As a home buyer, you want to be as safe as possible when completing the deal on your new property. A buyer’s protection plan is one of the safeguards you can use in this case and it can also help you save money. However, for it to be truly useful, you need to choose that plan carefully.
Home warranty companies that offer such protection are extremely varied and not all of the 180+ businesses operating on the market today are reliable. You need to know what to consider in order to pick the one that will help you save money in the long run.
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What Is a Buyer’s Protection Plan and Why You Need It
A buyer’s protection plan is, in essence, a type of a home warranty plan that you can purchase for your newly purchased home. Some companies have specialized plans for this specific purpose, but it’s not a necessary requirement.
For example, First American Home Warranty is the second biggest company in the industry and it only offers two plans, Basic and Premier.
You can use either as your buyer’s protection plan and it will work better than some specialized plans might. That’s because the company is one of the most trustworthy in this business. And trustworthiness is the most important requirement for a home warranty provider to meet.
That said, you should study all available plans to pick the one that offers the best coverage for your particular case. Your purpose as a buyer is to save money with this protection. In this case, the home warranty you use helps you do this by reducing the risk of getting huge repair bills if some home appliance or system breaks down soon after you move in.
With a buyer’s protection plan in place, the warranty company will pay for a part or all of the repair bill. As there are many potential issues that can appear out of nowhere, having a way to cut costs is vital.
Note that some home sellers might use a home warranty plan as an enticement for buyers. They will often highlight this particular “perk” and even raise the price because “the property comes with a warranty paid for a year in advance”.
According to statistics, this is a very effective trick used by sellers and it helps them get $2,300 more for their properties, on average. However, as a home buyer, you need to be aware that this kind of offer is anything but fair to you.
You can see why if you only check out the aforementioned First American (FAHW) review. It clearly shows that the cost of the Premier Plan is, at best $500, and you can get one for less, depending on the coverage. As such, overpaying $2,000+ for a plan that doesn’t even cost $1,000 is pure trickery.
Purchasing your own homebuyer’s protection plan will be far cheaper and more efficient. That’s because you can use it in conjunction with the home inspection. This is an important precaution because it allows you to avoid your claims being denied by the warranty company on the grounds of “pre-existing conditions”.
The Matter of a Pre-Existing Condition in a Home Warranty Plan
If you start researching home warranties, you will definitely find many angry messages from unsatisfied customers. People are most upset that these companies often don’t deliver on their promises, and they use the flimsiest excuse to deny the client’s claims. The “pre-existing condition” is, by far, the most common of the reasons for claim denial.
When the company uses this phrase, they mean that the breakdown was caused by some fault that has existed before you purchased the plan, and therefore they have no responsibility to pay for fixing it. This is a very common issue for home buyers as they can’t be 100% sure in the condition of all home systems and appliances in the property they buy.
And this is where joining your home warranty plan and the home inspection will be handy. What you need to do is to order a full home inspection, which is a very smart move for every buyer. In the meantime, you should negotiate with the home warranty company and purchase a plan that will use the results of this inspection as a benchmark of sorts.
This means that any issue that wasn’t found during the home inspection cannot be considered a pre-existing condition. So, the home warranty company won’t be able to use it as an excuse to deny your payments.
Of course, these businesses have other reasons to deny claims. That’s why it’s imperative that you study the plan’s terms and conditions as well as coverage in great detail. There will be pages of fine print for you to go through, but doing this is necessary to make sure that you can benefit from the home warranty plan.
Buying a Home Warranty When Buying a Home: How to Be Sure It’s Good
As mentioned above, the most important thing to do when buying a home warranty plan is to study the contract and plan coverage terms to understand exactly what you are paying for. Things to look out for in these plans include:
Exact Terms of the Coverage
What kind of breakdowns are covered? Are there any exceptions? What are the terms for repair vs. Replacement?
Payout Limits
A home warranty plan will always have a maximum payout limit. Research appliance repair costs to understand whether the amount offered by the company is sufficient.
Claim Filing Terms
Home warranty providers often have inconvenient file claiming terms and can deny you on the basis of breaking the procedure. Therefore, make sure you understand exactly what you’ll need to do and that the requirements are reasonable.
Maximum Response Time
While home warranty companies usually take calls 24/7 they aren’t obliged to send contractors to you immediately. Find out exactly how long you might have to wait as long response times are a frequent complaint from the users of this service.
Keep those things in mind when studying various home buyer’s protection plan options available to you and take your time studying each of them closely. This might take a while, but investing this time and effort will often make the difference between buying a home warranty plan that will help you to really save money and the one that will only waste it.
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