Through this post, let’s assemble some of the important Tips For Choosing the Best Home Warranty Plan.
Ever noticed how outrageously expensive home systems and major appliances are to repair or replace? For most, who live on a budget, these out-of-nowhere costs can be budget-wreckers.
Budgets require management and planning. These totally unforeseen and major expenses cannot be planned for or managed since most of them occur randomly. Ever noticed how, to make them even worse, these needed repairs seem to come in pairs or clusters?
Thankfully, there is a way to be proactive with this potential budget disaster. With us, homeowners do not have to put their money management plan at risk every time these repair surprises arise.
Home Warranty of America has put together some instructive pointers for selecting and buying the home warranty plan that best fits each homeowner’s particular needs. Read some of the key considerations below. They can help guide this budget-saving purchase.
Best Home Warranty Plans: Tips to Know
1. Location Factors
Costs for this valuable protection vary depending upon location. Certain regions of the country are simply more expensive to live in than others.
Companies offer these plans in line with the general cost of service and repair for markets in these different cost-of-living areas. Make sure the cost of your plan is in line with what others are generally paying for exact or similar coverage.
2. Determine Coverage Amount Needed
Another money-saving detail is to carefully analyze coverage amount needed. Multiple, major appliances, larger, more expensive HVAC systems and expensive roofing cost exponentially more to repair or replace.
To get a pretty close idea how much coverage to purchase, simply add the number of appliances and whole-house systems that need protection. Make a list of the most common repairs and replacements for each. Round that figure up by 30% to insure you buy adequate coverage.
3. Avoid Double Coverage Costs
If the house systems and appliances are new, with excellent warranties, the house plan gets a lot less expensive. Generally, the homeowner can then think in terms of supplemental coverage. Hence, this supplemental coverage can then be used toward the price difference between depreciation and actual cost of replacement. It can also help with co-payments inherent with repairs under the plan.
4. Coverage Cost
Affordability is a key concern for this coverage. The homeowner’s primary concern for a home warranty plan is often how much it costs. This cost can be budgeted for much better than random repairs.
Total cost is calculated not just by the initial cost of the plan, but cumulative cost over time. Simply multiply monthly premium cost by 12 to get annual cost.
Compare this figure with the repair or replace cost estimate made above. The cost savings should be substantial enough to make a protection plan worth purchasing.
5. Confirm Coverage
According to the Better Business Bureau, the majority of complaints they receive center on this issue. Be careful to read the coverage details.
Find this information on the Terms and Conditions page of the plan. Take note of precisely what the plan says it will pay.
Do not presume coverage that is not specifically stated. The policy issuer is only required to pay the expressed coverage and nothing more.
One example may be that the HVAC unit itself is covered, but the duct work that delivers cold, filtered air to the vents is not covered. It is incumbent upon the buyer of the coverage to read and know what is covered and what is not.
6. Broken Beyond Repair or Replacement Coverage
Another important detail is how replacement cost is paid. Too often the purchaser incorrectly presumes replacement means the replacement is new and free of cost to them.
Standard payment for replacement is usually calculated by adjusting for depreciation. This means the cost of a new one minus a prorated deduction for the time of ownership. The plan owner is financially responsible for the difference of that replacement cost.
Thinking to buy a new house, don’t miss to have a look at Tips for First time Home Owners.
7. Payout Limits
Every plan has payout limits. The provider and the plan coverage purchased determines these limits. They will have both a policy ownership time frame, say 12 months, and a maximum amount paid for any single claim.
A payout limit may read similar to this example. With a 1-year membership, the insurer agrees to pay a maximum of $2,500 for any repair, including diagnostics, part and labour or $2,500 toward a new replacement. The plan owner is responsible for any difference over that stated payout amount.
8. Plan Limitations
These plans all have stated limitations plainly written on the Terms and Limitations page. Read them to know what qualifies for issuer payment and what does not.
One common payment exclusion for electronic device replacement is power surge. Another is product misuse or abuse.
If the product was incorrectly installed or lack of routine maintenance can be demonstrated, the insurer is not obligated to pay the claim.
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Protection plans, in addition to regular insurance coverage, can go a long way toward eliminating those budget-crippling surprises. They help tremendously toward staying on a budget while providing the peace of mind such security offers.
What’s your take on it? Have you thought about considering a good home warranty plan? Feel free to discuss.