One of the biggest shifts that happens when you go from renting to owning a home is that you’re responsible for the maintenance and upkeep. If the dishwasher dies or your water heater goes out, you’ll have to foot the bill and get those appliances fixed.
That’s why for many people, investing in a home warranty service is tempting. You pay a monthly fee and if something breaks, the home warranty company pays to fix it for you.
But is a home warranty worth the price tag? That really depends on the company you end up going with and your service contract. If you do your research, then paying for a home warranty could be worth it.
If not, you could end up wasting a lot of money. Let’s look at how you can recognize the difference.
A Closer Look at Home Warranties and How They Work
A home warranty is a service that pays to cover the cost of repairs if an appliance or system in your home breaks. The specific items covered by home warranty companies can vary, but most home warranties cover the following appliances and major home systems:
- Dishwasher
- Washer and dryer
- Oven
- Refrigerator
- Electrical systems
- HVAC
- Plumbing systems
If you choose to buy a home warranty, you’ll pay either a monthly or annual premium. Then, if an appliance or system breaks, you’ll contact the home warranty company to have them send a technician to your home.
The technician will either repair the item themselves or recommend that the item be replaced altogether. As long as your premium is up-to-date, you won’t be responsible for paying anything more than a one-time service call fee.
Breaking Down the Costs of a Home Warranty
The total cost for a home warranty can vary depending on the size of your home, where you live, and the type of coverage you want. But according to Consumer Affairs, the average costs range between $300-$600 annually.
Or, if you prefer to pay monthly, you can expect to pay between $25-$50 per month. You also have to pay a service fee that typically ranges between $50-$100 whenever you call for home repairs. However, it could end up costing you more if you want enhanced coverage for a pool or septic system.
Are home warranties worth it?
Many homeowners purchase home warranties because of the added security they provide. Nobody likes the thought of unexpectedly having to pay thousands of dollars for a damaged roof or broken appliance. A home warranty will often pay for itself if even one major appliance breaks down.
However, a home warranty is only worthwhile if you partner with the right company. Many homeowners have paid the monthly or annual fee for years. But then, when an appliance or system breaks, they realize the contract terms don’t require the home warranty company to pay for all of it.
So if you’re interested in getting a home warranty, make sure you do your homework first. Contact several home warranty companies about their plan coverage before selecting one. And check sites like Consumer Affairs and the Better Business Bureau to find out what kind of experiences other customers have had with that company.
Pros and Cons of Home Warranties
Let’s look at some of the biggest pros and cons of home warranties.
Pros
- Peace of mind: If you live in an older home with dated appliances, purchasing a home warranty can provide some much-needed peace of mind. This is especially true for individuals who don’t have a substantial emergency fund to cover unexpected expenses.
- Coverage: Home warranties can cover most major systems and appliances, such as heating and cooling systems, plumbing and electrical systems, as well as refrigerators, ovens, and dishwashers.
- Potential savings: If one major appliance or system breaks, you’re going to be happy you have a home warranty. Your annual premium will be more than covered by the cost of repairs.
- Trusted technician: For many people, it’s challenging to find a contractor or technician you like. Home warranty companies will often take care of this for you and provide you with a licensed and trustworthy technician.
- Flexibility: Home warranties are flexible and can be customized to meet the needs of the homeowner.
Cons
- Coverage limits: Most home warranties do come with coverage limits. That means if an appliance breaks and the cost to fix it exceeds your coverage limits, you’ll be responsible for paying the difference.
- Claims could be denied: Due to the fine print in the home warranty contract, it’s possible your claim could be denied altogether. For instance, some home warranty companies state that they don’t have to pay to fix an appliance that hasn’t been properly maintained.
- Limited control: If an appliance breaks, the technician your home warranty provider sends out will determine whether it can be fixed or if it should be replaced. In all likelihood, you’ll have very little say in that decision. And if the company does end up replacing it, you won’t get to choose the make and model of your new appliance.
How to Choose a Home Warranty
Before deciding whether to purchase a home warranty, it’s wise to consider a cost-benefit analysis. Compare the average cost of replacing appliances to the annual premium and see if it aligns with your budget.
Additionally, thoroughly reviewing the terms and conditions is crucial. Look for any fine print that could disqualify you from coverage, and choose a reputable company such as Choice Home Warranty or Advanced Home Warranty that transparently lists what their plans cover.
Finally, be mindful of the coverage limits. If the repairs exceed the limit, you’ll have to pay the difference. Consider this as part of your overall evaluation in determining if a home warranty is the right choice for you.
When a Home Warranty May Not Be Worth It
To determine whether you need a home warranty, it’s essential to consider your expectations for appliance and system breakdowns. If your newly built home already has manufacturer’s coverage for its appliances and systems, a home warranty may not add value.
Additionally, if you have the financial resources to handle repairs without a warranty, bypassing the coverage could be a more financially sound decision. Lastly, if you are unable to wait for a warranty company to send a technician, the hassle may not be worth it. Consider all these factors to determine if getting a home warranty is right for you.
Bottom Line
A home warranty could be a good choice due to the peace of mind it can provide homeowners. Just make sure to research the company first and check its rating with the BBB. There are plenty of options available to you, so shop around and consider all of your options first.
Frequently Asked Questions
Is a home warranty the same thing as homeowners insurance?
No, homeowners insurance policies cover damages to your home. For instance, if your home were damaged in a flood or fire, your homeowners insurance would pay for the repairs.
Home insurance doesn’t cover normal wear and tear on your home’s major systems, so purchasing a home warranty might be a good idea. A home warranty covers problems with your appliances and systems.
What does a home warranty cover?
A home warranty typically covers major appliances like your dishwasher, washer and dryer, oven, and refrigerator. It will also often cover major systems like your HVAC and plumbing. Things like a sprinkler system, pool, and spa will not usually be included in the coverage.
How long does a policy last for?
The duration of home warranty coverage can vary among providers. Typically, home warranty policies are valid for one year, but some providers offer longer options of up to three years. During the policy period, homeowners can make use of repair and replacement coverage for eligible home systems and appliances.
When the policy expires, it’s time to evaluate the options of renewal or purchasing a new policy. Renewing a home warranty policy is typically a simple process that involves extending the coverage for an additional year or two.
How do I find the best home warranty for my needs?
It’s important to compare home warranty providers to find the right coverage for your needs. When shopping for a home warranty, consider the following factors:
- Coverage: Ensure the warranty covers all necessary systems and appliances, as well as any additional needs specific to your home.
- Cost: Evaluate the cost of different warranties to get the most cost-effective solution.
- Customer service: Assess the company’s responsiveness to customer inquiries and concerns by reading customer reviews.
- Flexibility: Seek a warranty with coverage options that can be adapted to your home.
- Reputation: Ensure the reliability and trustworthiness of the company through researching its reputation.
Look for home warranty providers with a good reputation that offer additional benefits such as discounts and free consultations.
How do I file a claim with my home warranty?
To initiate a claim, reach out to your home warranty company and provide them information about the problem. The company will then schedule a service professional to examine and fix the item that is covered under the warranty.
How long does it take for a home warranty claim to be processed?
The time it takes to process a home warranty claim can differ based on the claim’s type and the provider. Usually, the company will dispatch a technician for an inspection of the covered item within a few days after the claim is made.
Are there any additional fees for using a home warranty?
Yes, in addition to the annual cost of the home warranty, you may be charged a service fee for each repair. Service fees are typically around $50-$100.
