How Best to Protect Your Clients With a Home Warranty

Lori Apodaca

By Lori Apodaca

When you think of a home warranty, think PEACH (Plumbing, Electrical, Appliances, Cooling and Heating)! That acronym will be the easiest way to explain the coverage of home warranty to your clients. A home warranty, warrants the covered systems within the foundation of the home that fail through normal wear and tear over the course of the warranty. Combined with homeowner’s insurance (structure and contents of the home), your client will be able to rest easier with their new purchase.

While a home warranty can be purchased at any time, most polices are included at closing, when the home transitions to a new buyer. While home warranty companies don’t require a home inspection, the lack of one may leave gaps in your client’s coverage that could quickly turn their new home purchase into a negative experience.

Inspection Recommendations
If, during a home inspection, the inspector calls out an issue and recommends service or repair, then the work needs to be done by a licensed professional. If the issue is not resolved, then your client should not expect coverage on that system through the warranty.

If the issue is addressed, then the buyer should retain any receipts as evidence that the inspector’s concerns were addressed and corrected prior to the start of the home warranty policy.

For example, home inspections may note that the heating, ventilation and air conditioning (HVAC) system should be serviced by a licensed professional. If the inspection notes this then servicing should be completed. A receipt showing it was serviced and is in good working condition should be provided to the buyer to store in their records.

In the winter, a home inspection may note it is too cold for the inspector to test the air conditioning. However, an HVAC company can test the system to assure it is working properly. Taking this additional step will ensure that the homeowner has no gaps in their warranty coverage.

An Issue Under Warranty
When a covered system fails, through normal wear and tear, the homeowner must file a claim with the warranty company. They will be able to reach out to their warranty company for an approved technician. Most companies provide 24/7 customer service and emergency service.

When the warranty company sends out a technician, he or she is required to determine that the system in question was in good working order at the start of the policy. If no inspection was done, it is possible that the system was already compromised prior to the beginning of the warranty policy, resulting in a possible hole in the coverage. The homeowner may then be liable for any repair or replacement of the system.

If the inspection was completed and the system was found in good working order than repair or replacement would be covered. Similarly, if the inspector noted that service was required and the homeowner complied, then the receipt from the licensed professional will provide the necessary documentation to ensure coverage of the system in question.

Once coverage is determined, then the warranty company will cover the cost of the repair or replacement with a new, like functioning, system.

Advice for Clients
Purchasing a home is a big decision for anyone. Finding problems in that new home can turn a great experience into a negative experience quickly.

A home inspection, by a qualified inspector, should provide the buyer with added confidence regarding the current condition of the home and possible future repairs. Urge your client to address any concerns in the home inspection report to ensure that their home is completely covered from surprise costs. Coupled with a comprehensive home warranty, covering future failures and offering protection against undetectable defects that were not found during an inspection, will protect the buyer after closing.

Remember, not every home warranty company is created equal. Make sure your client does their due diligence in selecting the right company to protect their investment, their home.

In 1980, Lori Apodaca started work in the title insurance industry in Boise, Idaho. Over the next 21 years Lori did everything from deliveries, title, marketing and escrow. She wrapped up her career as the vice president and escrow manager of Alliance Title. In 2001, Lori took on another real estate related position as a home warranty representative. She worked for First American Home Buyers Protection for the next seven years and opened the Idaho territory for them. In 2008, she joined a very progressive national home warranty company, Home Warranty of America. Lori opened the Idaho territory for HWA and continues to build relationships and grow the business.