Is a Home Warranty Worth It? Cost, Value, and Making the Right Home Warranty Choice
A home warranty is optional coverage a homeowner can purchase to protect the assets within their home. The fact that it’s optional leaves a lot of homeowners asking: Is a home warranty worth it?
What is a Home Warranty?
Despite its name, a home warranty is not a warranty on a home from the manufacturer of the building products or the builder. And, it isn’t insurance either. The “warranty” part of a home warranty is really a misnomer.
A home warranty, otherwise known as a home service contract, is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on the major components of a home, like the air conditioning, plumbing, and electrical systems. A home warranty can also cover major appliances, such as washers and dryers, refrigerators, and swimming pools.
Basic plans provide homeowners with certain coverage, but homeowners can purchase add-on coverage for things like well pumps, septic pumps, guest units, and pool plumbing pipes and wiring, at an additional cost. Not all home warranties are “mix and match,” but some are.
To check the available home warranty companies in your area, enter your zip code to compare home warranty quotes. And, be sure to review what other consumers are saying about home warranties before you buy one.
What Does a Home Warranty Cost and Is a Home Warranty Worth It?
A home warranty costs a few hundred dollars per year, paid up front, or, if the company offers a payment plan, a homeowner can make monthly installment payments. Basic coverage plans range from $350 to $600 a year, which comes out to a monthly payment of around $30 to $50. Add-on coverage can increase the yearly cost of the plan by $100 to $500+ based on the additional coverage options you select.
No matter the type of home warranty plan, homeowners typically pay a service fee ranging from $50 to $75 for each repair job. When a claim gets filed, a service technician will come out to evaluate whether a repair or a replacement is necessary and also what will be covered. It’s important to note: A home warranty is designed to cover items that are in satisfactory, good-working condition and then fail due to normal wear and tear.
Is a Home Warranty Worth It?
Just like renters have a landlord who they can call on when something breaks, a homeowner can rely on a trusted home warranty company much in the same way. Granted they have certain coverage written into their contract, they can pick up the phone and make a claim when something breaks down. Home warranties offer homeowners peace of mind, in addition to repairs and replacements at a fraction of the cost. Since 58 percent of Americans have less than $1,000 in savings, a home warranty is a homeowner safety net when things fall apart.
Let’s face it. Home systems and appliances break down. These breakdowns can be stressful, inconvenient, and, above all, expensive. A new refrigerator can cost anywhere between $350 and $10,000. A front-load washer can cost anywhere between $600 to $2,000. How would Americans cover the cost if multiple home systems or appliances broke down at once?
For example, what happens when a homeowner’s trusty old HVAC unit goes ka-put? Let’s do the math: A brand new HVAC unit costs around $4,000. If the homeowner has been paying $30 a month for home warranty coverage and then only has to pay a one-time $75 service fee to evaluate the HVAC unit, the investment is well worth it.
Read the Fine Print, Make the Call
If you’re considering a home warranty, do this first: Read the contract. The fine print is full of details homeowners need to be aware of, including loopholes and exclusions.
For example, a home warranty policy does not necessarily cover all of the non-mechanical parts of covered items. While things like dishwashers and ovens are usually covered, the door of the dishwasher, knobs, or handles of ovens are not. Though it’s a simple mistake, quite often homeowners will think they have coverage for an item only to realize they don’t when it comes time to fix something.
So, is a home warranty worth it?
The homeowners who successfully utilize their home warranty over the years will enjoy peace of mind and cost savings. They have someone who they can call on, count on, and affordably repair or replace their worn-out systems and appliances. If you’re still unsure if a home warranty is right for you, enter your zip code, find out which home warranty companies service your area, research the company, review their contract details, and make the call. The next time something breaks down in your home, you’ll be glad you did.