Home warranties lessen repair costs, especially when homeowners insurance does not. Learn the pros and cons of purchasing a plan before or after closing.
Buying a home is never easy, but now the hard part is done: You’ve found your dream home, signed on the dotted line(s) and taken possession of the keys. Now, after shelling out all that cash for a down payment and other moving expenses, you may be wary about spending even more money. In fact, you may be so eager to just get those front door keys that you find yourself wondering “Can I purchase a home warranty after closing, so I don’t have to add one more thing to my list now?”
We get it. Buying a house is stressful, especially if you’re a first-time buyer. And the short answer is yes — you can absolutely purchase one after closing, even years after you’ve bought the home.
It's better to think about having a protection plan in place sooner rather than later, though. Remember that wariness about spending? Believe it or not, a home warranty actually helps you save money on inevitable repairs to those new home systems and appliances.
So if you didn’t buy coverage when buying a house, you need to get one now that you’re a homeowner. Here’s what to consider when buying one after closing and what your options are.
What a Home Warranty Does and Doesn’t Cover
A home warranty, also known as a home service plan, is a service contract that defrays the cost of repairs to major home systems or appliances, or even replacement of those home components if it’s necessary.
It is not a structural warranty on an existing home — although most newly built homes do come with a structural warranty from the manufacturer, the terms of which are usually dictated by state law.
A home warranty is also different from home insurance, which covers the structure of your home and the personal property within against catastrophic loss due to causes like fire, theft or acts of nature.
Instead of covering the structure of your home or your belongings against damage, loss, or theft, a home warranty offers budget protection to help you manage the cost of repairing or replacing covered home systems and appliances when they break down due to normal wear and tear. Your home warranty covers your major appliances, like your refrigerator, stove, dishwasher, or microwave and/or your home systems, like HVAC, electrical and plumbing, depending on your plan coverage. Find out exactly what’s covered in a home warranty, what’s not, and what can be covered with add-on plans.
Learn More: What is a home warranty?
The Importance of a Home Warranty
Obtaining a home warranty when buying a home is probably one of the smartest investments you can make. Why? Because your homeowner’s insurance only covers what could happen (like a fire or flood). A home warranty, on the other hand, covers what will happen (like an appliance breakdown).
As much as we would all love to believe that a new-to-you home equals no future issues with its major appliances and systems, that’s just not realistic. There’s no way you can know what’s happened in your home before you owned it. Have the previous homeowners kept up with their maintenance responsibility? Did they make sure the work was done right, or did they wing it and cut corners to save a few bucks?
You just have no way of knowing, and you can’t always see the defects in your home’s systems and appliances by looking at them or even by testing them. Often, there are unpredictable things just waiting to go wrong with a new-to-you home’s systems or appliances.
Repairing an appliance or home system that breaks down suddenly can wreck a carefully calculated budget. Even cheap home repairs can cost a few hundred dollars, and if you end up needing to replace an expensive home system or appliance, that could cost thousands.
With a home warranty, you can rest assured that those covered breakdowns will be resolved as quickly and efficiently as possible, with as little out-of-pocket costs to you as possible. For most repairs, all you need to pay is the Trade Service Fee, and we’ll cover the rest, up to plan limits. Even if the final cost of your repair or replacement exceeds your plan limit, you’ll save thousands — and if you exceed your plan limit for one repair, don’t worry. You’re still covered up to plan limits for other repairs, and there’s no limit on the number of claims you can file during your plan period.
Options for Purchasing a Home Warranty After Closing
Can you purchase a plan after closing on your home? Of course! Your home can be covered by a warranty anytime, whether you’ve lived in it for a few months or several years. And your coverage options should remain the same, as well.
Speaking of options, the best home warranty companies will provide several of them, so you can tailor a plan that meets your needs. For example, American Home Shield offers three home warranty plans: Appliances, Systems and Combo.
Are you pretty confident in your home’s systems but want coverage for your appliances, or vice versa? No problem — choose either the Appliances or Systems Plan.
Want basic coverage of your HVAC, electrical, plumbing, kitchen appliances and washer and dryer? Sure thing — the Combo Plan will be right for you.
Want to add on pool and spa coverage? You can do that, too. American Home Shield offers several different plan add-ons designed to allow homeowners to completely customize their coverage. Guest units, septic systems, well pumps and even electronics can be covered by American Home Shield.
Related: Ready to buy a home warranty?
Cons to Consider
Often, home service plans that are purchased before closing qualify for a lower rate. If you’re considering purchasing coverage outside of closing, that could mean that you may have to pay a slightly higher premium for the protection.
And, of course, just like insurance, a home service plan can be considered a “gamble,” since you’re not guaranteed to have to use it.
What’s more important, though: spending a few hundred dollars protecting your budget or being stuck with a large bill when a major appliance breaks down in your new home — after you’ve already spent so much money?
Also, some (or all) of your appliances may be covered already. If your house is new or if you purchased all-new major appliances and systems, they could still be under manufacturers’ warranties. It’s important to note, though, that these warranties typically only last 12 months past the purchase or installation date, and they only apply to the original purchase by the original owner.
Pros to Consider
It’s important to consider the age of your home and what the inspection report pointed out. If you purchased an older home with older appliances and systems, for example, a home service plan should be a no-brainer.
Also, consider the cost of obtaining a home service plan after closing — a few hundred dollars for a year of coverage — versus the cost to replace a major appliance. Who wouldn’t want that peace of mind while getting to know their new home? What’s more, without a home warranty in place, you could have a difficult time procuring a contractor to come out and make any necessary repairs. And you’ll be required to pay the service call fee plus potential additional fees. With a home service plan, you’ll only pay your fixed service call fee (likely much less than the company’s typical fee) for a covered service. Those savings really add up!
What Not to Do After Closing on a House
If there’s one thing you shouldn’t do after closing on a house, it's to forego the home warranty. It’s right up there with not changing the locks. If you didn’t get a plan from the seller or your real estate agent during closing — which exempts you from the waiting period — you should plan to buy one immediately after closing.
Remember, if you buy your warranty after closing, you have to get through a 30-day waiting period before you can make any service requests. You don’t know what’s going on inside your home’s plumbing, wiring, ductwork, or HVAC system — home inspections have their limits, and a home inspector can’t open up walls or dismantle appliances. All they can do is make visual and mechanical inspections to verify that they’re in good working order.
Protect your investment in your home and the budget that makes it possible. Buy a home warranty as soon as you can after closing
Ready to Safeguard Your Family’s Investment?
Thinking about further protecting your investment? Check out American Home Shield’s available home warranty options and get a free quote.