Renters have a few advantages over homeowners. When you own your own home, you are solely responsible for repairs and maintenance, which can get really expensive. One thing that homeowners might consider is purchasing a home warranty- but are home warranties really worth it? Let’s look at the facts so that you can make an informed decision that is good for your home and for your wallet.
How Much Do Home Warranties Cost?
Home warranties aren’t cheap. If you are considering a policy you should plan on paying somewhere in the range of $300 to $600 each year. Of course, there are some policies that are less and a few that are quite a bit more expensive. In addition to your annual premium, you will also have to pay a deductible each time you need a repair. Once again, the amount of your deductible will vary based on the policy you choose. Generally you can expect to pay between $50 and $100 per service call.
What Do Home Warranties Cover?
While home warranties aren’t cheap, they do offer quite a bit of protection to homeowners. Generally policies cover all of your home’s major appliances including the fridge, the dishwasher and the heater. Most policies also cover your electrical and your plumbing. Some policies allow you to add in additional appliances like the washer or dryer. When it comes to policies, no two are alike, so make sure that you know what type of coverage you are considering. Every policy is different.
How Do Home Warranties Work?
If you have a home warranty in place and something breaks down, you will contact your home warranty company first. They will then arrange for repair or replacement of your damaged item. All you pay is the deductible and the remainder of the repairs will be handled at no charge. This can make repairs very easy and stress-free. You won’t have to worry about finding a great plumber, electrician and oven repairman, the warranty company will be your call when something goes wrong. Bear in mind that if you have multiple items break down, that you will have to pay your deductible twice even if you only have one service call.
What Don’t Warranties Cover?
Home warranties won’t cover everything in your house. Each policy varies, but generally they do not cover pre-existing problems. They also won’t cover items that are damaged due to inappropriate use. This means that if you throw a wild party at your house and break the dishwasher in the process, you won’t be covered. If you attempt a repair and do not succeed, you can also void your warranty. Each policy is different, but most contain various loopholes and restrictions that your home warranty provider can use to keep from paying for repairs.
Are Home Warranties Worth the Expense?
Home warranties can be a great way to protect your finances. Think about it, if your dishwasher breaks down and needs to be replaced, it will cost you at least $300. If your home warranty costs $400 per year and you have a $50 deductible, you have almost paid for your policy in just one repair, and the dishwasher is one of the least expensive major appliances in your home.
On the other hand if you have a newer home and newer appliances, you might not really get the value from your home warranty. If nothing breaks down, you are out the yearly premium and you receive nothing in return. Also since policies can have loopholes, you may find that your policy excludes your damage.
Another thing to keep in mind is that home warranty companies will always choose to repair if possible. They know that replacing items is expensive and if there is any way to keep your 20 year old heater working, they will patch it back together. Since you have to pay your deductible each time a repair is needed, there may come a time that it is cheaper to replace an item yourself rather than calling out the home warranty company again.
Tips for Shopping for Policies
If you are planning on purchasing a home warranty, here are a few tips that will help protect you and your finances.
- Read Your Policy Carefully- Since home warranty policies can be filled with loopholes and exceptions, make sure that you read the entire policy carefully. Before committing to a plan you should know which appliances are covered, what you have to pay and what your responsibilities are in regards to maintenance of your appliances.
- Shop Around- Don’t turn to the first company that you find. Look at several top companies and compare. It is a good idea to look at several aspects of each company when comparing. If you only look at price or coverage you won’t get a clear picture of which company is the best for you.
- Choose Reputable Companies- There have been cases of home warranty companies refusing to make repairs and ripping off their clients. Always make sure that you check out the companies that you are considering. The Better Business Bureau is a great place to check providers for complaints.
- Use Your Policy- If you have a home warranty, make sure that you use it. Don’t attempt repairs on your own or replace equipment without first checking with your home warranty company. If you pay for the policy, you need to make sure that you use it.
A home warranty can be a great choice for protecting your home and your finances if you are a homeowner. When appliances fail, it can be very expensive to replace them. With a home warranty, you don’t have to worry about not being able to afford important repairs. However, they aren’t for everyone or every situation.
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