Benefits of a Condo Warranty Could Save You Money

People often buy a condo warranty when purchasing a condominium, as warranties can be the perfect solution for people who don’t want to worry about potentially replacing appliances and other systems in the condo in the future. Before opting for this type of agreement, you should understand the finer details of the coverage, the benefits, how the process works, and other considerations.
How It Works

Condominium warranties cover appliances and some indoor systems. This is a separate coverage from condo insurance or any coverage provided by the condominium association. Insurance predominately covers against perils affecting the structure of the unit and your personal property. Essentially, a condo warranty is a legal contract or guarantee between a home warranty company and the owner of the residence.

The company charges a monthly or sometimes yearly payment. This covers the replacement cost of covered appliances or features like refrigerators, stoves, indoor plumbing, toilets, heating systems, washers, and dryers. Most companies offer a basic contract, but you can usually change some provisions or add on special appliances that require coverage.

When an appliance breaks, you simply contact the warranty company, and they send out an approved service provider. In some instances, you’re allowed to choose the service provider, depending upon the terms of the agreement. The service provider comes out to look at the system or appliance to determine whether it is no longer working. If it is truly broken, the appliance will be replaced according to the terms of the contract.

Costs

Contracts may vary in price depending on whether you buy a basic plan or an extended plan. Most plans range from $300-$500 per year, and they typically do not increase far beyond these amounts unless the unit is unusually large. You are responsible for paying the monthly or annual premium and the costs of service fees.

Benefits

If you are considering the purchase of an older property and the appliances are already a few years old, you’ll have the peace of mind that they are covered and will be replaced if necessary. In other words, you probably won’t be handing over several hundred dollars every time an appliance stops working.

A warranty contract can also benefit the seller of a residence in addition to buyers. In some sales, the seller can offer to pay for a warranty, and this often seals the deal for the buyer. The agreement reduces the risk of potential problems in the future and makes the buyer more comfortable purchasing the unit.

Considerations

Always read legal papers carefully to see what is included or excluded. Some companies have clauses about only replacing products that have been cared for according to their maintenance requirements. If for some reason the item is not covered, you are still responsible for the service call charges. Depending upon arrangements, some companies do not guarantee that they will replace the item with the same brand or model. However, the replacement is usually similar.

You should decide if a condo warranty would be beneficial based on your needs and the ages of your appliances. This kind of agreement frequently presents an advantage, but it is always a good idea to carefully consider entering into any contract.

Home Insurance: What Peril Means to your Policy

Why do homeowners need to purchase a home insurance policy? Getting home insurance is a great way to protect yourself from lawsuits and is usually required by your housing lender. Ideally, you only need enough to cover your property and belongings. Investing in good quality coverage means you will have to pay less money out of pocket if the unthinkable happens. Some insurers may have coverage requirements for replacement cost protection. As a good rule of thumb, your coverage should be equal to the full replacement cost of your home. Many home insurance policies provide customers with a package of coverage.
However, it is important to keep in mind that coverage is only viable if your policy covers the peril that caused the damage. A peril is a term used to represent the specific cause for a loss. A covered peril, like a tsunami, theft, or wildfire, must have been the cause of your loss in order for you to receive reimbursement. Home insurance does not cover flood damage. Flood insurance can be purchased through a private insurer or through the National Flood Insurance Program.

Below is a list of common coverage forms.

Dwelling Fire Form: Covers your dwelling only. This form does not cover your personal liability, medical payments, or personal property.

Basic Form: This form insures your property against perils such as fire, smoke, windstorm, hail, theft, civil unrest, lightning, explosions, and vandalism.

Modified Coverage Form: Modified coverage covers the same perils as the basic form when the cost to rebuild older homes is greater than the market value.

Broad Form: This protects your property from the perils listed in the basic form, with the addition of perils such as: trees and other falling objects; the weight of ice, snow, and sleet; the freezing, sudden overflow, or rupture of a heating, air conditioning, plumbing or fire sprinkler system; or household appliance.

Special Form: Insures your property against all perils, except those specifically listed as not covered. The perils that are commonly excluded are flood, war, nuclear accidents, and earthquakes.

Tenants Form: For renters. Mainly your personal property against perils listed in the broad Form.

Condominium Unit Owners Form: As the name implies, this form is for owner-occupants of condominium units. It insures your personal property, walls, floors and ceiling against perils listed in the broad form.

Other types of home insurance exist for different types of residences, such as a townhouse or a mobile home that does not rest on a permanent foundation.