Home Warranties: What You Need to Know if You're Renting
Nowadays, you can buy a warranty for just about anything, even your home. Home warranties have become very popular in recent years because they can save homeowners a great deal of money should expensive repairs suddenly become necessary. Homeowners who rent their properties have discovered that home warranties can help keep them in compliance with federal, state and local laws. However, before you purchase a warranty for a rental home, several considerations should be made.
Home Warranty Basics
Many people confuse home warranties with insurance, but insurance covers damages from specific threats or events, such as fire, flooding, vandalism and theft. Home warranties cover the components of a home, including the structure, climate control system, plumbing, water heater, electrical system and major appliances.
A warranty company, such as Choice, contracts with service providers to make repairs or replace any of the covered components of a home. In return, the homeowner pays only a small service fee instead of the entire cost.
Home Warranties for Rental Properties
If you own a rental property and are thinking of purchasing a home warranty, you should first consider the age and condition of the home, its components and the appliances. If the home is new, many of these items will already be covered by a warranty, but if you have an older home or older appliances that are not covered and could potentially fail, then it makes sense to buy a home warranty.
When deciding on which home warranty to purchase, you will first want to take a look at what exactly is covered in each one. Some warranties cover only the basic components of a home while others, like Select, cover additional items, such as washing machines and swimming pools.
Another consideration is how the warranty company selects a contractor to conduct repairs. Are the contractors vetted in any way? Are they qualified and trusted by the local community, like AFC's contractors? Do they complete the work in a timely manner?
It is also important to note that some home warranty companies only work with individual homeowners. If you hire a property management company to conduct your rental business and maintenance, certain home warranties will not work for you. In addition, many service providers request that payment be made by a person in the home when the technician arrives. If you do not live in the home, this could be a problem because your tenants are not required to make such payments.
Home warranties can be excellent investments, but it pays to do your homework so that you select the best warranty for you and your property.