Ultimate Guide To Home Warranty: Is it worth the Money?

Ultimate Guide To Home Warranty: Is It Worth The Money?

A home warranty offers homeowners discounted replacement and repair services on their main home systems and appliances. It’s a good tool to help save money on some of the costliest home repairs you’ll have. Continue reading to get a deep insight into home warranty and get a detailed overview about it.

What is a home warranty?

Home warranties are commonly mixed up with home insurance. They are annual, renewable home protection policies that cover major home systems and appliances, unlike home insurance. A home warranty covers the price of repair and replacement of the covered items in case of a breakdown because of normal wear and tear.

What Does A Home Warranty Cover?

A home warranty policy covers the main systems and appliances of your home. Home warranty plans are primarily of 3 types:

1. Systems plan

It covers whole-home systems such as:

Air conditioning
Heating
Ductwork
Plumbing
Water heater
Garbage disposal
Ceiling fan
Doorbell
Smoke detector, and
Electrical

2. Appliance plan

It includes major appliances such as:

Refrigerator
Range
Dishwasher
Stove
Dryer
Built-in microwave
Garage door opener
Clothes washer and dryer, and
Freestanding ice maker

3. Combination plan

As the name suggests, a combination plan includes both systems and appliances. Several home warranty companies even give the option to personalize your plan.

Many companies also give the option to cover miscellaneous items such as a pool pump, spa pump, hot tub, or a second refrigerator as add-ons. You can include these items in your plan for an additional cost.

How Does A Home Warranty Work?

After buying your home warranty, you’ll get coverage within 30 days after the first payment. If a covered item malfunctions, you should immediately request a service request or a claim with the home warranty company.

You can file a home warranty claim in the following manner:

There is a normal wear and tear breakdown issue with your covered appliance or system. You’ll be required to call the home warranty provider to file a claim. Else, you can file the claim online.
A technician will visit to address the issue within 48 hours after your service request gets processed.
The technician will look at the damaged system or appliance and suggest a replacement or repair. You may have to pay the trade service fee at this point.
If the system or appliance repair doesn’t require much work and the technician has the required parts, the repair could be done immediately. A follow-up appointment will be arranged in the case of a replacement.

After the completion of appliance or system repair or replacement, you can use your system or appliance once again.

How Much Does A Home Warranty Cost?

One of the most common questions everyone has about the home warranty is the cost. Since the plan cuts down normal repair costs, the repair cost will be decreased from thousands of dollars to hundreds of dollars a year. The exact cost of a home warranty range from $300-$600 annually.

The price of the plan depends on the type of the property along with the chosen plan by the homeowner. The price is not usually dependent on the property’s age unless it’s brand new. Also, the home’s square footage doesn’t matter until the property is more than 5,000 square feet. Guesthouses are generally not included in the basic policy but some companies offer coverage to them as part of their optional coverage.

Along with the monthly premium, customers will have to pay the service call fee each time the technician visits to inspect the problem. A service fee (also known as a deductible) can cost around $60-$125 per visit, which depends on the home warranty company.

Before finalizing the home warranty company, you should thoroughly read the inclusions and exclusions in the plan. Also, don’t forget to ask about their ongoing offers or discounts as it will make the plan more affordable and easy on your pocket.

The Benefits of a Home Warranty

When you choose a home warranty plan for your home, you can enjoy the following benefits:

Savings on usual repairs: Homeowners won’t have to pay major repair or replacement costs as a basic warranty covers the major replacement or repairs.

An inexpensive and flat-rate fee for service calls: You’ll have to pay a flat fee for service calls.
Sit back and relax: A local expert will get designated so you won’t have to search for a technician to repair the broken appliance or system.
Time-saving: It is an easy way to take care of the repairs in no time. Once the service request gets processed, you’ll have an expert at your doorstep within 48 hours approximately.

A valuable incentive: Home warranties can act as a valuable real estate incentive whenever selling off your home. The majority of homes with a home warranty are sold faster and at higher prices, hence making it a valuable addition to the property.

The Drawbacks of Home Warranties

Here are some of the drawbacks that you might encounter whenever you buy a home warranty:

Not everything gets covered under the home warranty: One of the drawbacks of a home warranty is that everything is not covered. There are specific exclusions from the plan, and you will have to read the terms and conditions before choosing one. Most warranties don’t cover items or appliances that aren’t maintained properly. However, the definition of “properly maintained” can be different for the homeowner and the company, and which may potentially result in a disagreement.

Extra Cost: One more issue that adds in here is the money gets paid upfront under the impression that the home will require repairs. But, it is not the case in every circumstance. Many homeowners pay the premium even if everything works fine during the year.

No option to select repair service provider: The home warranties do make it easy for you to find a contractor when an appliance or home system breaks down. But, you may not have the option of choosing a repair contractor. It means you’ll remain stuck even if you don’t want to work with the contractor or aren’t satisfied with the work done. Apart from that, you might not have any say in the brand of the replaced component. However, they usually provide a similar or equivalent quality item.

No option between replacement or repair: The warranty provider has the power to make the final decision of whether the appliance or system requires a replacement or repair. It means that you get no option to choose even if the appliance or system becomes obsolete.

How To Purchase A Home Warranty?

