that you carefully consider a few factors, like:

• Does the warranty include what you would like it to?
• Are service calls to diagnose the problem included?
• Does it look after repairs or replacement, and in what circumstances?
• Will it cover only up to a certain dollar amount?
• Do you already have warranty protection for some items in the contract?

And, if you’re buying additional warranty coverage, think about whether the plan is a good value. In some cases, you may be better off putting money aside in an emergency savings account that you can access for unexpected expenses rather than paying the warranty premium.
Finally, if you have any questions about home warranties, reach out to me. If I can’t answer them myself, I’ll certainly put you in touch with someone who can!