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Houston Texas Real Estate Blog > Home Warranty InsuranceHome Warranty InsuranceContributed by Frank Schulte-Ladbeck on January 15, 2008 This insurance seems to be a fast growing vehicle for some firms as more homeowners are opting for it. I have mentioned this type of insurance before for real estate investors , but I wanted to take some time to go over it, for those of you who may be hearing about it for the first time. Generally, talk of home warranty insurance comes up after an inspection, since many of the items on an inspection are covered by this insurance. Your homeowner's insurance covers the building and personal property, but home warranty covers the mechanical equipment and built-in appliances. In fact what this insurance covers is changing rapidly. As more providers enter the marketplace, and insurance companies try to find ways of enticing new customers to purchase other products, home warranty has become a hit for home buyers, and insurance companies add features to this insurance each year. It used to be only major built-in appliances and major equipment, but I have seen non-built-ins added to the list of items covered by some companies. We are talking about washer/dryers, air conditioning, water heaters, dishwasher, stoves, and such. When you have this insurance, and your air conditioner does not work, you will call the service number from the insurance company. They will call out a technician from an HVAC firm to look at the problem. You will have to pay a $50 service fee, but everything else will be covered. The insurance runs around $400 per year. First time homeowners like it, because items on the inspection report are covered, while they can build up their own house emergency fund to pay for repairs. For investors, this can be a great help. The tenant can call the service number, instead of you. For new real estate investors, who do not have a reliable handy man, you can be overwhelmed with tenant calls. Home warranty insurance helps lower the stress that tenants could provide. The point to consider is the service call fee. Either you make it clear to the tenant that such fees are their responsibility in writing, or you work out how you will pay it. This consideration involves your contract for lease, the rent amount, and other financial/legal questions, so it is best to consult a real estate attorney of what would be acceptable in your area. You just have to consult with an attorney once to create your standard contract, but then you can use it for all the tenants who rent from you. If you are buying a home, or you are an investor, or you have a home but want some further protection, home warranty insurance could be for you. Realtors frequently will set this up for you, but you can spend a little time to find the best one for your needs. There are occasions were the seller will pay for the first year (if a piece of equipment looks as if it might fail during the first year). Comments:No comments have been submitted yet.
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