Has anyone ever heard of or used a 2-10 Homeowner’s Warranty? If so, give me your thoughts? Tell me what the

The 2-10 part means: One Year Workmanship, Two Year Systems and Ten Year Structural Warranty.

The Homeowners warranty is one of many gimmicks (and I do mean gimmicks) used to sell homes. Let’s be reasonable, here. In a new home, what can go wrong? The heating, air conditioning and appliances can go wrong, and they are already covered by their own warranties. The other major concerns are bad roofing and leaky basements. Bad roofing can be fixed, but leaky basements often can NOT be fixed if the water is coming in under pressure from the ground. The other problems are electrical and plumbing -bad connections. These are “punch list” items that the contractor fixes (or should fix) as they are discovered.

A warranty has good and bad points, but let’s keep this simple. What it does is LIMIT your recovery rights and options, if something goes wrong, ONLY to whatever the warranty lets you do. It takes the financial risk OFF the contractor and puts it ON an insurance company. And get this, from their web site:

“If a covered system breaks down, you call one toll-free number for any covered item and we will dispatch a contractor to make the repair. You pay the contractor a small deductible…”

Deductible??? Whoa, whoa, whoa! If that covered system happens to be a new refrigerator that goes on the blink, chances are the warranty on the reefer itself provides repair at no cost whatsoever!

The warranty might make more sense in an older home with appliances that are also old -but new stuff? And of course, you’re going to use the warranty on the appliance, which costs you nothing and which also means the home warranty people won’t see many claims -and then the coverage goes away after 2 years unless your renew it.

The best thing is to READ that puppy and understand what it does. As an example, here’s what the web site says about coverage for structural defects:

“A structural defect is defined as actual physical damage to the designated load-bearing elements of the home caused by failure of such load-bearing elements which affects their load-bearing functions to the extend that the home becomes UNSAFE, UNSANITARY OR OTHERWISE UNLIVABLE. This is coverage for catastrophic failure of load-bearing elements as defined in the warranty booklet.” (Emphasis mine).

Sounds good, right? Wrong. Let’s take a closer look:

“…actual physical damage to the designated load-bearing elements of the home caused by failure of such load-bearing elements…”

In other words, damage to anything else is NOT covered. Thus, if a big beam under the floor cracks and self-destructs, the coverage applies ONLY to the beam -not the flooring, walls, roof or anything else. And what does a beam cost? Maybe $ 100.00. Also, not just ANY load bearing element is covered ONLY the “designated” ones -whatever THAT means. Is there a list of them; maybe another “definition” somewhere? Who knows?!

“…to the extend…” Do they mean, “…to the extent…” with a letter “t” at the end? The material above is from the website, copied right smack dab to this answer. OK, OK, so maybe the person who did the web site made the typo. But no one at 2-10 caught it, did they? A bad sign.

How about this little gem:

“…the home becomes UNSAFE, UNSANITARY OR OTHERWISE UNLIVABLE. This is coverage for catastrophic failure…”

So now, the coverage is not only limited to the designated load bearing elements, but also to a situation which makes your place unsafe, unsanitary or unlivable. Ridiculous! The silly part here is that you don’t need a warranty to get coverage of catastrophic failure -you’ve got insurance for that- and even if you didn’t, what do you think the courts would say to any contractor who denied liability for the defect?

The passage above also refers to a “warranty booklet,” which, not suprisingly, is nowhere to be found on the website, which is: http://www.2-10.com. The site is slow and tells you very little. A bad sign.

So, to wrap this all up, if you’re getting the warranty just as “part of the deal,” then fine. Just make sure you don’t sign ANYTHING that compells you to give up any rights of recovery you would otherwise have. AND, if they ask YOU to pay for the warranty directly, I wouldn’t do it.

My sources: years in the insurance and real estate business. We sold plenty of warranty programs -but didn’t have the stomach to present THIS turkey on a new home; only on older ones which might reasonably be expected to stay on the market a long time because of age of appliances, systems, etc.

Buyer -beware.