What is a Home Warranty?

A Home Warranty, also called a Residential Service Contract, is an agreement between the company and the owner of a house, apartment, condominium, or other residential unit which provides that for a stipulated fee and over a stipulated period of time the company will "repair, or replace all or any part of the appliances, electrical system, plumbing, heating, cooling, or air conditioning systems of residential property."

There are similarities between a residential service contract and the standard definition of an insurance policy. Both contracts seek to substitute a small certain loss (premium or contract fee) for a potentially much larger but uncertain loss (destruction or failure). In many jurisdictions a home warranty may or may not be considered insurance and is often regulated by the Department of Insurance. In some jurisdictions it is regulated by the Real Estate Commission and is considered distinctly different than insurance. A home warranty is used much more often than a standard insurance policy with an average of it being used twice per year nationwide.

The best way to draw distinctions is to compare the most common insurance policy written on a house with the typical residential service contract. The homeowner's policy covers fire, lightning, windstorm, hail, explosion, riot and civil commotion, vandalism and malicious mischief to the entire dwelling and its contents. It specifically excludes loss due to "mechanical failure" or "normal wear and tear." These exclusions are significant because they offer the inevitability of loss. Property insurance commonly shies away from perils which experience shows will inevitably occur. A home warranty contract, on the other hand, covers the inevitable perils of mechanical failure and wear and tear. It anticipates that it will be called upon frequently to provide repairs but seldom ones which will approach the dollar value of the catastrophic perils covered in the homeowner's policy. As an example, take a hot water heater in a single-family residence. If the hot water heater burst due to pressure or corrosion, the homeowner policy will repair the consequences of this failure. It will pay for cleaning carpets, replacing warped floorboards, damage to walls, floors, and furniture. It will not pay for repair or replacement of the hot water heater itself. A home warranty will pay for repair or replacement of the hot water heater itself including the plumber's charges for installation, but it will not pay for the consequential damage resulting from this failure. This is an example of how a homeowner's insurance policy and a home warranty compliment each other. No homeowner should feel fully protected unless he or she has both types of coverage.

"My washer is working very well now - the repairman was Mr. Efficient."

      Laurie - Pennington, NJ

Home Buyer Home Warranty

Confident. If a system or appliance in your home fails, you will not have to bear the cost of repairs. Globe Home Warranty Company is just one phone call away and the covered system will be repaired. A warranty compliments your home protection and covers what your homeowners insurance does not.

Look for value. A home with a Globe Warranty is a better buy than an unwarranted home.

Control unexpected costs. With all the expenses of buying, moving into, and furnishing a new home, unanticipated repair bills in the months after closing couldn't come at a worse time. With a Globe Home Warranty, any repair of any specified component costs just $50 - or less.

Avoid delays and uncertainty. When you've just moved in to a new neighborhood and something breaks down, who do you call? If the home is protected by a Globe Home Warranty, there's only one toll free number to remember for professional quality repairs of all covered systems and appliances.

Reduce risk. Will the home you're considering meet your expectations - or bring you unexpected problems? With a Globe Home Warranty, you can relax and enjoy your home.

What it’s not. A warranty is not a substitute for lack of routine maintenance (i.e. filters changes etc.). The home should be inspected and systems and appliances should be in good working order prior to placing a warranty on a home. No home warranty covers pre-existing conditions.

"Just wanted to drop you a line and comment on your excellent service and for my new Heating system."

      N.R. - Chicago, IL

Home Warranty Benefits for Sellers

As a Seller why would I want a Home Warranty?

Add value. 8 out of 10 buyers prefer a warranted home. A Globe Home Warranty makes your home more desirable and statistics show your home will sell faster (up to 15% faster) and for a higher price. Appraisers consider it an added value to a home --- up to $3000 in additional value. In addition, statistics show you have a 29% better possibility of selling your home when a Home Warranty is included.

Avoid delays. A breakdown at the wrong moment can frighten off prospects, delay a closing…even kill a deal. A Globe Home Warranty ensures rapid, professional repairs of specified components and systems- and it helps reduce buyers concerns about future problems.

Control expenses. Unlike other home warranties, the Globe Home Warranty offers sellers broad coverage during the listing period and no money changes hand until the closing when seller coverage is purchased through a Real Estate Professional

Reduce risk. When your home is on the market, the last thing you need is a major, unexpected repair bill. A Warranty protects the seller from many liabilities since most lawsuits arising from home sales are for misrepresentation of the home and systems in the home, known or unknown.. Buyers and Sellers rest easier knowing Globe Home Warranty Company is there taking care of the seller during the listing period and for a full year after closing.

What it’s not. A warranty is not a substitute for lack of routine maintenance (i.e. filters changes etc.). The home should be inspected and systems and appliances should be in good working order prior to the purchase of a warranty as part of a real estate transaction. No home warranty covers pre-existing conditions.

Contact a real estate professional or us to place seller coverage on your home.

See current brochures and contract for specific coverage and limitations in your area.

"Our realtor said you would take care of us and she was right - your plumber was wonderful."

      Martha - Pensacola, FL

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