Is Home Warranty Worth It?
Maintaining proper maintenance is a skill we slowly develop as house owners. Maintenance is an utterly unavoidable agenda whether you own or rent any property. On many occasions, appliances malfunction, faucets leak, and air conditioners might stop in the middle of a heatwave. Some people acquire house warranties to cover the expense of typical home repairs rather than depleting their savings.
However, how efficient are these warranties? We are here to share our insights on what a house warranty is, when it should be purchased, whether or not it is a good deal for you, and what the finest home warranty providers have to offer. This is your complete guide to making your decision on purchasing a home warranty.
A house warranty is not the same as home insurance, which protects against severe risks like fires, storms, property crimes, and some forms of water damage that might affect the entire property or the homeowner's personal belongings.
A house warranty is an agreement between an owner and a house insurance provider that provides subsidized replacement and repair service on the critical components of a home, like a heater, HVAC, plumbing, and power components. A house warranty may also cover large equipment such as washing machines, dryers, fridges, and pools.
What is a Home Warranty?
Home warranty plans are unique plans for each household. They offer you coverage against damages and repair costs that you are not prepared for. Many conventional house warranty policies cover all electrical parts, heating, plumbing, air conditioning systems, and various other products. Customers can also include additional coverage for goods like a stand-alone fridge, a well-pump, a pool, or even a spa, along with essential items in your house.
How does Home Warranty Work?
To begin with, the process may require a home inspection before signing up for a house warranty to ensure that systems are properly installed and maintained. In addition, the home inspection report reveals which appliances are approaching the end of their useful life, allowing both parties to understand better which items require the greatest care.
Once you have purchased the warranty, you can claim or submit a claim online after coverage begins and a covered item stops operating. The company will send a pre-authorized service provider to your house to examine the problem within 48 hours when they have validated the claim.
The expert will repair it as soon as feasible if it is possible. If a replacement is required, the technician sets up a follow-up appointment to finish the job.
Homeowners Insurance vs. Home Warranties
A house warranty is not the same as home insurance. Both plans involve sheltering your house, but they cover different things. For example, a house warranty protects you financially if the home's systems or appliances stop operating due to regular wear and tear. In contrast, homeowners insurance protects you financially if your home is damaged by a catastrophic event like a natural catastrophe or fire.
To be more clear, if lightning strikes your home and the subsequent electrical surge fries your refrigerator, you should call your homeowner's insurance company for coverage. If your refrigerator has to be repaired due to regular wear and tear, you should call your home warranty company.
Homeowners insurance is mandatory, but a house warranty depends entirely on the owner's preference. However, investing in a home warranty can save you money in the long run by reducing the cost of unexpected repairs and replacements.
Appliance extended warranty vs. Home warranties
Home appliances are unpredictable supplies. They can stop working at any moment. You can deal with such occurrences in three ways. First, there are extended warranties for your appliance. Or a house warranty expressly for appliances. Lastly, you can pay for repairs and replacements by yourself.
Extended warranties are acquired before the manufacturer's warranty on a particular appliance expires. This insurance will only cover the appliance for which it was purchased. And its conditions will be comparable to those of the original manufacturer's warranty. It is available from the appliance store, the manufacturer, or a third-party vendor.
On the other hand, a home warranty is a one-time purchase that covers a variety of key household equipment, such as bundled appliances, bundled built-in systems, or a complete combination plan. As opposed to an extended warranty, a house warranty provides more comprehensive coverage by covering a variety of objects and circumstances.
What does a home warranty cover?
A home warranty generally covers all systems and equipment in a household. Starting from air conditioning, kitchen appliances such as the refrigerator, oven, dishwasher, and built-in microwave are cooled, heated, and powered by electricity, an opener for garage doors, a Laundry machine and dryer, and whatnot.
The top home warranty companies offer two or more tiers of warranty policies to choose from. Appliance plans, system plans, and combined plans are the most prevalent. In most cases, providers offer customers coverage for devices like a central vacuum or a pool pump. These are called add-on benefits.
How Much Does a Home Warranty Cost?
Consider the fees associated with these protection options before purchasing a house warranty. There are three types of costs.
Premium: The monthly or yearly premium you pay to the home warranty business is the premium. The premium cost varies depending on the coverage you choose. A house warranty typically costs between $300 and $600 each year.
Service Charge: When a service technician conducts a repair or replacement, you are charged a service fee after filing a claim. It works similar to a deductible in a car insurance policy. Some home warranty providers, such as American Home Shield or America's First Choice Home Club, let you pick between a greater service cost and a cheaper premium. The average service rate ranges from $75 to $125.
Other expenses:— If clients quit their home warranty plan after the first 30 days of coverage, most firms will charge a $75 cancellation fee.
An annual house warranty costs several hundred dollars, paid in advance. The plan's cost varies according to the kind of property (single-family detached, condominium, townhouse, or duplex) and if the homeowner gets a primary or extended plan.
