Everything you need to know about Home Warranties

When you purchase a new home, you’re investing in your future and creating a foundation for lasting memories. Protecting this significant investment is essential, and one way homeowners often consider doing so is by purchasing a home warranty. But is a home warranty truly worth the cost? In this blog post, we’ll delve into the pros and cons of purchasing a home warranty to help you make an informed decision.

Pros:

1. Peace of Mind: A home warranty can provide peace of mind to homeowners, especially for those who are new to homeownership or lack experience in home maintenance. Knowing that certain major systems and appliances are covered by the warranty can alleviate concerns about unexpected repair costs.

2. Financial Protection: Home repairs can be costly and often arise unexpectedly. A home warranty can help homeowners budget for repairs more effectively as they typically involve a fixed annual cost and a set service call fee, which is generally lower than paying for a repair or replacement outright.

3. Comprehensive Coverage: Home warranties typically cover a range of systems and appliances, including heating and cooling systems, plumbing, electrical, kitchen appliances, and more. This comprehensive coverage can be particularly beneficial for older homes with aging infrastructure.

4. Convenience and Accessibility: Home warranty companies typically have a network of qualified service providers, making it easy for homeowners to schedule repairs when needed. Additionally, most home warranties offer customer support, providing a one-stop-shop for addressing home maintenance issues.

Cons:

1. Limited Coverage and Exclusions: Home warranties often come with a list of exclusions, and not all repairs will be covered. Pre-existing conditions or neglect might invalidate claims, and coverage for certain high-end or uncommon appliances may require additional fees.

2. Service Call Fees: While a home warranty can save money on major repairs, homeowners will still have to pay a service call fee each time a technician is dispatched, which can add up if multiple issues arise in a short period.

3. Possibility of Denial: There is always a chance that a claim might be denied, leaving the homeowner responsible for the full cost of repairs. This can be frustrating, especially when the homeowner believed the issue would be covered.

4. Limited Control Over Repairs: With a home warranty, homeowners often have little say in the choice of repair vendors, and the quality of service may vary. This lack of control can be a concern for some homeowners who prefer to choose their trusted contractors.

When Does It Make Sense?

Purchasing a home warranty can make sense for certain homeowners, especially:

1. First-Time Homeowners: For those new to homeownership, a home warranty can be a safety net during the learning curve of property maintenance.

2. Older Homes: Older homes are more prone to age-related issues, and a home warranty can help offset the potentially higher repair costs.

3. Limited Savings: Homeowners with limited savings may benefit from a home warranty as it can help manage unforeseen repair expenses.

When Might It Not Be Worth It?

1. New Homes: New homes typically come with warranties from builders that cover structural defects and major systems for a certain period. In such cases, additional home warranties might not be necessary.

2. Well-Maintained Homes: If the home and its systems have been well-maintained, the likelihood of major breakdowns is reduced, making a home warranty less critical.

3. DIY Enthusiasts: Homeowners who are skilled at DIY repairs or have reliable contacts for home maintenance might find less value in a home warranty.

How much does a Home Warranty cost?

Home warranties on average cost $450-650 per year. The cost can vary depending on the square footage of the home. Most home warranty companies offer different levels of warranty protections, be sure to ask what is covered in each package. Usually the higher level packages will be the only ones to include HVAC and other major appliances. Septic/Well/Pool Equipment can usually be added for an additional charge. The cost can also be negotiated to have the seller cover the first year of coverage. 

Conclusion:

Purchasing a home warranty can provide valuable peace of mind and financial protection for some homeowners. However, it’s essential to carefully review the terms, coverage, and exclusions of the policy before making a decision. For some homeowners, the costs may outweigh the benefits, especially if they have the means to handle unexpected repairs on their own or have warranties already provided by the builder. Ultimately, the decision to purchase a home warranty should align with individual circumstances, preferences, and risk tolerance.