Home warranty advisable if appliances are aging

Inspector's Eye

April 29, 2001|By Dean Uhler

Jocelyn Jones of Columbia asked whether it is more advisable to renew a home warranty, at a cost of about $400, or to purchase separate contracts with service providers that would, in some cases, include annual inspection.

Home warranties are obtained by some homebuyers as protection against the cost of unexpected repair or replacement of major appliances in the first year of home ownership. Policies often can be renewed for additional years.

I would definitely consider obtaining or renewing a home warranty policy if one or more appliances covered by the warranty had reached or exceeded their expected life. Policies often cover the repair of even old, outdated appliances, provided the appliances were in working condition at the start of the warranty. This coverage can be valuable.

For example, replacement of the compressor in an air conditioner or heat pump can cost in the neighborhood of $1,000.

Costs are even higher if an entire appliance, rather than a component, needs replacement. This can occur when an outdated appliance experiences a major component failure, such as an old furnace in which the heat exchanger is damaged, or a boiler that develops a leak. There may be no alternative to replacement of the unit. This could cost $2,000 to $3,000, or more, in the case of a furnace or boiler.

If a home warranty is in effect, it can cover the installation of the new system, at a cost to the homeowner of only the policy's deductible.

On the downside, service contracts may limit coverage to repair or replacement of specified components. In the example given, replacement of the outdated furnace or boiler would be at the homeowner's expense under most service policies, although possibly at a discounted price.

Be aware that home warranties exclude coverage of pre-existing conditions - defects that existed before the start of the warranty. You could be unaware of pre-existing conditions when you purchase the policy, and think you have coverage, only to have it denied later.

Inspection of a house you are buying by a qualified home inspector can help you discover defects in major appliances and thereby avoid the disappointment of having warranty coverage denied.

Also, specified components of major systems, such as hot-water heating pipes contained in concrete slabs, may be excluded.

Read the terms of a home warranty policy before deciding to buy or renew it.

If your major appliances are still relatively young, the likelihood of major failure is low. Then, the advantages of service contracts, such as annual inspection and maintenance, or free service calls, may outweigh the advantages of a warranty.

Service plans vary from provider to provider, so shop around and weigh your options.

If a company has provided service on your furnace or other appliances, that company already knows much about what your needs are likely to be. Ask them what service plans they could offer you.

Dean Uhler has been a home inspector for more than 12 years and is president of Baltimore-based Boswell Building Surveys Inc. He is a member of the American Society of Home Inspectors.

Questions, with name, address and daytime telephone number, can be faxed to 410-783-2517, e-mailed to real.estate@baltsun. com or mailed to Inspector's Eye, Second Floor, 501 N. Calvert St., Baltimore, Md. 21278-0001.

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