Written in Partnership with Amir Bakian
Home warranties provide financial protection in case your home’s systems and appliances break down due to normal wear and tear. They can save homeowners thousands of dollars and stress.
But are they worth it? It depends on a number of factors. This article will help you decide if a home warranty makes sense for your situation.
Coverage
A home extended warranty can cover appliances and systems that break down due to normal wear and tear. It can save a homeowner money by providing coverage for service, repair and sometimes replacement costs.
When a system or appliance breaks down, homeowners can file a claim with the home warranty company to have a licensed contractor dispatched to the house for inspection and repairs. Depending on the company, homeowners might be able to choose their own service provider or the home warranty company will assign one from its network.
It’s important to review the details of each home warranty plan to ensure that it covers the system or appliance you need protected. For example, some home warranties don’t cover exterior pipes and sewer lines unless they are specifically included in the policy. Additionally, a home warranty won’t cover damage or loss caused by natural disasters, which is why homeowners should have homeowners insurance for that protection.
Exclusions
While home warranties can help protect against unforeseen repair bills, there are some limitations to these contracts. Most providers offer a list of exclusions that are listed in the contract, and it’s important to review these carefully.
Home warranty companies typically do not cover systems and appliances that have been damaged by poor maintenance, abuse or misuse. Additionally, they are not responsible for damage caused by acts of nature or natural disasters, as these issues remain the responsibility of homeowners or insurance policies.
Purchasing a home warranty may make sense for new homeowners, especially first time buyers who have limited knowledge of how well the house has been maintained or aren’t sure how to find contractors for repairs and replacements. In addition, a home warranty can provide financial protection against high out-of-pocket expenses and convenience through its streamlined process and access to qualified service providers. However, these services are not perfect and do have some downsides, such as requiring a service call fee to open a claim and limits on the make or model of a replacement appliance.
Deductibles
Home warranties are similar to insurance policies. They cover failures of appliances
and systems, but not everything. They can deny coverage if the company finds that an appliance or system broke down due to improper maintenance.
Home warranty companies usually have a service fee or deductible that must be paid when making a claim. This helps reduce frivolous claims and lowers overall business costs for the home warranty provider. This, in turn, can lead to reduced premiums for homeowners.
Choosing the right deductible depends on the homeowner’s risk tolerance and budget, as well as the age of the appliances or systems in the house. It’s also important to know what specific items are covered by the plan, and how those items might be divided between different plans based on size or type. It’s best to read the fine print and get quotes from several home warranty providers before signing a contract. Also, pay attention to whether a contract has a waiting period before coverage begins.
Service calls
In return for a fixed monthly or yearly premium and a service call fee, you can avoid spending hundreds or even thousands of dollars on repairs and replacements. For many homeowners, this can make a home warranty well worth the investment.
However, the costs can add up over time and you should carefully read any protection plan for terms, conditions and exclusions. Also, you should choose a provider with a clear contract to help you avoid any surprises.
Generally, you can get your appliances and systems repaired or replaced quickly by contacting the home warranty company over the phone and explaining the problem. They will send a repair technician to your house and assess the issue. Depending on the plan, they may be able to fix it right away or will provide you with a list of contractors to choose from. Alternatively, they will schedule an appointment to replace your appliance or system with a similar one that is comparable in size and functionality. Be sure to get a home warranty quote from a reputable company and know what the company offers before signing up.
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