Insuring your digs.

Byline: Randi Bjornstad The Register-Guard

Homebuyer Tracy Conaghan first learned the value of a home warranty the hard way - she forgot to use it.

"We bought a house when we first moved to Eugene, and the Realtor said we should buy a home warranty, so we did," Conaghan says. "After we moved in, we had to hire an electrician to fix some problems that we found, and the bill was $800. Then I read the home warranty policy, and I said, `Dang it, I could have used the warranty and saved myself a lot of money.' '

Home warranty programs - essentially an insurance policy like the extended warranties offered on everything from toasters to automobiles - have been around for decades in some parts of the country, but they're just now gaining in popularity in the Lane County area, real estate agents say. "Home warranties are great," says Jay Cope, principal broker and sales agent with Century 21 - Best Realty in Eugene. "I would estimate that 30 percent of the properties I sell have a home warranty."

Most often purchased by home sellers when they put their houses on the market, the warranties reassure potential buyers that they won't be stuck with huge bills if something goes wrong with appliances or basic housing systems - primarily electrical and plumbing - within a year after a sale closes.

At the same time, Cope says, it reduces the liability of sellers for unforeseen appliance or other failures that buyers may experience during the first months of ownership and then expect sellers to make good.

Many home warranties protect the seller by offering some benefits during the listing period on the house, then kick in for a full year of coverage for the buyer when the sale closes.

However, sellers aren't the only ones who can purchase a home warranty - buyers have the option of paying for the warranty if a seller won't. The annual premium usually ranges from $250 to $425, depending on the company and the desired level of coverage, although premiums for houses bigger than 5,000 square feet can run substantially higher. Home warranty companies also require a set fee for service calls - the equivalent of a copay - that can be as little as $35 or as much as $65 or more, depending on the contract.

Homeowners who aren't buying or selling houses also may enroll in home warranty programs. Premiums may run higher than the discounted deals offered through real estate agents, although many companies offer "instant rebates" to customers who sign up and pay via the Internet, making the cost comparable.

Home warranty policies can be renewed annually; premiums and service fees may increase from one year to the next.

The warranties "give peace of mind if something major goes out, so if you have an older home, or a modern home with lots of mechanical things like spas and hot tubs, it can be a good thing," said Dale Saari, broker at Windermere Florence Real Estate.

"Some cases don't require a warranty if people intend to do a major renovation and completely tear things apart and replace them," Saari said. "People need to figure out how much there is that can go wrong in a house, and then decide if it's worth it to them."

Mike Dewey, assistant service manager at Oldfield's appliance store in Eugene, which does local home warranty work, said service calls from consumers with warranties have picked up substantially in recent years.

Part of the reason may be the increasing cost of purchasing and maintaining homes and appliances, which makes the insurance policies more attractive, Dewey said. But there's also the they-don't-make-it-like-they-used-to factor, particularly related to federal energy-saving requirements.

For example, in order to meet federal energy standards, many refrigerators and freezers now come with smaller compressors, Dewey said.

"They do use a lot less power, but they don't last as long," which makes extended warranties - either on appliance sales or as part of home warranties - much more attractive, he said.

With any extended warranty, customers should be aware of exclusions or limitations on coverage, Dewey said. "There are a lot of exclusions, and people need to realize that the warranties cover 'functional' things, not cosmetics."

Most home warranty companies offer different levels of coverage at different prices. Plans can be as basic as a "kitchen/laundry plan," covering only kitchen appliances, washing machines and dryers, or as elaborate as a "major systems plan" that warrants those appliances plus plumbing, air conditioning, electrical and heating systems, as well as ductwork, garage door opener, ceiling fans and water heater.

The warranty company generally reserves the right to choose whether to repair an appliance or replace it with one of comparable quality and features.

Homeowner Conaghan says she's made full use of the home warranty program since she and her husband, Jim, recently bought a larger home for themselves and their two young children.

"We bought a 1960 house - I've never had a house this old before - so we figured there would be things that might go wrong," Conaghan said. "This time, I had the idea of a home warranty in the back of my mind from the beginning."

Sure enough, in the month since they moved in, Conaghan has called LaDonna Hale at First American Home Buyers Protection - one of several home warranty companies that serve the Lane County Area - four times for service.

Loose wires hanging into a kitchen drawer underneath a cooktop presented a safety problem, which an electrician fixed. Equipment used by floor finishers taxed the home's electrical system, necessitating another visit from an electrical contractor. A continuously running toilet, leaking pipes under a utility sink and a shower connection that squirted nearly as much water back into the wall as into the tub required intervention by a plumber.

Last week, the 20-year-old dishwasher gave out.

"I really hated to call about that, but LaDonna (Hale) said if it couldn't be fixed, First American would replace it with a comparable model," Conaghan said. "I giggled, because the dishwasher is so old, but she said if it had to be replaced, the warranty payment could be used as a credit toward whatever dishwasher we wanted."

After a Wednesday morning service call by an appliance technician, First American decided to replace Conaghan's dishwasher rather than repair it. She could have chosen a replacement black, white or bisque model for a total out-of-pocket cost of $55, but Conaghan decided to pay extra for stainless steel, to match her other new appliances.

Hale, who lives in Eugene, has been covering the area from Salem to Roseburg for First American for six months, "and I love it," she said.

"I call on real estate offices to educate them about home warranties so they can educate their clients, and I help process claims," Hale said. "If something isn't happening as quickly as possible for the customer, I can step in and help get it resolved."

Kevin Simrin, a broker with Re/Max Integrity, said the feedback he's heard about home warranty insurance "has been generally good," but he cautions consumers to do their homework before signing up for any company's plan.

"In many cases, there's basic coverage and extra coverage, and people need to know what they're paying for," Simrin said. "The warranty companies almost always would rather fix something than replace it, so people need to take that into account."

Covered items, fees and copays vary from plan to plan - for example, some companies cover refrigerators under their basic plans while others don't - "so people need to make an educated decision" before enrolling in any insurance plan, he said.

Home owners also need to realize that they can't call their favorite plumber or electrician to make repairs; each warranty company has its own list of technicians who respond to service calls, he said.

TYPICAL HOME REPAIR COSTS

Figures are ranges across the country; actual costs in local areas may vary.

Heating system replacement: $1,100 to $3,500

Plumbing repair: $90 to $2,500

Electrical switch or outlet: $85 to $310

Electrical main service panel: $200 to $4,100

Range, oven replacement: $300 to $2,200

Refrigerator compressor: $350 to $3,100

Dishwasher replacement: $300 to $750

Water heater replacement: $450 to $925

Garage door opener repair: $125 to $310

Garbage disposal replacement: $125 to $250

Air conditioner compressor: $500 to $1,200

Heating thermostat: $125 to $250

Toilet leak repair: $85 to $400

- First American Home Buyers Protection Corporation