Thus far, home ownership has been a very educational experience. It seems that I learn something new each day. For instance, I learned a valuable lesson regarding insurance.
As you probably already know, everyone is required to purchase home owner's insurance. One of the benefits of this insurance, is that you can replace a failed appliance or other household items which are damaged or stolen.
In my case, I have a very old hot water tank. So, upon reading the insurance guidelines, and speaking to the insurance service agent, I decided to schedule an appointment to get the unit replaced. The selling point here, is that the plumber would come out and replace the unit for a service fee $75.00. Hell, I couldn't even install the unit myself for $75.00. Gosh what a deal ! This is why you pay all that loot for the insurance. Right ? Wrong.
The plumber came to my home and inspected my hot water tank. He immediately asked if I'd read the fine print in my contract. Something about "We're not responsible for bringing the unit up to code ." I said, "Why yes, I had read the entire document. ". He proceeded to show me the sentence, that he was referring to. Next, he began to show me the items that weren't up to code.
1) Vent Piping incorrect diameter.
2) Gas regulator
3) Ball valve needed to be replaced w/gate valve
4) Upgrade tank from 30gal to 40 gal
5) Galvanized pipe replacement w/copper
6) Disposal fee
After he was done with his list, the cost of the repairs rose from $75.00 to $575.00. You can imagine what I said to him. I cut him a check for $75.00 and said thanks, but no thanks.
Now that I'm involved with rehabbing depressed properties, it's actually cheaper for me to get one of my handymen to do the required work. Install and dispose of tank for $312.00 Amazing. Why even pay for the insurance ?
Hmmm... Not sure how it works in your part of the country but typically homeowners insurance replaces damages to the property caused by fire, weather, falling trees, etc. (except flood/earthquake). These usually require separate policies. It also replaces contents of the home lost due to fire, burglary, water damage, etc. Never heard of it replacing failed appliances.
Home warranties replace failed appliances, plumbing, electrical, septic and other add-ons that you pay extra for.
If your piping, plumbing, vents, ductwork, etc. are not up to code, that should have been discovered and documented during a home inspection. This should have been done before you bought the home, so that the previous owner would have fixed these issues before the closing OR reduced the sale price enough to cover the cost of fixing these items to bring them up to code.
Why pay? Well..its usually mandated by the lender for one thing. Also if a big tree falls on the house or your DUI neighbor crashes his car into it (dont laugh.. I know people this has happened to down here in tornado alley), it can be replaced-- actual cost of replacement for a comparable home--which may be more than what you paid, considering building materials are more expensive these days.
Welcome to homeownership Alfred. You will learn something new everyday believe me.
In terms of insurance, I would careful of the amount of nominal claims you put in to your company. They could end up cancelling you for a $500 claim. Save it for a big one.
Charlene:
Yes, I actually was referring to home warranty not home owner's insurance. Nonetheless, I was still surprised by the additional fees that were requested to get the required service.
J:
You are so right, I learn something new each day. Never a dull moment. Keep passing on the useful tidbits.