Since this column first appeared, I’ve received numerous phone calls and emails from readers, many of them inquiring about specific situations regarding home warranties. This month, I’d like to use this space to address a few of the most common questions I receive on a regular basis. Hopefully, this will prove helpful to you and your clients.
WHAT IS THE BEST WAY TO TALK TO MY CLIENTS ABOUT HOME WARRANTIES?
The best way to communicate what a home warranty is to your client, is by explaining that most home warranties cover mechanical failures due to normal wear and tear. Coverage typically includes most major systems and major appliances. Some items, conditions and services are not covered such as non-mechanical items, including windows, walls, doors and maintenance service.
Suggestion: This is a good time to explain the difference between a home warranty and homeowner’s insurance. In doing so, your buyer will have a clearer understanding, which translates into higher customer satisfaction.
WHAT DO “BASE PLANS” COVER?
Most home warranty base plans will cover the mechanical failure of the unit itself (repair or replace) and labor (to repair or replace). For example, if a buyer’s furnace has failed and needs to be replaced, most home warranties will cover the cost of the new furnace and the labor to install it. Base plan coverage does vary with each warranty company, so make sure your client investigates the nuances of their applicable plan.
Suggestion: Presenting real-world examples to your buyer helps them have realistic expectations of what a home warranty does and does not cover. Don’t wait until they need the service to explain the nuances. It’s better to be clear up front, to avoid confused or disappointed clients down the road.
CAN MY BUYERS UPGRADE THEIR HOME WARRANTY?
Most home warranty companies offer higher levels of coverage that will help cover out-of-pocket expenses. Upgrades are enhancements to base coverage. There are additional costs, but typically the benefits outweigh the added expense. Some upgrade examples include Premier Upgrade Package, Buyer 7 Star Upgrade, diamond and platinum. Common upgrade coverage options can include coverage of septic systems, private wells and swimming pools.
Suggestion: It’s very important to disclose to your clients what upgrade options are available. You don’t want your client to find out later – or when they file a claim – that they had the option of more complete coverage. Educating your client simply translates into greater customer satisfaction.
DOES A HOME WARRANTY COVER PRE-EXISTING CONDITIONS?
Home warranties are not meant to cover, pre-existing problems. That would be comparable to buying auto insurance after you’ve wrecked the car. However, most national home warranty companies do offer “unknown pre-existing condition” coverage in their base plan for buyers or as an add-on option to their base coverage.
Suggestion: Again, it is in your best interest, and that of your client, to make them aware of these options. The sale might be completed, but if you’re counting on referrals or repeat business, you don’t want all the goodwill you’ve built to be lost over a misunderstanding of their home warranty coverage.
HOW TO DETECT IF THERE IS A PRE-EXISTING CONDITION?
Ignorance is not bliss! The following actions are typically recommended and will help prevent any misunderstandings down the road:
- A visual inspection of unit or system with no noted problems.
- Mechanical test is performed, confirming the system can be turned on and off without any noted problems or issues.
- Documentation may be requested. This could be in the form of a home inspection or a licensed technician checking the system and documenting they found it to be in good, working order prior to the date of enacting the home warranty.
Suggestion: Having a home inspector or qualified technician that has a solid reputation, or who you have used in the past is imperative. Make sure the people working with you are as conscientious as you are!
As I said, these are just a few examples of the most commonly asked questions regarding home warranties. Of course, each sale, client, and house is different, so I invite you to call or email me with any specific questions or concerns you might have. Ultimately, we all want a happy client and home warranties are one way to ensure customer satisfaction and peace of mind. Jennifer Gagne
