Is a Home Warranty Right for You?

Home Warranty Pros and Cons

A home warranty offers some peace of mind regarding inevitable repairs and maintenance on your property. These contracts can cover various things, from electrical and plumbing work to appliances and HVAC repairs. However, finding the right policy can be overwhelming, particularly if you are a first-time homeowner.

According to the National Association of Realtors, a home warranty is “a service contract, normally for one year, which helps protect homeowners against the cost of unexpected covered repairs or replacement on their major systems and appliances that break down due to normal wear and tear. Coverage is for systems and appliances in good working order at the start of the contract.”

In a nutshell, you insure critical systems in the home, and should something go wrong with those systems, the insurance company covers the cost of repairs. And it’s true, a home warranty can be exceptionally valuable, especially in the first year of homeownership, when you’re still getting a feel for your home’s overall health and maintenance status.

Home Warranty Plans average $350 to $600 annually for basic home warranty coverage. In addition to the annual premium, homeowners pay service charges (also referred to as a deductible) for each claim. This fee ranges from $75 to $100 for each repair or replacement.

Sellers often offer a home warranty to ease buyers’ concerns over their first year in the home. A warranty can be a competitive advantage if a buyer is looking at two comparable homes.

But as with all insurance policies, the fine print matters. When researching home warranties, you must know what the policy covers and how the insurance company honors claims. The home warranty can be a massive cost saving for big-ticket items like heating and cooling systems, often reducing out-of-pocket expenses to less than 10%. However, with smaller appliances and simple repairs, the deductible/service fee can cost as much as the repair would.

You should also be aware that having a home warranty isn’t required on certain home features. For instance, the home warranty coverage may be excessive if you already have a dishwasher or water heater under the manufacturer’s warranty. However, the warranty can be worth the investment if you have major systems with considerable age.

Be aware of the warranty terms when it comes to maintenance and neglect. Home warranty companies occasionally try to get out of paying for repairs or replacements by claiming you haven’t kept up with routine maintenance issues. Understanding how the insurance company justifies these claims ensures you don’t get caught in these technicalities.

Check with the insurance company for a list of providers in your area. Many claims are ’emergencies,’ and you will want to ensure they have service contractors ready to take care of your needs quickly.

Insurance is always complicated, but don’t hesitate to investigate a home warranty if you’d like protection from major, catastrophic repairs. With a bit of diligence, you can get the coverage you need. If you have any questions about where to obtain home warranty quotes, contact me today.

Dena & Dave Plane
928-830-6976