Q: We looked at a home with our Realtor. She suggested if we write a contract to buy the house we should ask the seller to provide a home warranty. Why and what is a home warranty?

A: A home warranty is an insurance policy that may cover part of the repair cost if certain systems in the house fail and certain criteria are met for that repair. A warranty may be provided by the seller while the house is for sale to add to the property's appeal, especially for first-time buyers and older houses.

A buyer may ask the seller to provide a warranty as a condition of sale or a buyer can purchase the product themselves after closing. Many of the companies allow a buyer to purchase their product any time in the first year after closing on the house purchase.

There are about as many different home warranty companies out there as there are fingers on your hand, or more. Each of their policies varies in cost, what is covered, and under what circumstances coverage applies. As with any insurance policy or contract, both of which a home warranty is, you should always read it cover to cover. If there is verbiage that sounds ambiguous or you do not understand, I suggest you consult an attorney or decline to participate in the warranty.

For a single family house, typical prices may be $319-$399 depending on the extent of coverage. The term of the basic policy is typically 13 or 14 months. A condo policy can be had for about $245 from many companies.

As an example of what may or may not be covered on any given warranty policy, I will reference the policy offered by the seller when my wife and I purchased a house earlier this year. The policy said it covers ONLY mechanical systems. We purchased in winter so the swamp cooler on the roof was drained. Come springtime, we found one of the coolers leaked — NOT covered because they said it was “not within the box of the house.” We had a pressure tank on the hot water heater spring a leak on a Sunday night. A plumber came out first thing Monday morning without us consulting the warranty language — NOT covered because we did not have prior authorization and did not use one of the company's two approved local plumbing contractors.

Almost all homebuyers purchase homeowners' insurance at the time they buy the house. That insurance covers many of the typical problems that may also be covered by a home warranty; so in a way it is a duplication of insurance.

Do I recommend a home warranty? I often say to a buyer: “If you are the kind of person who buys all the extra insurance they want to tack on at the airport rental car desk, maybe you're the type to want to buy a home warranty.”

If you tell the car rental clerk that your auto insurance will cover you and you want nothing more, you are probably not a candidate for a home warranty. It's another one of those situations where, given what you have read here, and maybe some research on the Internet, you should decide.

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Doug Van Etten is an associate broker at Keller Williams Colorado West Realty. He has been helping families buy and sell their homes since the early 1990s.

GOT A QUESTION? Email your real estate-related questions to douglasvanetten@gmail.com, or call 970-433-4312.