Typically, the cost doesn't really vary with the property's age unless the home is brand-new, which increases the price of coverage. In most circumstances, the home's square footage does not affect the price unless its property is over 5,000 square feet larger. Generally, separate properties, such as guesthouses, are not protected by the general protocol but can be insured for an extra price. Nevertheless, a garage is included as an essential warranty provision.
On top of an annual subscription, home warranties impose a customer call fee of between $60 and $100 whenever a warranty holder wants a service provider to inspect an issue. If the situation necessitates the visit of more than one type of contractor, the owner may be responsible for each service cost.
A house warranty does not guarantee that the homeowner will not have to pay for home repairs. The security will not protect some issues because the owner did not acquire coverage or because the insurance policy company does not offer coverage. Additionally, house warranties typically do not cover improperly maintained components. In addition, if the warranty provider refuses a claim, the client will still be liable for the service charge and repair costs.
Are Home Warranties Too Pricey?
While a home warranty comes with an annual fee, the advantages might surpass the repair expenses. The home warranty can be repaired with just one service visit each year.
The average cost of repairing a water heater, for example, is $546. So if you pay a $300 warranty premium and a $100 service cost for a water heater repair, there will still be $146 leftover to go towards other household bills.
Most home warranty plans include coverage limits for various home systems and appliances. For example, a refrigerator's normal coverage maximum is $1,305, while the average cost of a new refrigerator is $1,925. Therefore, the home warranty would cover $1,305 of the new appliance and be responsible for the remaining $620, which is a great deal given that you are receiving a new appliance for a third of the original cost.
Perks of a Home Warranty
Home warranties are often discussed when a home is sold or bought. A home warranty service can give a buyer peace of mind if they don't know much about how well the home's parts have been taken care of or how well the house was built within the case of new construction. Insuranceinsurance can also help people who just bought a home with all their savings and would like to avoid any high costs shortly.
When selling a home, giving the purchaser a paid-up, one-year warranty may protect the seller from complaints from the buyer about any problems or flaws found after the sale closes. But showing a home warranty doesn't mean the seller doesn't have to tell the buyer about it.
We have aligned some of the brilliant perks of having a home warranty here.
- A home warranty assures you that if a covered system fails, you will be responsible for the whole cost of repair or replacement.
- You will have access to a network of professional, pre-approved service providers, which will save your time and effort in looking for a reputable local contractor.
- When you need servicing for an appliance or home system, having only one phone number or website to call is convenient and simple.
Top-rated home warranty providers
You can save unforeseen expenditures with a home warranty. Here are some of the best companies in the business.
Choice Home Warranty
Choice Home Warranty is the best overall home warranty policy. As a homeowner, you have almost definitely been exposed to confusing language in service contracts or company policies. Choice Home Warranty goes to great measures to make its policies as plain and straightforward as possible. Choice Home Warranty has over 13 years of expertise in the industry and is known for its exceptional customer care. Choice provides an easy claims procedure and comprehensive coverage for all your home appliances and systems, so you cannot go wrong.
Or read our complete review of Choice Home Warranty
Select Home Warranty
Select Home Warranty is a low-cost company that offers three distinct coverage options. One of the unusual features is free roof leak coverage, which most home warranty companies do not offer. Furthermore, discounts are given regularly to keep monthly payments affordable. Finally, it comes with a $75 cancellation fee and rather limited coverage. On the other hand, select is one of our top three selections due to its extensive coverage and reasonable pricing.
Or read our complete review of Select Home Warranty
Amerian Home Shield
American Home Shield has a solid reputation for offering excellent customer service 24 hours a day, seven days a week, and has over 50 years of experience in the industry. AHS also offers three service charge options, giving you greater flexibility in paying your monthly premium.
Or read our complete review of American Home Shield
The Home Service Club
The Home Service Club is a well-known home warranty company that offers two different options: appliances and systems. The company's extensive warranties cover several things, including repairs and replacements. The Home Service Club's major flaw is its service costs significantly more than competing firms. Home Service charges $95, which is more than the regular rate of $75.
Or read our complete review of The Home Service Club
Final Thoughts
Buying a home warranty is a smart move to avoid any sort of disturbances with the house systems or appliances. It is like a safety net. However, while a home warranty offers financial aid, it also requires a handsome premium. So, it is your call to set the right priority.
An insurance policy is not really the best way to protect against risks and hidden costs. If the seller wants to offer you one, it certainly won't hurt. Before buying one, you should read the contract carefully and consider whether or not the insurance is inclined to pay off.
Homeowners or buyers who would feel comfortable with a home warranty and sellers who would like to offer a protection plan to a buyer should do careful research and find a reputable insurance policy business that uses reputable agencies and will pay for its valid maintenance when they are required.
