Last updated on April 13th, 2023 at 06:58 pm
A home warranty is a contract between you and an insurance company in which the company agrees to repair or replace any appliances or systems in your home that break down due to normal wear and tear.
What is a home warranty?
Before we get to the pros and cons of a home warranty, we need to understand exactly what exactly we’re referring to. A home warranty is a service contract meant to help homeowners protect their homes from expensive, unforeseen repairs. For a small monthly fee or an annual lump sum, a home warranty covers the repair or replacement of major systems and appliances in the home.
It’s important to note that this is different than your homeowner’s insurance. While most homeowner’s insurance policies cover the structure of the home itself, they typically do not cover the home’s systems and appliances.
A home warranty can be an affordable way to protect your budget from expensive, unplanned repairs.
How do home warranties work?
A home warranty is a service contract that covers the repair or replacement of home systems and appliances that break down due to normal wear and tear. The terms of the contract, including what is covered and for how long, vary by company.
Homeowners pay an annual or monthly premium for the home warranty coverage, plus a service call fee each time they request service. The home warranty company then contracts with pre-screened, licensed, and insured service providers to perform the repairs or replacements.
The Pros and Cons of a Home Warranty
What are the main benefits of a home warranty?
Home warranties are not insurance policies, but are service contracts that home buyers can purchase to protect themselves from expensive, unforeseen repairs. While home warranties are not required, they can offer peace of mind to homeowners, especially those who have just purchased a home or moved into a new home.
When it comes to home warranty prices, you get what you pay for – the more comprehensive the coverage, the higher the price. Home warranties typically cover the major systems in your home such as electrical, heating and cooling, plumbing, and more.
Some home warranty companies also offer coverage for appliances like your dishwasher, refrigerator, oven, washer, and dryer. If one of your covered home systems or appliances breaks down, you can contact the warranty company, and they will send a contractor to your home to make the repairs. You typically will pay a small service fee when the contractor comes to your home.
A home warranty is an affordable way to protect your budget from expensive, unplanned repairs. And, because home warranties are transferable, they can also be a selling point if and when you’re ready to move.
Additional benefits of having a home warranty
Since a home warranty can save you thousands of dollars on unexpected repairs, it can give you peace of mind to know your home is covered. But remember, because home warranty companies aren’t all the same, do your research and compare home warranty companies before choosing one.
Some additional benefits of having a home warranty include:
- 24/7 support – most home warranties offer 24/7 support, so you can call them anytime, day or night, if you have an issue with a covered item in your home.
- Flexible coverage – you can customize your home warranty coverage to fit your needs and budget.
- Discounts on repairs – many home warranty companies offer discounts on repairs and replacements when you use their services.
- Convenient service – having a home warranty means that you don’t have to worry about finding a reputable contractor to make repairs to your home. The home warranty company will take care of everything for you.
If you are considering purchasing a home, you can ask the seller if they are willing to include a home warranty in the purchase price. It could save you a lot of money and hassle down the road.
The drawbacks of a home warranty
Now that we know why we might want to purchase a home warranty, what are the cons of a home warranty? While a home warranty can be a helpful way to budget for unexpected repairs, there are some drawbacks to consider before signing up for one.
First of all, home warranties typically have fairly low coverage limits per item – usually around $500-$1000 – so if you need to replace an expensive appliance like your refrigerator or washing machine, you may still be on the hook for part of the bill. Additionally, home warranties usually have a deductible – often around $100 – that you must pay out-of-pocket before coverage kicks in.
Another point to consider is that home warranty companies may not always use the most reputable or qualified repairmen to service your appliances. In some cases, you might end up waiting weeks for a repairman who never shows up or does shoddy work. And even if you’re happy with the repairman, there’s no guarantee that they’ll be able to fix your appliance – sometimes, they may just replace it with a used or refurbished model — and may not even tell you!
Home warranties have exclusions. Read the “fine print” to make sure you fully understand what’s covered. For example, a home warranty may not cover things like “pre-existing conditions, animal infestations, or recalled products.” Exclusions vary from program to program. That’s why, as with any purchase or contract, make sure you know exactly what you’re paying for.
A home warranty can give you peace of mind and protection against expensive repairs or replacements. It’s important to do your research though to find the best home warranty company that meets your needs and your budget. Be sure to read the fine print so you know what’s covered and what’s not. With all the pros and cons of a home warranty in mind, you’ll be able to make the best decision for your home and family.Are Home Warranties Worth It? The Pros and Cons of a Home Warranty | #home #personalfinance Click To Tweet
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