A home warranty may offer some relief from the stress of buying or selling a home.
So is a home warranty worth the money? The easy answer is…
Maybe. A home warranty can protect you or your home buyer from shelling out extra cash if something goes wrong with an appliance or home system. Then again, there is always the possibility that nothing will go wrong.
What Do Home Warranties Cost?
Home warranties average between $250 and $500 dollars a year for basic coverage, according to realtor.com, and become more costly for extra protection.
What Does A Home Warranty Cover?
Coverage varies with each warranty provider. Many plans include coverage of kitchen appliances such as dishwashers, ovens, ranges and refrigerators. Other home items that may be included are plumbing, sump pumps, water heaters, ceiling and exhaust fans, and heating and electrical components.
Make sure to read all the fine print and know what your plan covers. Here is an example of home warranties from Landmark Home Warranty.
FYI: Home warranties have a deductible or service cost when used, and warranty companies use specific contractors to perform inspections and repairs.
What Are the Benefits?
A home warranty may help put the buyer’s mind at ease and expedite the sale of your home. Sellers of older homes often offer a home warranty to entice buyers.
Home repairs can be incredibly costly. If you have a tight budget and little to no savings, a home warranty can help protect you from unfortunate circumstances. No one wants to spend a bunch of money buying a new home, then find out months later they need to spend thousands on repairs for a vital system.
FYI: Remember to select a warranty that includes the refrigerator. It is often not covered in basic plans.
What Are the Drawbacks?
The drawbacks of home warranties depend on the type of warranty you purchase. Many items won’t be covered for a basic warranty but may be covered in an extended plan. Some home warranty companies are insuring items with a value over $20,0000 dollars for $300 dollars a year, so they don’t cover everything.
Each warranty claim you have will require a deductible. In addition, you will be restricted to using the warranty company’s contactors. Sometimes these contractors are overworked, and your appointment may be pushed back much farther than if you selected and paid for a technician on your own.
Warranty companies take the path of least resistance. This means if they can fix it for $200 dollars they won’t spend $1,000 on replacement.
Homes with newer appliances and systems may already be covered by their manufacturer, so a home warranty may not be useful for these items anyway.
Pre-existing conditions are normally not covered, so make sure to check for a pre-existing conditions clause.
Proper maintenance of warrantied items is required. If you do purchase a warranty, keep repair records handy. Don’t give any company the ammo to deny one of your claims.
Home warranties are not for everyone. If you are a handyman around the house and enjoy repairing items yourself, the value may be not worth the cost. If you’re worried about unexpected repair costs when moving to your new home, a home warranty may be the peace of mind you are looking for.
Every prospective warranty buyer needs to evaluate what their peace of mind is worth. I recommend reading all the fine print on any home warranty before purchase. I would also search for reviews of home warranty companies. Just like any insurance company, they are gambling that your home will not need repairs, and you are gambling that it will.
If you have had an experience with a home warranty company, tell me about it in the comments.