Home Warranty Insurance

Securing a home improvement loan can be more challenging than some homeowners would suppose. Whereas home mortgages are typically backed fully by the value of the home are issued for, it can be more difficult to justify loans aimed at financing home improvement or repair in this way. Lenders understandably want to protect their investments, and they have a variety of ways of helping to improve the chances of their outlays being repaid.

One of these is by requiring an insurance backed guarantee on the work that any borrower proposes to have done. By establishing a definite, contractual requirement that home improvement or repair work will be properly conducted and overseen, they can help to boost the odds that a home will not lose value as a result. That can greatly improve the prospects of a borrower repaying money that was lent, helping to keep lenders' books in good shape along with the homes that receive work.

Because of the attractiveness and desirability of this arrangement, a wide range of home warranty companies offer just such coverage. This kind of home warranty insurance is quite specialized compared to the policies that most homeowners are already familiar with, though, so it comes with some caveats that may seem unusual at first.

One of these is that particular insurers will generally only be willing to offer coverage for work done by a selected list of contractors. Instead of approaching every prospective policy on a case-by-case basis, these insurers normally work closely with home repair and improvement specialists to find those who are most capable of doing high quality work.

That allows them to keep premiums down, an important consideration when the overall cost of a home improvement project is taken into account. The best home warranty companies will also insist that the contractors that they endorse receive regular vetting and training, because these requirements are the best way of ensuring that high quality work remains the norm.

Insurers of this kind will also generally have fairly specific requirements as to the nature of the work done. Even if perfectly suited to a particular family's needs, most renovation projects involve some fairly common combinations of work, and insurance backed warranty provider insurers are more likely to be comfortable with such endeavors than with those that are more plainly out of the ordinary. This common sense precaution helps to limit the potential downside that insurers face and rarely poses much of a hurdle in practice.