Should You Consider Getting a Home Warranty?

Should You Consider Getting a Home Warranty?

As a homeowner, you just never know when you’ll face unexpected and costly repairs for your home.  One way to mitigate the fear of paying big money for things that break before they should, is to consider getting a home warranty. 

Home warranties have gotten a bad rep in the past, but like any warranty or insurance policy, the upfront cost could end up being worth it in the end. You do need to read the fine print and understand the terms and conditions first!

Read on to learn more about the pros and cons of home warranties and whether it’s something that will fit your particular needs and budget.

What is a home warranty?

It’s a policy where your home’s main systems or appliances are covered for repair work. It’s usually purchased through a home warranty company.

A home warranty is different from your homeowner’s insurance or a manufacturer’s warranty on a product. For example:

It may cover the labor to fix a failed part on a product that your manufacturer’s warranty doesn’t.

It may pay for the plumber to fix a broken pipe but not the damage to your home. Your insurance policy would likely be responsible to cover the damage to the home.

A home warranty can work hand-in-hand with other home policies when something goes wrong.

It’s important to keep in mind that a home warranty is different than home insurance.  It’s similar in how car insurance and a car warranty cover different items. Home insurance, like car insurance, covers unforeseen damage and catastrophes, whereas a warranty fixes things that break earlier than they should have.

What are the typical home systems covered and yearly cost?

Policies typically include air conditioning/heating systems, water heater, furnace, plumbing, built-in appliances such as refrigerator or dish washer, and for an additional fee, you can add “extras” such as a swimming pool system.

One year of coverage typically costs $400-750 with a $100 deductible when you make a service call. Be sure to check with the home warranty company on costs and deductibles because they can vary.

Who can purchase a home warranty?

Many home warranties are purchased when you go to settlement, but some warranty companies will allow a warranty to be purchased by a homeowner that is already living in their home. This is a great improvement because previously home warranties could only be purchased by new homebuyers at the time of settlement.

What do consumers need to know before they buy?

It’s very important to read over the fine print of your contract and understand what is covered and what is excluded. Here are some typical actions to be aware of for standard packages:

• Covers repairs on large systems (heating or air conditioning) but does not always cover replacements. Typically, it will help keep your appliances functioning and in working order.
• Won’t cover if breakage is due to poor maintenance by the homeowner; typically covers “normal wear and tear” of an item.
• Excludes certain items – i.e., may cover refrigerator repairs but not the ice maker.
• Doesn’t cover items once they reach a certain time period or beyond its serviceable life (i.e., 20+ years old).
• Doesn’t cover pre-existing conditions. Items need to be properly installed, maintained, and in good working condition when you apply for coverage.
• Doesn’t typically cover roofs and exterior items.

What happens when I need to have something repaired?

A home warranty company requires you to contact them first when something breaks. They will then contact their service providers to send to your home. They will pay the service provider once the claim is approved.

If you call a service provider without contacting them first, the company may not cover the repair.

You do not control who can come to your home to repair an appliance or major system. That can be a major downside to some homeowners, especially if they have to wait a long time for a repair.

If your furnace breaks down during a cold spell, you have to wait for the home warranty company to deal with their subcontractor.

What if something is not covered when I thought it was?

Like any warranty for any other type of purchase, there are times the warranty company can choose not to cover something. That’s why you need to read the fine print carefully!

What do I look for in a home warranty company?

It’s important to find a reputable company that has been highly recommended by others.

• Investigate its long-term history and Better Business Bureau information.
• Compare coverage levels and upgrades to standard packages along with deductibles and service fees.
• Read the fine print in the contract to understand any fees and exclusions.
• Understand how you can cancel a contract.

Of course, a home warranty may be a good idea for some but not necessary for others. That’s why it is important to assess your own home and decide if it would be worth it for you. The claims process can be lengthy, especially for larger fixes, but that can save you money in the long run! I’ve also had clients that have purchased a home warranty and never needed to use it. As a homeowner, you get to make these important decisions, but I’m here to help. I’m always happy to recommend a home warranty company if you’re interested! Just email us at kurrleteam@firsthome.com