When you manage one or more properties, you want to cover all of your investments with insurance and warranties when it is in the best interest of the property. While it is usually required for a property owner or landlord to carry homeowners insurance on a residential property, you are not required to carry a home warranty. However, purchasing a home warranty can be a good idea because it will cover certain aspects that home insurance or renter’s insurance will not cover.
What’s the Difference?
Homeowners insurance covers the structure itself, whereas the home warranty plan covers the items inside the property such as refrigerator, AC units, etc. For example, if a refrigerator motor goes out, the home warranty would cover the repairs. When considering a home warranty for your rental property, you want to do thorough research before setting up a contract.
There are a variety of companies that offer warranty coverage on rental properties such as American Home Shield. Each company offers different plans to suit your needs at different prices. Establish what you need covered and shop at least 2-3 different companies plans to see what the best price available is.
What Do They Cover?
Each company and plan varies. Look at all the fine print to ensure your assets are covered. Some companies also put a cap on how much will be allocated to repairs on a single item. For example, if you have an appliance break down more than one time, it may not be covered for the second time.
Who Do They Use?
Try to find out which vendors a company uses for repairs. If they use companies with poor reputations or long response times it may cost you more time and money than the plan itself is worth. If you already have a vendor you prefer, speak with them to see if they are affiliated with any home warranty companies.
Read the Reviews
It is also very important to look up any company you are considering investing your money into. There have been reports of scams, as well as companies with poor ratings. It is also a good idea to check the Better Business Bureaus reports on a company. If there are any negative marks check the resolution to the incident to see if they were professional in handling the issue. Keep in mind when checking reviews to look at the star rating based on the number of reviews. A company with 3 stars out of 5 based on 20 reviews is better than a company with a 5 star rating with 1 review.