Home warranties are designed to soften the blow of replacing systems and appliances that fail from normal wear and tear. They’re a common choice for people who are selling their homes and don’t have manufacturers’ warranty protection, or for buyers who want to reduce their out-of pocket repair costs after they move in.
What Does It Cover?
What do home warranties cover? Home warranties cover the servicing, repair and replacement of your home’s appliances and systems. They don’t cover everything but can offer you a financial cushion to help pay for unexpected repairs and replacements.
The cost of home warranty plans varies, depending on what you want covered and where you live. Most providers charge an annual premium and a service fee when you have to call on your plan.
You can usually customize your home warranty plan to include add-ons such as well pump coverage and roof leak coverage. It’s important to choose a home warranty provider that offers a clear contract with transparent terms and conditions, clauses and exclusions to avoid misunderstandings and costly surprises down the road.
Do You Need It?
Home warranties do not replace homeowners insurance, which protects the homeowner against sudden damage from perils like fire and water. However, they do offer peace of mind to new homeowners and can be an asset if the seller covers the cost as part of the home purchase.
If you decide to buy a home warranty, look at the coverage limits carefully. For instance, whether the total amount paid for repairs or replacement is aggregated across all covered items (as most plans do) or each item has its own limit (as some companies allow).
Also look at the company’s reputation. You can do this by checking out the Better Business Bureau website and typing in the company’s name with “complaints” to see what pops up. Finally, consider the price. The yearly premium for the plan can range from a few hundred dollars to over $1,000, depending on how much you get covered. However, some companies let you pay monthly instead of annually to make it slightly more affordable.
How Much Will It Cost?
Home warranties may seem expensive on their face, but they’re generally worth the annual premium. The money you pay for a warranty allows you to budget for repairs, which may save you from overspending on unplanned expenses in the future.
Home warranty costs vary, and each plan has different coverage for appliances and systems. Most plans include a service fee, which you pay to a repair technician when you report a problem. A service fee can range from $50 to $150 per visit.
It’s important to compare home warranty companies’ pricing options before you make a final decision. Check out a company’s reputation by going to the Better Business Bureau website and typing its name into a search engine. You can also look at reviews and complaints from other homeowners. Some contracts also have “limits” on certain items, such as an electrical system, which means the company won’t cover any additional costs beyond a set dollar amount.
Do You Want It?
In addition to the peace of mind that comes from knowing your appliances and home systems are covered against breakdowns, a warranty may help ease financial burdens. However, it’s important to keep in mind that warranties don’t cover every possible issue. For instance, nicks and scratches to the refrigerator or dishwasher that don’t affect operation are considered cosmetic and typically not covered by most plans. Also, even if you are diligent with your maintenance schedule and have a savings account in case of emergencies, it may still make sense to rely on paying an annual premium for a home warranty contract that could end up saving a lot of stress.
To find a home warranty company that’s right for you, research each option on price, coverage and reputation. Look for a provider that offers sample contracts that you can look over to get a better idea of what your policy covers.