Here are some tips to consider when purchasing a home warranty:

Pick the plan as per your requirements: Some companies offer plans based on the total items in each plan while some give coverage by the classification of the items. Check all the items in your home and consider the coverage options before choosing a plan.
Consider the coverage caps: A home warranty provider might have coverage caps on specific appliances or systems. The amount will only cover the repair costs; however, if there is a need for replacement, you will not get full coverage. For instance, if there is a $3000 coverage cap on an electrical system, you will have to pay any amount beyond that from your pocket.
Price of the home warranty plan: Price is one of the major factors that you should consider when purchasing a home warranty. You can get a plan as low as $50 a month. So, research properly before availing the plan of your choice.
Customer service: Selecting a reliable, responsive and helpful customer service team should always be your priority. The best home warranty companies offer 24/7 customer service and offer an online portal or app through which you can easily file claims.
Reputation: When looking for a provider, choose the one which has at least a B rating from the Better Business Bureau (BBB). Also, make it a point to read the home warranty reviews from the customers. Sometimes, people have bad experiences with the companies as they gloss through the contract.

The 5 Best Home Warranty companies

Company Name	Benefits	Get Quote
American Home Shield (AHS)	Offers replacement and repair for household items Offers coverage without maintenance records Pays for removal of refrigerant
Select Home Warranty	Covers all the major home systems and appliances Provides 24/7 customer service Provides limited roof coverage with all plans
Choice Home Warranty	Repairs and replacements for critical home systems and appliances Strong contractor network of over 25,000 technicians Free coverage for one month
ServicePlus Home Warranty	Network of local technicians 24/7 claims hotline Free coverage for two months
Cinch Home Services	A $25 credit to use towards filters for your A/C unit or refrigerator

Is A Home Warranty Worth It?

A newly constructed home might not need a home warranty plan as it already comes with brand new appliances and systems.

Manufacturers’ warranties are effective only for a year or two and don’t cover the systems and appliances that break down because of normal wear and tear. That is why you should get a home warranty immediately after the manufacturer’s warranty expires.

Here are some of the scenarios where you should consider purchasing a home warranty:

You don’t want to pay expensive repair or replacement charges for your home systems and appliance problems.
You live in an old home.
You are buying the home for the first time and prefer all systems and appliances to be protected.
You want to sell your home and attract potential buyers.
You are moving to a new area and aren’t familiar with the local repair technicians.

As the future is uncertain when it comes to home systems and appliances, choosing a home warranty is worth it. This home protection plan will keep you protected from any unforeseen damages in case any home item breaks down. Also, you will save time as you won’t have to search for a reliable contractor on your own.

Conclusion

A home warranty is a good solution to dodge the expensive costs of repair or replacement of home appliances or systems. Before you buy one, make sure to go through all the terms and conditions of the home warranty contract.

Homeowners who want to choose the best home warranty should thoroughly do their research to find a well-reputed home warranty company. Finding a reputable company with a good network of contractors will provide you with peace of mind in case of any breakdowns.

Frequently Asked Questions (FAQs)

1. Can I Buy A Home Warranty After Closing?

Absolutely! You can buy a home warranty at any time.

2. Should I Extend My Home Warranty?

You should consider different factors when deciding to extend the warranty, which includes the experience, savings, and ease of usage. These factors will help you make the right decision.

3. Can A Home Warranty Be Canceled?

Yes, you can cancel a home warranty. Make sure to cancel within the first 30 days of the order. It will help you get the contract fee refunded fully. Many companies subtract a $50 administrative fee along with the service costs if incurred.

4. How Is A Home Warranty Different From Home Insurance?

A home warranty offers discounts on repair and replacement services for household appliances and systems. On the other hand, home insurance safeguards your home and personal belongings against risks such as fires and theft.

5. Who Pays For A Home Warranty – A Buyer Or A Seller?

Home warranties can either be paid for by the buyer or the seller. Buyers can sometimes request the seller to pay a part or all the closing costs. However, the sellers are only accountable if they agree to it in the contract.

6. How To Get Your Home Warranty To Replace The AC Unit?

You can follow the procedure listed below to get your home warranty to replace your AC unit:

Place a claim online or by phoning customer support.
After the claim gets filed, the customer support representative will make sure to check that the warranty plan includes the type of AC. After confirming the same, a local and certified technician will get assigned to check the system.
The technician will thoroughly check the AC unit, and notify the company of the issue. If the plan covers the specific part, then the company will approve the repair.
If the technician isn’t able to repair the system and thinks it should get replaced, the same will get informed to the company. After the confirmation, the company will replace the part or AC unit.
If they are unable to provide the replacement, they offer a reimbursement amount equivalent to the depreciated AC value.

7. How Long Does A Home Warranty Last?

In general, a home warranty lasts for one full year. Most companies provide a whole year service agreement which can get renewed every year. You can even get multi-year plans for your home warranty.

8. Does A Home Warranty Cover Pre-Existing Conditions?

Some home warranty companies only cover pre-existing conditions if not detected during the time of the visual or mechanical test.

9. How Are Home Warranty Companies Regulated?

The home warranty companies are mainly regulated at the federal and state level. As there is no one standardized home warranty contract, the regulations vary from one state to another.