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Understanding the "Limitations of Liability"on Home Warranties

By
Real Estate Agent with Community Association Manager

Today the regional director of HSA Home Warranty for our area spoke at our Tuesday repairsmeeting regarding HSA Home Warranties as well as home warranties in general.

Probably one of the most misunderstood areas of this warranty is what is covered and what is not.  First of all, a home warranty covers the Mechanical Items of a home.  It does not cover drywall, wood molding, a porch step to use a couple of examples. 

Pre-existing Conditions

A home warranty is not going to cover something that already had a problem before the buyer bought the house.  What this means is, if a furnace stops working the day you move in and the problem ends up being a "cracked" heat exchanger, then that problem already existed prior to you purchasing the home.  There's a long explanation about how heat exchangers crack but basically it's due to moisture which in turn starts a rust that over time eats away at the heat exchanger.  This series of events happens over time and would not be covered.

damagedAbuse, Mis-use and Acts of God

These incidents are not covered either.  If you kick the dishwasher door and from that it no longer seals, that would not be covered.  (The dent in door is what's going to tell on you.)  If a Barbie Doll goes into the toilet and backs it up that would not be covered.  If hail, wind or some kind of storm damage takes place, not covered.  Those types of claims go under your homeowners insurance.

Hazardous materials are not covered and if you have refrigerator repairs or air conditioner repairs that leave hazardous materials that need to be disposed of, you will be responsible for that cost.  (Even if the repair itself is covered under the home warranty.)

Modifications on Code Issues

In order to have building code changes covered under the policy, you will need an upgraded policy in order to cover these issues.  Otherwise they will be the responsibility of the homeowner. 

Lack of Maintenance 

If the previous homeowner or yourself does not maintenance a mechanical item as it needs to be, you will not have coverage.  Some good examples of this would be not changing the furnace filter regularly, not keeping weeds and items away from the air-conditioning unit, etc.  If there were repairs but the company that did them had poor workmanship, that would be something you would have to go back to the original company for repairs. 

Secondary Damage

An example of this would be an upstairs toilet that was leaking.  If water started coming through the downstairs ceiling, the damage from the water would not be covered.  The problem from the leaking toilet maybe covered but not the damage it does until the leaking water is stopped.

Having a Home Warranty can be a useful item.  If a blower on your furnace went out or the dishwasher stopped working for some reason, chances are these items will be covered.  The warranty has been known to save a home owner several hundreds of dollars.  House

If you are considering selling your home, one of the bonuses of listing with me is that I can provide an up to one year policy on your listed home, just in case something should happen.  This coverage would be free for you and you would not pay for a policy until your home was sold.  Then there would be another year's coverage for the new homeowner.  If for some reason your home did not sell and even if you had made a claim, you would owe nothing for the policy itself. 

If you would like to learn more about my marketing plan and extra options for selling your home, please visit my website http://cyndisloop4indyhomes.com/ for more information.

Comments (3)

Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO
Great post, Cynthia. This is a pesky issue for me - luckily we switched to a new Warranty provide this year. But no matter who the provider, you are so right to warn people not to assume everything is covered. 
Nov 28, 2006 09:22 AM
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

I'm fighting with HSA right now over them trying to ditch out on replacing my electric service and box.  Long story, but they are sleeze in my opinion!  I'm still doing the research for my post, but if you like, it should be posted in a few.

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Mar 07, 2008 06:54 AM
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Posted my article....if you're interested, here it is.

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Mar 07, 2008 07:18 AM